Good morning, ladies and gentlemen. Welcome to DAVIDsTEA's second quarter results webcast for fiscal 2026.

Today's webcast is being recorded and is in a listen-only mode. Before we get started, I would like to remind you of the company's safe harbor language.

This webcast includes forward-looking statements about expectations for the performance of the business in the coming quarter and year. Each forward-looking statement contained in this webcast is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements.

Additional information regarding these factors appears under the heading "Risk Factors and Uncertainties" in the management's discussion and analysis of financial condition and results of operations, the MD&A, which was filed with Canadian regulatory authorities and is available on www.sedarplus.ca. Forward-looking statements in this discussion speak only as of today's date, and the company undertakes no obligation to update or revise any of these statements.

If any non-IFRS financial measure is used during this webcast, reconciliation to the most directly comparable IFRS financial measure will be detailed in the MD&A. As a reminder, all dollar amounts referred to are in CAD unless otherwise indicated.

Now, I would like to turn the call over to Sarah Segal, Chief Executive Officer and Chief Brand Officer of DAVIDsTEA.

Good morning, everyone, and thank you for joining us today. While Q2 is generally our seasonally weakest period, we are pleased with our performance in the quarter.

Sales from our brick-and-mortar stores were up 9.6%, including comparable store sales growth of 4.4% and strong contributions from new stores, while we expanded our gross margin by 320 basis points. We achieved this during a challenging consumer environment, and I think that speaks to the strength of our brand, the resilience of our business, and the discipline of our operating strategy and team.

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, including Oshawa Center in June and at Square One Shopping Center in Mississauga shortly after the quarter end. These flagship stores, featuring a full assortment of loose leaf teas, signature collections, and seasonal tea bar offerings, have enabled DAVIDsTEA to re-engage with communities where the brand has historically had a strong presence.

Consumer response has been very positive, and both stores have delivered strong early performance. The company also plans to reopen stores at Southgate Center in Edmonton and at Metropolis at Metrotown in Burnaby, British Columbia this fall, bringing our total number of new stores since we launched this growth program to five, four of them in fiscal 2026 alone, and positioning us to reach the objective we set at the beginning of the year, which was to grow our footprint to 25 locations by year-end.

Looking ahead to 2027, we are still in the planning phase, but our initial assessment suggests a store expansion similar to 2026. We see significant white space in Canada, and the pace of expansion will be determined by market conditions and our capacity to fund that growth.

It's worth reiterating that the unit economics of our new stores are highly attractive. Each new location requires an investment of approximately CAD 450,000, and the payback period ranges between 15 and 18 months.

Our store-led growth strategy is performing exactly as designed, and we expect it will generate a positive spillover effect on both our online and wholesale channels as our footprint grows. Behind this store-led expansion strategy rests our unmatched value proposition.

First, we offer the broadest loose leaf tea collection in the specialty tea market, with over 200 proprietary blends along with single-origin and organic teas. Our product portfolio is not only wide, but deep, with more than 30 SKUs of matcha sourced from premium growing regions in Japan, for example.

Second, we boast an in-house R&D team dedicated to developing new recipes aligned with wellness, immunity, sleep, health, and energy needs. This market-driven focus on innovation represents a key differentiator for DAVIDsTEA, both in our product pipeline brimming with new fall flavors such as Carrot Cake Tea, Pu-erh, Chai on the Rocks Tea, and Electric Lemonade Tea, and unique gift collections like Fresh and Fruity Sachet Tea Wheels, Haunted House Tea Samplers, and 24 Days of Matcha Advent Calendars.

Third, we're committed to ethical sourcing and eco-friendly packaging. As a proud member of the Ethical Tea Partnership, we source from trusted partners that offer ethically sourced ingredients to ensure all sustainability boxes are checked.

We are deepening our commitment to reduce plastic consumption and recover plastic waste, partnering with CleanHub on verified plastic recovery. On packaging, we introduced 100% industrially compostable loose leaf tea packaging for our Garden to Cup collection, as well as plant-based biodegradable tea sachets.

In short, we provide tea drinkers with innovation they can taste and love. We are excited to continue to enhance our customer experience, especially in this time of the year, and elevate our tea experience through retail journeys, improved offerings, and more connections with customers wherever they are.

