DavidsTea will only reopen 18 stores in Canada, down from 186 before pandemic

DavidsTea’s shift to selling primarily online will see the chain reopen 18 stores across Canada, a significant drop from the 186 it had before it closed all of its locations when COVID-19 hit.

The Montreal-based chain announced on Thursday that as part of its restructuring plans, it will only reopen 18 locations across Canada.

The chain announced earlier this month that it would restructure itself under the Companies’ Creditors Arrangement Act, the Canadian law that covers companies that can’t pay their bills.

Like many retailers, DavidsTea was forced to shut down all of its locations when the COVID-19 pandemic struck in March. At the time, the company was trying to beef up its online sales platform, when suddenly those plans were kicked into high gear by a lack of physical places to sell tea and accessories.

“The plan was always to significantly reduce our retail footprint and the strong performance of our e-commerce and wholesales channels in recent months has provided further validation of that strategy,” chief operating officer Frank Zitella said. 

According to a report from PwC, the company handling the company’s restructuring, prior to COVID-19 DavidsTea had 186 locations across Canada and 45 in the U.S. The company said it had already terminated 82 leases across the country. The fate of the U.S. locations is being determined by a separate process happening under U.S. bankruptcy laws.

The company warned investors in June that it had not paid rent on any of its store locations in the past three months.

The company has been operating with a skeleton staff through the pandemic, with 128 people at its head office, after having laid off 87 there and 2,276 people across its retail locations.

On Thursday the chain said it has managed to extricate itself from as many leases as it could, and is moving forward with plans for a much smaller retail footprint.

“Our decision to reopen these select stores is consistent with our objective to create a leaner, more efficient company, positioned for long-term growth,” CEO Herschel Segal said.

“We are very pleased that the landlords for these 18 stores have offered more advantageous rent conditions to us in light of the COVID-19 pandemic,” Zitella added.

The stores will open by the end of next month. 

Seven of the stores are in Québec, five are in Ontario, with the balance in Alberta, British Columbia, Manitoba and New Brunswick. All of them are in major shopping malls, the chain said.

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