• Sales increased 3.3% to $11.5 million; retail store sales grew 9.6%
• Gross margin improved 320 bps to a record 61.9%
• Adjusted EBITDA improved $0.7 million to $0.5 million
• Net loss narrowed to $1.2 million
• 2 new locations in the Greater Toronto Area
• Cash of $10.2 million, up $2.6 million year-over-year

Montreal, Quebec--(Newsfile Corp. - September 22, 2026) - DAVIDsTEA Inc. (TSXV: DTEA) ("DAVIDsTEA" or the "Company"), a leading tea merchant in North America, announced today its results for the second quarter ended August 1, 2026 ("Q2 Fiscal 2026").

"We performed well in the second quarter and are pleased with our comparable-store sales growth of 4.4% and the 320-basis point improvement in our gross margin despite an uncertain economic landscape" said Sarah Segal, Chief Executive Officer and Chief Brand Officer of DAVIDsTEA. "We are making progress on a strategic plan and these efforts have contributed to improved retail trends and a positive start to the 3^rd quarter."

"We completed the consolidation of our operating footprint in Montreal and continued executing our store-led growth strategy with the opening of two new locations in the Greater Toronto Area, namely at the Oshawa Centre in June and Square One Shopping Centre in Mississauga post quarter-end. These flagship stores, which feature a full assortment of loose-leaf teas, signature collections, and seasonal Tea Bar offerings, have enabled DAVIDsTEA to re-engage with communities where it had a strong presence in the past."

"With respect to expanding our store footprint, we also have plans to open stores at the Southgate Centre in Edmonton and the Metropolis at Metrotown in Burnaby, B.C. this fall, raising our store count by five since launching our growth program and reaching 25 by the year-end. We are looking forward with excitement to having all the stores operational leading to our seasonally strong fourth quarter. Looking ahead to 2027, we are still in the planning phase, but our initial assessment suggests a store expansion similar to 2026." Ms. Segal added.

"The strong improvement in gross margin reflects lower unitized freight and inbound shipping costs, combined with the continued benefit of the internalized fulfillment model. During the quarter, we generated $0.6 million of free cash flow, and retail capital expenditures totaled $0.6 million. The balance sheet remained solid, supported by $10.2 million in cash, with further improvement expected in the second half of the year due to the normal seasonality of the business. Finally, the recent consolidation of our Canadian operations under a single roof in Montreal is expected to generate operational and cost efficiencies beginning in the third quarter," said Frank Zitella, President and Chief Financial and Operating Officer of DAVIDsTEA.

Operating Results for the Second Quarter of Fiscal 2026

Three Months Ended August 1, 2026, compared to Three Months Ended August 2, 2025

Sales. Sales for the second quarter of Fiscal 2026 increased $0.4 million, or 3.3%, to $11.5 million, compared with $11.1 million in the prior-year quarter. The increase was driven by higher brick-and-mortar sales, partially offset by lower wholesale sales, while online sales increased modestly.

Canadian sales increased $0.5 million, or 5.5%, to $10.5 million, representing 91.5% of total sales. The increase reflected contributions from the Laurier Québec City store, opened in December 2025, and the Oshawa store, opened in June 2026, as well as growth across the existing store base.

U.S. sales decreased $0.2 million, or 15.2%, to $1.0 million, primarily due to U.S.-Canada trade tensions and tariff-related pressure on cross-border e-commerce. Following the elimination of the U.S. de minimis import rule, the Company began fulfilling U.S. orders through a third-party logistics partner in Chicago on March 26, 2026. With the transition now complete, management expects U.S.-based fulfillment to reduce cross-border friction and support improved U.S. sales through the balance of Fiscal 2026.

Online sales increased $0.1 million, or 1.1%, to $5.2 million, representing 45.0% of total sales, compared with 45.9% in the prior-year quarter. Growth was moderated by tariff-related pressure on U.S. cross-border e-commerce and softer Canadian online demand.

Brick-and-mortar sales increased $0.4 million, or 9.6%, to $5.0 million, representing 43.5% of total sales, compared with 41.0% in the prior-year quarter. The increase reflected contributions from the two new stores, while comparable-store sales increased 4.4%, compared with 0.6% in Q2 Fiscal 2025.

The Company opened its Square One Shopping Centre location in early August 2026 and plans to open two additional stores during the balance of Fiscal 2026: Southgate Centre in Edmonton and Metropolis at Metrotown in Burnaby this fall.

Wholesale sales decreased $0.1 million, or 8.8%, to $1.3 million, representing 11.5% of total sales, compared with 13.0% in the prior-year quarter. The decline primarily reflected the timing of customer replenishment cadence across grocery and convenience-store partners.

