Rocky Mountain Chocolate Factory, Inc. SEC 10-Q Report

Rocky Mountain Chocolate Factory, Inc., a leading manufacturer and retailer of premium chocolates and other confectionery products, has released its Form 10-Q report for the second quarter of fiscal year 2025. The report highlights the company's financial performance and operational activities, reflecting both challenges and strategic initiatives aimed at improving profitability and growth.

Financial Highlights

• Total Revenue: $6.373 million, a slight decrease of 0.5% compared to the same period last year, primarily due to the non-renewal of an unprofitable contract.
• Gross Profit: $0.326 million, a significant improvement from a loss of $0.307 million in the prior year, marking a 206.2% increase due to the cancellation of certain unprofitable contracts and adjusted sales prices.
• Operating Loss: $0.145 million, a substantial reduction from an operating loss of $1.630 million in the prior year, indicating enhanced operational efficiency and cost management.
• Net Loss: $0.324 million, down from a net loss of $1.658 million in the prior year, reflecting better cost control and improved gross margins.
• Basic Loss per Common Share: $(0.04), an improvement from a loss of $(0.26) per share in the prior year, indicating a reduction in losses per share.

Business Highlights

• Revenue Segments: The company reported revenue from three main segments: Franchising ($1,655,000), Manufacturing ($4,399,000), and Retail ($319,000) for the three months ended May 31, 2025. This reflects a focus on franchise fees, product sales, and retail operations.
• Sales Units: The company operates 2 company-owned stores, 136 domestic franchise stores, 3 international license stores, 104 co-branded Cold Stone Creamery locations, and 10 co-branded SWRL locations as of May 31, 2025. This indicates a slight decrease in total store count from 260 to 255 due to closures.
• Operational Efficiency: The company has been rationalizing product offerings to improve production efficiencies and has adjusted sales prices to achieve targeted margins. This is part of their strategy to enhance profitability.
• Franchise Network Support: Increased franchise costs were incurred to create a support framework for the franchise network, reflecting the company's commitment to strengthening its franchise operations.
• Cost Management: The company implemented cost-cutting measures in sales and marketing, as well as general and administrative expenses, which contributed to a reduction in overall costs and expenses.
• Future Outlook: The company plans to focus on increasing sales of premium chocolate products, supporting franchisees to boost customer visits and transaction values, and expanding e-commerce and new franchise store growth. They also aim to reduce overhead costs and improve manufacturing efficiencies.
• Seasonality Impact: The company experiences seasonal fluctuations in sales, with stronger sales during key holidays and summer vacation seasons. This seasonality affects quarterly results and is a key consideration in operational planning.

SEC Filing: Rocky Mountain Chocolate Factory, Inc. [ RMCF ] - 10-Q - Jul. 15, 2025