Davids Tea posts huge Q1 loss on IPO costs
In its first quarter as a public company, Davids Tea posted an operating loss of over $75 million, with the costs of the IPO and the weakness in the Canadian dollar cited as main driving factors. Sales grew by 29% to just under $30m over the quarter, although comparable sales for stores open at least a year grew just 6.3%. Gross profit as a percentage of sales decreased to 53.3% from 56.6% due to weaker Canadian dollar and higher supply chain costs. Davids Tea opened 7 new stores in the quarter to bring the total for the year to 35 and 161 overall. Reflecting investor dissatisfaction, the company's share price took a significant hit, trading at around $20 on Nasdaq, about 30% lower than it did last week. Proceeds from the IPO were about $55m.