Interview with the CEO of DavidsTea | “The results will speak”

Sarah Segal welcomes us with a smile. She seems relaxed and in good spirits. However, she would have many reasons to think differently. The company she runs is down, she’s facing public criticism, and her cousin, co-founder of DavidsTea, has just started a rival company.

Posted at 5:00 am

Richard Dufour

Richard Dufour
The press

In the very first interview she has given since being named CEO of DavidsTea in December 2020, the woman who has just given birth to her second child in three years – and who has chosen not to take maternity leave – recognizes some pressure .

“We have big plans. But not only I feel it [la pression]. It’s the whole company that feels like we have to finish something. We have initiated a change. We are ready to take another step. We are ready to start a global company. We understand that it is a big commitment,” says the 37-year-old.

Founded in 2008 and listed on the NASDAQ seven years later, Montreal-based retailer DavidsTea has grown rapidly. The tea merchant operated more than 230 stores before the pandemic. Today it’s only 18. After hovering around $30 in 2015, DavidsTea’s stock hit a low of $1.12 this month.


The founders, Herschel Segal (Sarah’s father) and David Segal (Sarah’s cousin), no longer hold official positions with the company.

David Segal just teamed up with Shopify President Harley Finkelstein to launch Firebelly Tea to compete with DavidsTea, the company that bears his name and that he founded with Sarah’s father.

“I have remained a big tea drinker. I collect tea like other people collect wine,” says David Segal over the phone. “I wanted to get back into the industry and start a company where I’m their biggest customer,” he says with a smile in his voice.

This is how Firebelly Tea started its activities (online only) last November. David Segal says he never considered going back to DavidsTea or discussing it with his cousin or even Herschel Segal.

I left DavidsTea in 2016 and we went different ways.

David Segal on his cousin Sarah Segal

David Segal claims he is comfortable with his time at DavidsTea without giving further details about his departure. “It’s not uncommon for a company founder to leave,” he says simply, now hoping those who have enjoyed DavidsTea’s products will try Firebelly’s.

Sarah Segal shows no interest in talking about Firebelly Tea or her cousin. She prefers to bring the conversation back to DavidsTea.

Respond to critics

Criticism doesn’t seem to bother Sarah Segal either. Earlier this month, an article published on financial site SeekingAlpha argued that she did not have the qualifications to run DavidsTea.

“I’m not alone,” she replies. I work with a very qualified team. I don’t pay too much attention to these comments. The results will speak for themselves. »


PHOTO ALAIN ROBERGE, THE PRESS

Sarah Segal wants to increase awareness of the DavidsTea brand. The company particularly started broadcasting content on TikTok during the pandemic.

Sarah Segal grew up in a family with a passion for retail. She says she speaks daily to her father Herschel, DavidsTea’s largest shareholder, strategic advisor and founder of retailer Le Château. “I really appreciate his ideas and his retail experience,” she says.

Sarah Segal’s mother also plays an important role. Jane Silverstone is CEO of DavidsTea and a former executive at Le Château.

If DavidsTea was forced to reorganize during the pandemic by adapting to the Law on the regulation of corporate creditors in Canada and Chapter 15 of bankruptcy in the United States, Sarah Segal was making a similar journey with her jelly bean company Squish Candy at the same time.

DavidsTea was also one of the creditors with claims against Squish Candy under the Insolvency and Bankruptcy Law. Squish Candy’s proposal to its creditors has since been accepted and the candy company continues to operate today, but only online.

All 20 Squish Candy stores have closed. Sarah Segal still owns Squish Candy but has handed over management of the business to others to focus on DavidsTea.

To have an effect

Sarah Segal says she sees her appointment as head of DavidsTea as an opportunity to make an impact on the business. “It allows me to step back and think long-term instead of just thinking about mundane tasks. »

DavidsTea has several opportunities to seize, according to her. Ready-to-drink beverages are about to hit the market in the form of ready-infused, ready-to-drink teas.

We don’t always have time to infuse leaves. Even me, who likes to drink loose tea. I’m often on the run and sometimes I just want to get a ready-made drink.

Sarah Segal, CEO of David’s Tea

A return to the American market is also in sight, albeit via wholesale with a presence in department stores. The company intends to be inspired by the approach used in Canada, where DavidsTea products are stocked in more than 3,300 supermarkets and pharmacies.

Sarah Segal also wants to improve brand awareness and the online shopping experience. She believes the loyalty and rewards program has great potential to increase sales.

She also talks about a partnership beginning this month with Lululemon in Boston, offering drinks in pop-up stores (Pop Up Blinds). She points out that this is a test. “We’ll see what happens next,” she said.

Sales under pressure

Sales recovery remains a priority. They were down 12% at the start of the fiscal quarter this year. Sales fell 15% in 2021 after already falling 38% in 2020.

Sarah Segal isn’t ready to set sales targets for the next few years. Still, she speaks confidently about strategy and feels very comfortable with the company’s positioning.

“People are becoming more interested in their well-being. We have a product that is good for your health. We are in a good place to keep growing. I’m very confident,” she says.

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