We remain committed to the strategic plan we put in place earlier in the year, and these efforts have contributed to stronger retail performance and a good start to our next quarter. We are equally focused on making sure our online customers and Frequent Steepers and Super Steepers are given as many perks and benefits, and continue to be celebrated in their tea journey.

We look forward to leveraging our market-driven innovation and broad product portfolio to delight customers in the more revenue-intensive second half of fiscal 2026. With that, I will turn the webcast over to Frank Zitella, President, Chief Financial and Operating Officer of DAVIDsTEA.

Thank you, Sarah, and good morning, everyone. Our sales performance for the quarter varied greatly by geography and channel.

In Canada, sales grew 5.5% to CAD 10.5 million, representing 91.5% of total revenue for the quarter. The higher sales reflected contributions from the Laurier Quebec City store opened in December 2025, and the Oshawa store opened in June 2026, as well as growth across the existing store base.

In the U.S., our sales were down 15.2% to CAD 1 million, primarily due to trade tensions and tariff-related pressure on our cross-border e-commerce channel. To address these challenges, we transitioned U.S.

order fulfillment to a third-party logistics partner in Chicago in late March 2026. With the transition now complete, we expect U.S.

fulfillment to reduce cross-border friction and support improved U.S. sales for the balance of the fiscal year.

As Sarah mentioned, our brick-and-mortar sales increased 9.6% to CAD 5 million, or about 43.5% of total sales, compared to 41% a year ago. This growth was led by comparable store sales, which increased 4.4%, a significant acceleration from 0.6% growth in the second quarter of last year, supplemented by contributions from our two new Greater Toronto area stores.

Online sales increased 1.1% to CAD 5.2 million, representing 45% of total sales, compared with 45.9% a year ago. Meanwhile, wholesale sales were down 8.8% to CAD 1.3 million, primarily reflecting the timing of replenishment orders across our grocery and convenience store partners.

Gross profit increased 9% to CAD 7.1 million, outpacing sales growth and driving gross margin expansion of 320 basis points to a record 61.9%. This improvement reflects lower unitized freight and inbound shipping costs, as well as the benefits of our internalized fulfillment model.

Importantly, we achieved this margin expansion while managing tariff-related cost pressures and successfully transitioning to U.S.-based fulfillment in the quarter. Our selling, general, and administrative expenses as a percentage of sales decreased to 59.8% from 60.9% a year ago, reflecting the operating leverage in our rebuilt cost base.

Looking at profitability for the quarter, we had EBITDA of CAD 0.2 million, representing an improvement of CAD 0.5 million, while adjusted EBITDA improved by CAD 0.7 million, reaching CAD 0.5 million in our Q2. Our net loss narrowed to CAD 1.2 million compared to CAD 1.6 million a year ago.

Turning briefly to our balance sheet, at the end of the quarter, we had working capital of CAD 17.1 million, including cash of CAD 10.2 million, compared with working capital of CAD 17.7 million and cash of CAD 16.5 million at the end of the fiscal 2025. The decreases are consistent with seasonality in our business, where cash is typically deployed in the first three quarters to build inventory ahead of our fourth quarter peak selling season.

Compared to the second quarter of last year, our working capital increased by CAD 5.7 million, and our cash position is CAD 2.6 million higher. Last quarter, I briefly mentioned that we were transitioning to a consolidated operations in Montreal, including administration, storage, and production under a single modernized roof at our Mont-Royal facility.

That process is now complete and ahead of our peak inventory build season. With the move now behind us, we expect to realize the full run rate benefit of a consolidated footprint beginning in the third quarter.

To sum things up, our Q2 results show that our strategy is working and that our business model continues to be resilient. The acceleration in comparable store sales this quarter is encouraging and a signal that our store-led growth strategy is translating into broader customer demand, not just additional square footage.

Our investments in brick-and-mortar stores is paying off, while our strong gross margins continue to benefit from our internalized fulfillment model. In the U.S., we expect our fully operational Chicago fulfillment platform to support improved sales through the balance of the year.

As usual, I will end by encouraging investors who want to learn more about DAVIDsTEA to contact investor relations, who will be happy to coordinate access to management. To all, thank you for joining us today, and have a great day.