Like many retailers dealing with slow (or nonexistent) store traffic during the COVID-19 pandemic, tea retailer DAVIDsTEA is shifting its focus to e-Commerce and wholesale operations. As part of bankruptcy filings in Canada and the U.S., the Montreal-based company is sending notices to terminate leases for 82 of its Canadian stores and all 42 U.S. locations.
The retailer, which also sells tea and tea-related products in 2,500 grocery stores and supermarkets across Canada, currently operates more than 100 stores in the country. DAVIDsTEA is in negotiations with its Canadian landlords, and warned that it may permanently close additional stores if it cannot negotiate more favorable lease terms.
“With the upcoming closure of 124 unprofitable stores across North America, we are certainly making good progress in creating a stronger business model for the future and ensuring the long-term success and sustainability of DAVIDsTEA and our beloved brand,” said Herschel Segal, Founder, Chairman and Interim CEO of the company in a statement.
Under Canada’s Companies’ Creditors Arrangement Act, DAVIDsTEA has obtained an initial order from the Quebec Superior Court allowing its bankruptcy-style reorganization to proceed. DAVIDsTEA plans to apply for similar orders for its wholly owned U.S. subsidiary under Chapter 15 of the U.S. Bankruptcy Code.