Rocky Mountain Chocolate Factory, Inc. reported a slight decline in total revenue for the three months ended May 31, 2025, with figures reaching $6.373 million compared to $6.407 million in the same period last year, marking a decrease of 0.5%. The company's sales from its Durango production facility and retail operations fell by 10.6% to $4.718 million, primarily due to the non-renewal of an unprofitable contract with a specialty market customer. However, franchise and royalty fees increased significantly, rising by 53% to $1.619 million, attributed to higher sales from products made in-store by franchisees.
In terms of profitability, Rocky Mountain Chocolate Factory reported a net loss of $0.324 million for the quarter, a notable improvement from a loss of $1.658 million in the prior year. The operating loss also decreased from $1.630 million to $0.145 million, reflecting a reduction in total costs and expenses, which fell by 18.9% to $6.518 million. The gross margin percentage improved to 6.9%, up from a negative 5.8% in the previous year, largely due to the cancellation of unprofitable contracts and adjustments in sales prices aimed at achieving targeted margins.
Operationally, the company maintained a total of 255 stores as of May 31, 2025, with a slight reduction in franchise locations due to the closure of three domestic stores. The company continues to focus on enhancing its franchise support framework and increasing the frequency of customer visits to drive sales. The total employee headcount remained stable, with no significant changes reported during the quarter.
Looking ahead, Rocky Mountain Chocolate Factory faces challenges from inflationary pressures affecting raw materials, labor, and logistics, which could impact future sales and profitability. The company is exploring strategies to strengthen its liquidity position and ensure compliance with its debt financing covenants, particularly in light of its $6 million credit agreement with RMC Credit Facility, LLC. Management remains optimistic about leveraging the upcoming holiday season and expanding e-commerce sales to bolster revenue, although they acknowledge the inherent risks associated with market conditions and operational execution.
About Rocky Mountain Chocolate Factory, Inc.
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