DavidsTea Founder Takes Control of Retailer and Commits to Profitability


DavidsTea CEO resigned Thursday after losing a battle with the company’s co-founder which saw the entire board

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MONTREAL – The CEO of DavidsTea resigned Thursday after losing a battle with the company’s co-founder that saw the entire board replaced at the helm of the struggling specialty drink retailer.

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Chief Executive Officer Joel Silver, who led an attempt to prevent a shareholder revolt led by Herschel Segal, resigned after the results of the vote were announced at the company’s annual meeting.

Segal has taken over as executive chairman and interim CEO and the company said it will start looking for a permanent chief executive to replace Silver, who has been in the role for just over a year.

Fifty-four percent of the votes cast at the shareholders’ meeting supported Segal’s list of seven directors rather than the leadership contestants.

Segal on Thursday promised that the chain of 240 stores in Canada and the United States would become profitable within a year and focus on its Canadian roots.

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“We now have a little time to look at exactly how we can get this business back on track. “

Segal, a seasoned retailer who also founded clothing chain Le Chateau, said DavidsTea had a great brand and a product that failed to find its way into the United States.

“After six years of working there, not only have we not been successful in the United States, because there is a different culture and a different customer there and what we have done is at the same time neglecting the Canada. “

Some US stores could be closed, but the mission of the DavidsTea brand must first be clarified and made effective to restore profitability, Segal said in a brief press conference.

Corporate Director William Cleman, Viau Foods President Pat De Marco, Retired Professor Ludwig Max Fisher, Former MEC CEO Peter Robinson and Roland Walton, Former President of Tim Hortons Canada and the president of the Castle Emilia Di Raddo were also elected to the council.

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The Montreal-based company lost $ 30 million last year out of $ 224 million in sales. The losses included one-time separation costs for a former CEO, depreciation charges and the impact of onerous contracts.

“We are now going back to see what we need for Canada,” Segal said. “The situation in the United States is on hold. “

Segal said he had not considered privatizing or selling the company, which he said still has a future. Tea is a social, calming drink that moves away from sugary drinks, energy drinks and coffee shakes, he said.

However, few people figured out how to make a tea business successful, he said, pointing to Starbuck’s, which shut down its Teavana chain in January about five years after buying the division for $ 620 million.

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Segal’s holding company, Rainy Day Investments Ltd., which owns about 46 percent of the outstanding shares, was in competition with three investment firms that together control 36.5 percent of the shares. They accused Segal of trying to acquire the company without paying a premium.

Benjamin Gisz, director of TDM Asset Management Pty Ltd, which owns 12.2 percent of DavidsTea’s shares, said after the vote that he was not surprised with the outcome.

“We hope the board is doing well, we just never supported Mr. Segal as head of the board or the management team,” he said in a statement. interview.

“We just want to see this brand thrive and the key to doing that is creating an environment where great people can come into the company and the key to that is to ensure that the leadership team receives a clear mandate from the company. board of directors, clear accountability and a plan to execute.

DavidsTea has been listed on the stock exchange since June 2015, when it was listed on the Nasdaq as part of an expansion plan.

DavidsTea shares fell from nearly US $ 30 in 2015 to just US $ 4.12, up 4.4% Thursday on the Nasdaq.

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