DAVIDsTEA Inc. (NASDAQ:DTEA) Files An 8-K Results of Operations and Financial Condition
Item 2.02 Results of Operations and Financial Condition.
On June 15, 2020, DAVIDsTEA Inc., a corporation incorporated under the Canada Business Corporations Act (the “Company”), issued a press release announcing its financial results for the three and twelve-month periods ended February 1, 2020, as well as preliminary unaudited financial information for the period ended May 30, 2020. A copy of the press release is furnished as Exhibit 99.1 hereto.
The information presented under Item 2.02 in this Current Report on Form 8-K and the accompanying exhibit attached herein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“the Exchange Act”), or otherwise subject to the liability of that section, nor shall it be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 8.01 Other Events.
Due to the COVID-19 pandemic, the Company is availing itself of a 45-day extension to file its Quarterly Report on Form 10-Q for the period ended May 2, 2020 (the “Quarterly Report”), originally due June 16, 2020, in reliance on an order (the “Order”) issued by the Securities and Exchange Commission (the “SEC”). The Order was issued to Section 36 of the Securities Exchange Act of 1934, as amended (Release No. 34-88465), regarding exemptions granted to certain public companies based on the COVID-19 pandemic.
The COVID-19 pandemic and related events have resulted in our management devoting significant time and attention to operating the Company’s business in this new environment and understanding and complying with an evolving regulatory environment. These efforts led management to determine that the closure of all of our stores in North America, effective March 17, 2020, and as mandated by the governments in both Canada and the U.S., was necessary to minimize exposure risk for our employees and customers, and our communities more generally. As part of these efforts, we also began having employees work remotely to the extent possible. As the Company continues to adapt its business strategy to the current environment, it has reduced costs to align expenses with decreases in its retail store sales driven by COVID-19 related closures. This includes temporarily furloughing all of its store-related employees and moving substantially all non-essential remaining employees to a four-day work week. While these measures, among others, are intended to better align the Company’s cost structure with its current sales and help preserve its financial position, they have drastically impacted how we run our business.
Overall, the significant disruption of our operations by the COVID-19 pandemic and related mitigation efforts have negatively impacted our ability to prepare our Quarterly Report. As such, the Company will be relying upon the 45-day extension provided by Order for the filing of its Quarterly Report. The Company will file its Quarterly Report by no later than July 31, 2020, 45 days after the original due date for the Quarterly Report.
Set forth below are risk factors regarding the risks related to the impact of COVID-19 pandemic on our business and results of operations.
We face business disruption and related risks resulting from the COVID-19 pandemic, which could have a material adverse effect on our business and results of operations.
On March 17, 2020, we closed all of our stores in North America, as subsequently mandated by the governments in both Canada and the U.S., to protect our employees, customers and communities. We have also temporarily furloughed all of our store related employees and have moved substantially all remaining non-essential employees to a four-day work week to reduce expenses. Although we continue to offer our products directly to consumers through our online store and our products are available in supermarkets and drugstores across Canada, there is no assurance that customers will purchase our products at previous volumes through these alternative channels.
We depend on cash flow from operations to pay our lease expenses and our other cash needs. If our business does not generate sufficient cash flows from operating activities to fund these requirements, we may not be able to service our lease expenses, which would harm our business. As the stores have been closed due to the COVID-19 pandemic, we have not remitted rental payments for the months of April, May and June.
DAVIDsTEA Inc. Exhibit
EX-99.1 2 dtea_ex991.htm PRESS RELEASE dtea_ex991.htmEXHIBIT 99.1 DAVIDsTEA Reports Fourth Quarter and Full Year Fiscal 2019 Financial Results and Preliminary Financial Information for the 17-Week Period Ended May 30,…
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About DAVIDsTEA Inc. (NASDAQ:DTEA)
DAVIDsTEA Inc. is engaged in the retail and online sale of tea, tea accessories, and food and beverages in Canada and in the United States. The Company’s segments include Canada and the U.S. The Company is a branded retailer of specialty tea, offering approximately 150 loose-leaf teas, pre-packaged teas, tea sachets and tea-related gifts, accessories, and food and beverages primarily through approximately 190 DAVIDsTEA stores, which are operated by the Company, and its Website, davidstea.com. Additionally, the Company offers on-the-go tea beverages in its retail stores. The Company’s tea accessories include tea mugs, travel mugs, teacup sets, teapots, tea makers, kettles, infusers, filters, frothers, tins and spoons. The Company offers beverages range from the standard hot or iced tea to its Tea Lattes. The Company’s different flavors of loose-leaf tea span eight tea categories: white, green, oolong, black, pu’erh, mate, rooibos and herbal tea.