Gross profit. Gross profit increased $0.6 million, or 9.0%, to $7.1 million, compared with $6.5 million in the prior-year quarter, outpacing the 3.3% increase in sales. Gross margin expanded to 61.9% from 58.7% in Q2 Fiscal 2025. The improvement in gross margin reflected lower unitized freight and inbound shipping costs, together with the continued benefit of the Company's internalized fulfillment model. These benefits were maintained despite tariff-related cost pressures and the transition to U.S.-based fulfillment during the quarter.

Selling, general and administration expenses. SG&A of $6.9 million increased $0.1 million or 1.5%, though it declined as a percentage of sales to 59.8% from 60.9%, reflecting operating leverage in our rebuilt cost structure. The increase was primarily driven by a $0.3 million rise in other SG&A expenses, partially offset by $0.1 million declines each in professional and consulting fees and stock-based compensation.

EBITDA, Adjusted EBITDA and Adjusted EBITDAR¹. EBITDA was $0.2 million in the quarter compared to negative $0.2 million in the prior year quarter, an improvement of $0.5 million, reflecting the flow-through of gross margin expansion. Adjusted EBITDA was $0.5 million compared to negative $0.2 million, an improvement of $0.7 million. Adjusted EBITDAR was negative $0.7 million compared to negative $1.4 million, an improvement of $0.7 million. The quarter demonstrates the operating leverage in our rebuilt cost base.

Net loss and Adjusted net loss¹. Net loss was $1.2 million compared to $1.6 million in the prior year quarter, an improvement of $0.3 million. Adjusted net loss was $1.0 million compared to $1.8 million in Q2 Fiscal 2025, reflecting the flow-through of gross margin expansion.

Fully diluted net loss per share. Fully diluted net loss per common share was $0.04 compared to $0.06 in the prior year quarter. Adjusted fully diluted net loss per common share¹ was $0.03 compared to $0.06.

Cash on hand. The Company ended the second quarter of Fiscal 2026 with cash of $10.2 million, compared to $16.5 million at the end of Fiscal 2025, a normal seasonal drawdown consistent with our working capital cycle, in which cash is typically deployed in the first three quarters to build inventory ahead of the fourth-quarter peak selling season and substantially restored in Q4.

LIQUIDITY AND CAPITAL RESOURCES

As at August 1, 2026, the Company held cash of $10.2 million, all on deposit with major Canadian financial institutions, compared to $16.5 million at January 31, 2026 and $7.6 million at the end of Q2 Fiscal 2025. The $6.2 million decrease since fiscal year-end reflects the normal seasonal pattern of the business, in which the first and second quarters are a lighter periods for revenue and the Company builds inventory ahead of the peak selling season later in the year.

The year-over-year improvement of $2.6 million is the more meaningful comparison, and reflects the combined impact of the November 2025 private placement of $3.0 million, cash generated from operations following the Company's return to profitability in Fiscal 2025, and disciplined working capital management. This was partially offset by capital expenditures against the Fiscal 2026 store opening program.

Working capital was $17.1 million as at August 1, 2026, compared to $17.7 million as at January 31, 2026 and $11.4 million at the end of Q2 Fiscal 2025 — a year-over-year improvement of $5.7 million, or 50%.

The Company's primary sources of liquidity are cash on hand and cash flow generated from operations. Working capital requirements are driven by the purchase of inventory, payment of payroll, ongoing technology expenditures, and other operating costs, and fluctuate over the course of the year — rising in the second and third fiscal quarters as the Company takes title to increasing quantities of inventory in anticipation of the peak fourth-quarter selling season, and unwinding as that inventory is converted to revenue and cash. Management expects cash to reach its seasonal low point in the third quarter before rebuilding through the fourth quarter, consistent with the historical seasonal pattern of the business.

Capital expenditures amounted to $0.7 million in the second quarter of Fiscal 2026, comprised of leasehold improvements of $0.5 million, furniture and equipment of $0.1 million and computer hardware of $0.1 million, primarily due to the Company's store-led growth plan. Capital expenditures are expected to increase through the balance of Fiscal 2026 as the Company progresses against its plan to open two additional stores during the year. Capital expenditures in the second quarter of Fiscal 2025 amounted to $0.1 million, substantially all of which related to leasehold improvements.

