Teavana announces Middle East expansion

By Arielle Kass

The Atlanta Journal-Constitution

In its first earnings announcement as a public company, Atlanta-based Teavana reiterated its plans to get much bigger.

The tea retailer intends to more than double its number of U.S. stores by 2015, to 500 retail locations. It announced a franchise agreement to open stores in the Middle East in 2012. And it's hiring.

Teavana went public Aug. 2, but the company was founded in 1997. Its sales grew 36 percent in the second quarter over the same period a year ago, and chairman and CEO Andrew Mack said in a conference call that he is "incredibly excited" about Teavana's growth prospects.

"We're establishing such a strong base on which we can build," he said.

Teavana already has a franchise agreement with a company that operates its stores in Mexico, and the 10-year franchise development agreement with Alshaya, an international franchise operator, will allow stores to be developed in Bahrain, Kuwait, Saudi Arabia, Qatar, United Arab Emirates, Egypt, Lebanon and Jordan. Alshaya also franchises brands such as Starbucks and Pottery Barn.

The company has 179 U.S. stores, all of which are profitable on an annualized basis, Mack said. The average amount that customers are spending at Teavana has risen 11 percent, even as the number of sales per store has slipped.

Executive vice president and chief financial officer Daniel Glennon said in the call that the company is more able to control what people spend when they are at Teavana than they are able to control who goes into malls.

He said, too, that he sees an opportunity for Teavana to invest in ways to build awareness of the brand.

"We have no marketing department," he said. "We have no customer loyalty program. We are very focused on making an investment in those areas, to do it right."

A spokeswoman confirmed that the company is recruiting a vice president of marketing, but said it was too soon to discuss plans for additional marketing hires.