DAVIDsTEA (DTEA) investor relations material

Executive summary

• Q1 2026 sales were $13.0 million, down 5.2% year-over-year amid cautious consumer sentiment and U.S.-Canada trade frictions, but net income improved to $0.1 million from a net loss of $0.2 million in the prior year quarter.

• Gross margin held at 59.7%, up from 59.5% year-over-year, and adjusted EBITDA margin expanded by 100 basis points to 12.5% of sales.

• Cash position increased to $11.2 million, up $0.8 million year-over-year, with working capital at $18.0 million.

• Store-led growth strategy underway, with four new Canadian stores planned for Fiscal 2026, targeting a total of 25 by year-end.

• Retail expansion and operational improvements, including a new U.S. fulfillment center, are expected to support sequential recovery and self-funding growth.

Financial highlights

• Revenue for Q1 2026 was $13.0 million, down 5.2% year-over-year, with gross profit at $7.8 million and gross margin improved to 59.7%.

• SG&A expenses dropped by $0.7 million or 10.7% to $6.3 million, now 48.2% of sales, mainly due to lower marketing costs.

• EBITDA rose 31.6% year-over-year to $1.5 million; adjusted EBITDA was $1.6 million, flat year-over-year but higher as a percentage of sales.

• Adjusted net income was $0.1 million, up from a $0.2 million loss in Q1 2025.

• Fully diluted net income per share was $0.00, compared to a net loss per share of $0.01 last year.

Outlook and guidance

• Four new Canadian stores to open in fiscal 2026, targeting a total of 25 by year-end, with store expansion expected to become self-funding as incremental free cash flow grows.

• U.S. sales expected to recover sequentially as the new Chicago fulfillment center is now fully operational.

• Focus on positive comparable sales in Q2 and beyond through new products and omni-channel initiatives.

• Cash is expected to reach a seasonal low in Q3 before rebuilding in Q4, consistent with historical patterns.

• Management believes liquidity is sufficient to fund operations and store expansion.