During a second-quarter earnings call, DAVIDsTEA executive chairman and interim CEO Herschel Segal described the changes he believes will return the company to profitability following several quarters of declines. In the first quarter, DAVIDsTEA reported a $10 million net loss following board upheaval that led to a change in management. Sales declined 12 percent compared to the same period in 2017 when the company reported a net loss of $5.6 million. Segal referenced a Euromonitor 2017 report describing Canada’s tea market as divided into two distinct segments: teabags and the loose-leaf segment. Teabag products are mainly sold in supermarkets, hypermarkets, and discount retailers. Loose leaf purveyors frequently offer tea in sachets, but primarily focus on loose-leaf and organic teas. Segal said Montreal-based DAVIDsTEA intends to capture more of the teabag market by implementing better pricing and providing consumers with a convenient tea experience in supermarkets. The process will take place in two steps:
- First, DAVIDsTEA will purchase teabags at a lower price point.
- Secondly, Loblaw Companies will begin distributing DAVIDsTEA at its 450 Canadian stores under various banners including flagship Loblaws, Fortinos, Provigo, Dominion, Atlantic Superstore and Valu-Mart. These stores feature the company’s best-selling 15-pack tea sachets, which are displayed at eye-level.