Teavana Holdings, Inc. today announced financial results for the third quarter fiscal 2012 period ended October 28, 2012.

Highlights for the third quarter:

• Net sales increased by 38% to $46.0 million from $33.4 million in the third quarter of fiscal 2011. Net sales for the quarter include $4.1 million of net sales from the 46 Teaopia stores acquired on June 11, 2012.
• The Company opened 17 new stores to end the period with 301 company-owned stores.
• Comparable sales increased by 0.4%. Comparable sales include e-commerce and exclude the acquired Teaopia stores.
• Loss from operations, which includes a loss from Teaopia of $1.7 million and $0.4 million in other one-time expenses, was $2.2 million compared to income from operations of $1.6 million in the third quarter of fiscal 2011. The Teaopia loss was driven by a$1.4 million loss from operations and $0.3 million in one-time transaction and integration expenses. The other one-time expenses include transaction costs related to the pending Starbucks acquisition and set-up costs for our international entity.
• Net loss, which includes a loss from Teaopia of $1.0 million after tax and $0.2 million after tax in other one-time expenses, was$1.4 million as compared to net income of $0.9 million in the third quarter of fiscal 2011. The Teaopia loss was driven by a $0.8 million after tax loss from operations and $0.2 million after tax in one-time transaction and integration expenses. The other one-time expenses include transaction costs related to the pending Starbucks acquisition and set-up costs for our international entity.
• Net loss per diluted share, which includes a loss from Teaopia of $0.03 per diluted share and $0.01 per diluted share in other one-time expenses, was $0.04 per diluted share as compared to net income per diluted share of $0.02 in the third quarter of fiscal 2011. The Teaopia loss was driven by a $0.02 per diluted share loss from operations and $0.01 per diluted share in one-time transaction and integration expenses. The other one-time expenses include transaction costs related to the pendingStarbucks acquisition and set-up costs for our international entity.

Andrew Mack, Chairman and CEO, stated: “We continued to show progress in the third quarter with sales growth of 38%, the successful conversion of the remaining 44 Teaopia stores to Teavana stores and strong performance of our new stores with non-comp store productivity excluding Teaopia rising to 82% of comp store productivity. In addition, the first Teavana store in theMiddle East under our Alshaya franchise agreement opened early in the fourth quarter with week one sales results that exceeded any we have seen in our company’s history. Of course, we were also thrilled to announce in November our pending acquisition byStarbucks. We have great respect for what Howard Schultz and his team have built at Starbucks and believe that with Starbucks we will be able to truly realize our global potential and fulfill our mission of bringing premium tea to millions of people across the world.”

Highlights for fiscal year-to-date:

• Net sales increased by 34% to $133.4 million from $99.7 million in the prior year period. Net sales include $6.2 million of net sales from the 46 Teaopia stores acquired on June 11, 2012.
• The Company opened 55 new stores and acquired 46 Teaopia stores to end the period with 301 company-owned stores.
• Comparable sales increased by 1.8%. Comparable sales include e-commerce and exclude the acquired Teaopia stores.
• Income from operations, which includes a loss from Teaopia of $4.0 million and $0.5 million in other one-time expenses, was$3.7 million as compared to $10.4 million in the prior year period. The Teaopia loss was driven by a $2.2 million loss from operations and $1.8 million in one-time transaction and integration expenses. The other one-time expenses include transaction costs related to the pending Starbucks acquisition and set-up costs for our international entity.
• Net income, which includes a loss from Teaopia of $2.4 million after tax and $0.3 million after tax in other one-time expenses, was $1.9 million as compared to $5.3 million in the prior year period. The Teaopia loss was driven by a $1.3 million after tax loss from operations and $1.1 million after tax in one-time transaction and integration expenses. The other one-time expenses include transaction costs related to the pending Starbucks acquisition and set-up costs for our international entity.
• Net income per diluted share, which includes a loss from Teaopia of $0.06 per diluted share and $0.01 per diluted share in other one-time expenses, was $0.05 per diluted share as compared to $0.14 per diluted share in the prior year period. The Teaopia loss was driven by a $0.03 per diluted share loss from operations and $0.03 per diluted share in one-time transaction and integration expenses. The other one-time expenses include transaction costs related to the pending Starbucks acquisition and set-up costs for our international entity.

Balance sheet highlights as of October 28, 2012:

• The Company had $19.6 million in credit facility borrowings and $29.7 million of availability on the credit facility at the end of the third quarter of fiscal 2012, compared to $4.5 million in borrowings and $35.3 million of availability at the end of the third quarter of fiscal 2011.
• Inventory was $34.6 million at the end of the third quarter of fiscal 2012, compared to $32.5 million at the end of the third quarter of fiscal 2011.

Outlook:

Due to the pending acquisition by Starbucks, no guidance is being provided.