Good morning, ladies and gentlemen. Welcome to DAVIDsTEA's First Quarter earnings webcast for Fiscal 2023. 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 presentation 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 presentation 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 the Canadian regulatory authorities and is available on www.sedar.com, as well as in the Investor Relations section of the company's website at www.davidstea.com.
The 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 on this call, a 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 Canadian dollars unless otherwise indicated. Now, I would like to turn the call over to Sarah Segal, Chief Executive Officer and Chief Brand Officer of DAVIDsTEA.
Thank you, operator. Good morning, everyone. Our path towards profitability continues, and although consumer confidence continued to be dampened by challenging economic conditions in the first quarter of Fiscal 2023, we are encouraged by the early results of our cost containment plan that should deliver between CAD 8 million- CAD 10 million in annual cost savings. SG&A expenses in the first quarter decreased nearly 22% year-over-year, mainly due to a reduction in online marketing expenses, lower software implementation costs, and payroll savings related to the streamlining of our operations. Aligning our cost structure with a lower revenue run rate not only accelerates our return to profitability, but also narrows our strategic focus on value creation initiatives that will drive sales growth.
Key initiatives that we have prioritized include, first, improving the online customer experience through updated Product Detail Pages or PDPs by providing more information, storytelling, easy-to-find instructional how-to videos, and clear product information to support both in-store and online purchases, as well as the upcoming release of a mobile app. These efforts are part of our digital-first growth strategy to increase sales in this current environment. Second, we aim to expand our wholesale footprint into the U.S. this fall. If you recall, last quarter, we announced our intention to launch six SKUs of flavorful sachet packs at more than 400 grocery stores in the northeastern U.S.. Preparations are intensifying for a September rollout, but we are adopting a gradual step-by-step approach to address the U.S. wholesale market.
Aligned with our expansion south of the border, we signed a distribution agreement with a large wholesale distributor of Health and Specialty Foods in the U.S., supplying National and Regional Grocery chains. Third, we plan on strengthening our flagship model with a launch of renovated retail stores in Canada in 2023, and freshen up other stores within the DAVIDsTEA portfolio to support our growth strategy. Already, we have fully remodeled our store at Les Galeries de la Capitale in Quebec City, with an open table concept and focus on new beverage offerings at our Tea bar, while another renovation effort is scheduled at our Sherway Gardens in Etobicoke, Ontario.
In a post-pandemic environment, we recognize that consumers are increasingly seeking sensory-rich experiences by touching and tasting our products, so DAVIDsTEA has responded with a revised strategy of investing in the brick-and-mortar space, with a renewed brand experience in select Canadian markets. Finally, we seek to fuel innovation through an enhanced product offering, featuring seasonal and organic loose leaf teas, ready-to-drink beverages, Tea Pops, Superfood powder drinks, along with Matcha lattes and Lemonades. We expect these additions to our premium product offerings will attract a broader segment of consumers to DAVIDsTEA and further entrench loyalty with existing ones. We believe these revenue-generating actions, combined with customer awareness and acquisition activities, improved customer satisfaction, and ongoing financial discipline, are necessary measures that will allow us to achieve profitable growth. In closing, I would like to thank all our incredible team members for their dedication and entrepreneurial spirit.
I have full confidence that the entire DAVIDsTEA team is up to the challenge of returning the company to profitability. Thank you for your attention today. I will now turn the call over to Frank.
Thank you, Sarah, and good morning, everyone. Sales decreased 29.4% year-over-year to CAD 14.3 million in the first quarter of 2023, as inflationary pressure and higher interest rates continued to undermine consumer sentiment across all channels and regions. E-commerce sales declined 40.6%, or CAD 5.3 million, to CAD 7.6 million in the first quarter, as we witnessed an ongoing leveling out of pandemic-fueled online sales, in addition to the impact of consumer losses resulting from order fulfillment challenges experienced in the fourth quarter, which left many consumers frustrated and from which we have not recovered. Wholesale channel sales, meanwhile, dropped 11.1%, or CAD 0.3 million year-over-year, to CAD 2.4 million in the first quarter.
This channel is impacted by the lumpiness of large customer order deliveries, as revenues are recognized upon receipt in the customer's distribution centers. We're thrilled by the entry into the U.S. marketplace this fall, and we anticipate growing into that space thereafter. For their part, brick-and-mortar sales decreased 8.5% or CAD 0.4 million to CAD 4.3 million in Q1 of 2023. From a geographic perspective, sales in Canada declined 26.5% year-over-year to CAD 12.2 million in the first quarter, while U.S. sales fell 42.5% to $2.1 million during the same period. Canada accounted for 85% of total sales in the first quarter versus 15% for the U.S..
Gross profit decreased 29.7% to CAD 5.8 million in Q1 2023, mainly due to lower combined sales with higher per unit freight, shipping, and fulfillment costs. Gross profit as a percentage of sales remained relatively stable at 40.3% for the quarter, compared to 40.5% in Q1 2022. As Sarah indicated, we are encouraged by the impact of our cost containment plan on SG&A expenses. SG&A dropped 21.9% year-over-year to CAD 7.9 million in Q1 2023, from CAD 10.1 million in the same period of 2022. As a percentage of sales, SG&A expenses rose to 54.9% in Q1 2023, from 49.5% in Q1 2022, due to lower absorption of fixed costs from reduced sales in the quarter.
Adjusted EBITDA in the first quarter of 2023 was negative CAD 0.9 million, compared to CAD 0.1 million in Q1 of 2022. The CAD 1 million decrease in Adjusted EBITDA reflects the year-over-year impact of reduced sales and gross profit, partially offset by lower SG&A expenses. Net loss remained flat year-over-year at CAD 2 million. At the end of the first quarter, we had a cash position of CAD 19.6 million and no debt to help us manage through this volatile environment. On the operations side, we recently reached an important decision to bring order fulfillment back in-house to better support the sales efforts that Sarah outlined earlier. Internalizing our order fulfillment process will help us create that elevated brand experience consumers have come to expect from DAVIDsTEA.
Beginning next month, company staff will take great pride in fulfilling customer orders, ensuring the brand experience is significantly improved end-to-end. Despite a challenging environment, we remain focused on creating shareholder value for all. A motivated and entrepreneurial team that is market-driven, we will continue to anticipate and react to changing market conditions with speed and agility, with a mission to make tea fun and accessible to all. This concludes our comments for Q1 of 2023. We encourage investors wishing to obtain additional color on the quarter to contact Investor Relations at investors@davidstea.com, and they will coordinate access to management. On behalf of the entire DAVIDsTEA team, thank you for joining us today.