From the store layout to the sales systems to their heavenly names, Atlanta-based tea retailer Teavana has much in common with the Canadian company it announced on Monday that it is acquiring.
Despite the similarities, Teaopia's 46 stores don't make as much money as Teavana's do. And Canadians drink twice as much tea per capita as Americans do, the Atlanta company said. So Teavana, which started expanding into Canada late last year, believes there is plenty of room for improvement and for growth.
In a company conference call, Teavana chairman and CEO Andrew Mack said the Teaopia's average store revenue in its mall locations is less than half that of Teavana's, but that those Canadian locations are much of the appeal of the acquisition.
"You heard us say how important the right location within the right mall is for Teavana and how securing these premier locations is a critical piece of our strategy," Mack said. "With the Teaopia acquisition, we are instantly securing these prime locations in the Canadian market as the deal catapults us into the attractive locations."
Teavana, which went public last summer, paid $26.9 million for Teaopia. It said it expects integration costs to be low, as the companies share similar store layouts and operate on the same sales systems.
In a research note, Stifel Nicolaus analyst David Schick said the acquisition was a healthy one for the company as it expands internationally.
Teavana last September announced that it would open franchise stores in the Middle East. The company earlier had called international expansion a priority and described Canada as an attractive market and a logical first step for company-owned stores outside the U.S. By 2015, Teavana plans to have 500 locations; it currently has more than 200 stores.
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