Troubled Montreal-based tea retailer DAVIDsTEA (Nasdaq:DTEA) will keep 166 Canadian and 42 American stores permanently closed, as it moves ahead to only reopen 18 stores across Canada at a date yet to be announced.
Of those 18 stores that it expects to reopen under what it calls "new, more favourable lease terms and conditions," only one is in B.C. – in CF Pacific Centre. A scan of DAVIDsTEA locations before the COVID-19 pandemic showed 28 stores in B.C.
"How customers shop has continued to evolve, and we want and need to adapt with you," the company said July 30 in a note on its website. "The new retail landscape has forced us to re-evaluate how we can bring tea to our fans most efficiently."
DAVIDsTEA earlier this month said it would restructure under Canada's Companies' Creditors Arrangement Act (CCAA).
“We believe that a select group of our best-performing stores, complementing our growing online and wholesale business model and supported by an entrepreneurial organization, will enhance DAVIDsTEA’s ability to emerge from the CCAA restructuring process as a more sustainable and resilient organization,” said Herschel Segal, the company's founder, chair and interim CEO, in a statement.
Other Canadian stores are set to be in metro areas in Calgary, Edmonton, Winnipeg, Hamilton, London, Ottawa, Toronto, Montreal and Moncton.
All of DAVIDsTEA's planned future stores are set to be in shopping centres, and only Vancouver, Ottawa and Toronto will have the chain's locations downtown, said Retail Insider Media owner and retail consultant Craig Patterson.
"This speaks to the strength of downtown Vancouver," he said. "The fact that they have kept their only store in the Vancouver market downtown speaks to the importance of retail in Vancouver's downtown core."
In contrast, despite six stores set to be in metropolitan Montreal region, none of DAVIDsTEA's planned future stores will be in that city's downtown, he said.
Patterson also lauded DAVIDsTEA's strategy to keep some physical locations.
"Still having a physical location is important," he said. "The International Council of Shopping Centres came out with a study last year that said that there's a symbiotic relationship between physical and online retail. You'll drive higher online sales if you actually have a physical store in the same market."
Investors liked the news, pushing DAVIDsTEA shares up seven and a half cents to US$0.88, or 9.4%. Shares are down more than 61.7% from the US$2.30 52-week high, and up 175% from the US$0.32 52-week low.