DAVIDsTEA Delivers Strong Turnaround in Fourth Quarter and Full Year Fiscal 2024 Results

Core Insights - Fiscal 2024 was a positive turnaround year for DAVIDsTEA, characterized by incremental sales growth, gross profit improvement, and positive cash flow from operations [2][4] - The company returned to profitability with a net income of $2.5 million in Q4 2024, a significant improvement from a net loss of $3.9 million in the prior year [2][14] - The omnichannel growth strategy, including the opening of new retail stores, has brought the brand closer to consumers and positively impacted wholesale and e-commerce sales [2][3] Sales Performance - Sales for Q4 2024 reached $61.8 million, up 2% year-over-year, while sales for the fiscal year increased by $1.2 million, or 1.9%, to $61.8 million [5][17] - Canadian sales accounted for 84.3% of total revenue, with a slight decrease of 5.5% year-over-year, while U.S. sales remained stable at $3.6 million [7][17] - Online sales represented 53.3% of total sales in Q4 2024, although they decreased by 5.6% compared to the prior year [8][18] Profitability and Margins - Gross profit for Q4 2024 increased by 8.5% to $11.2 million, with gross profit as a percentage of sales rising to 48.4% from 42.6% in the prior year [11][20] - Selling, general and administrative expenses (SG&A) decreased by 39.4% to $8.6 million in Q4 2024, leading to a significant reduction in costs as a percentage of sales [12][21] - Adjusted EBITDA turned positive at $4.0 million in Q4 2024, compared to $0.5 million in the prior year [13][24] Future Outlook - The company aims for a sales compound annual growth rate of 10-12% over the next three years, driven by retail expansion in Canada and enhanced online presence [3] - DAVIDsTEA plans to raise its gross profit margin to 48-50% by leveraging in-house fulfillment capabilities and focusing on innovation [3] - Expected annual cost savings of $4 million from the new IT platform and tight control on discretionary spending will support profitability goals [3][23] Financial Position - As of February 1, 2025, DAVIDsTEA had a cash position of $16.2 million, providing financial flexibility for future growth [4][27] - Working capital decreased to $12.8 million, primarily due to a reduction in inventories and prepaid expenses [28] - The company recorded a net loss of $3.2 million for Fiscal 2024, an improvement from a net loss of $13.8 million in the prior year [25][26]