As at August 1, 2026, the Company had purchase obligations in connection with the procurement of goods and services of $7.0 million, net of $0.3 million of advances included in prepaid expenses and deposits which compares favourably to the prior year quarter of $12.9 million, net of $0.8 million of advances (January 31, 2026 — $6.5 million, net of $0.4 million of advances). The $0.5 million increase reflects the placement of inventory orders for the back half of the year and is consistent with the seasonal cadence of the business. All purchase obligations are expected to be discharged within twelve months.

The Company also maintains a revenue-linked financing arrangement under which it remits 7% of revenues generated through its retail and e-commerce channels until a fixed repayment amount is satisfied. This financing arrangement was fully repaid in the second quarter, with $0.4 million paid down, fully extinguishing the outstanding balance. The facility remains available to the Company for future draws should additional financing be required.

Based on cash on hand of $10.2 million, anticipated cash flow from operations, and the continued availability of the revenue-linked financing facility, management believes the Company has sufficient liquidity to fund its operations, meet its near-term contractual obligations, and execute the Fiscal 2026 store opening program.

The Company continues to operate in a challenging environment characterized by the imposition of tariffs by the United States, ongoing geopolitical instability, evolving consumer behavior, and persistent inflationary pressures affecting consumer confidence, and management remains focused on disciplined execution of the strategic plan while preserving balance sheet flexibility.

Condensed Consolidated Financial Data
(Canadian dollars, in thousands, except per share information)

Use of Non-IFRS Financial Measures and Ratios
This press release includes "non-IFRS financial measures" defined as including: 1) EBITDA, Adjusted EBITDA, and Adjusted EBITDAR, 2) Adjusted net income (loss), 3) Adjusted fully diluted income (loss) per common share, and 4) Comparable store sales growth. These non-IFRS financial measures are not defined by or in accordance with IFRS and may differ from similar measures reported by other companies. DAVIDsTEA believes that these non-IFRS financial measures provide knowledgeable investors with useful information with respect to historical operations. These non-IFRS financial measures are presented as supplemental performance measures because the Company believes they facilitate a comparative assessment of its operating performance relative to its performance based on IFRS results, while isolating the effects of some items that vary from period-to-period but not in substitution to IFRS financial measures.

Please refer to the non-IFRS financial measures and ratios section in the Company's Management Discussion and Analysis for a reconciliation to IFRS financial measures.

Note
This release should be read in conjunction with the Company's Management Discussion and Analysis, which is filed by the Company with the Canadian securities regulatory authorities on SEDAR+ at www.sedarplus.ca and will also be available in the Investor Relations section of the Company's website at www.davidstea.com.

Caution Regarding Forward-Looking Statements
This press release includes statements that express our opinions, expectations, beliefs, plans or assumptions regarding future events or future results and there are, or may be deemed to be, "forward-looking statements" within the meaning of applicable Canadian securities law. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms "believes", "expects", "may", "will", "should", "approximately", "intends", "plans", "estimates" or "anticipates" or, in each case, their negatives or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts and include statements regarding our intentions, beliefs and current expectations concerning, among other things, our store-led growth strategy, and our results of operations, financial condition, liquidity and prospects.

While we believe these opinions and expectations are based on reasonable assumptions, such forward-looking statements are inherently subject to risks, uncertainties and assumptions about us, including the risk factors discussed in Management Discussion and Analysis of Financial Condition and Results of Operations for our fiscal year ended January 31, 2026, filed with the Autorité des marchés financiers on April 29, 2026.

Conference Call Information
A conference call to discuss the second quarter Fiscal 2026 financial results is scheduled for September 22, 2026, at 8:30 am Eastern Time. The conference call will be webcast and may be accessed via the Investor Relations section of the Company's website at ir.davidstea.com. An online archive of the webcast will be available within two hours of the conclusion of the call and will remain available for one year.

About DAVIDsTEA

DAVIDsTEA offers a specialty branded selection of high-quality proprietary loose-leaf teas, pre-packaged teas, tea sachets, tea-related accessories and gifts through its e-commerce platform at www.davidstea.com  and the Amazon Marketplace, its wholesale customers which include over 4,000 grocery stores and pharmacies, over 1,500 convenience stores in Canada, as well as 23 company-owned stores across Canada. It offers primarily proprietary tea blends that are exclusive to the Company, as well as traditional single-origin teas and herbs. The team's passion for and knowledge of tea permeates the Company's culture and is rooted in an excitement to explore the taste, health and lifestyle elements of tea. With a focus on innovative flavours, wellness-driven ingredients and organic tea, the Company launches seasonally driven "collections" with a mission of making tea fun and accessible to all. The Company is headquartered in Montréal, Canada.

¹ Please refer to "Use of Non-IFRS Financial Measures and Ratios" in this press release

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