Rocky Mountain Chocolate Factory ((RMCF)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Rocky Mountain Chocolate Factory revealed a slightly positive sentiment with a cautious tilt towards optimism. While the company showcased promising growth in revenue and e-commerce, successful strategic initiatives, and a stronger executive team, challenges such as margin pressures, increased costs, and a net loss were also highlighted. These elements contribute to a balanced outlook that leans towards optimism as the company continues to advance strategically.
Revenue and E-commerce Growth
During the third quarter of 2025, Rocky Mountain Chocolate Factory experienced a revenue boost, with total revenue reaching $7.9 million, up from $7.7 million in the same period last year. Notably, e-commerce sales nearly tripled during October, November, and December compared to the previous year, marking a significant success in their online sales strategy.
New Store Openings and Franchise Model Improvements
The company is focusing on expansion with plans for two new stores and one kiosk in Chicago, Charleston, and Brandon. These developments are supported by existing franchisees who have validated the improved store design and business model. This strategic move is expected to rejuvenate growth in franchise stores, reversing a decade-long stagnation.
Successful ERP System Launch
A new ERP system was launched on January 6, which is anticipated to streamline cost management, minimize manual errors, and enhance strategic decision-making through real-time insights. This technological advancement is a key component in the company’s strategy to improve operational efficiency.
Holiday Season Fulfillment Success
The company successfully fulfilled nearly 100% of franchisee and specialty market demand during the holiday season, a noteworthy improvement from the previous year. This achievement highlights significant progress in the company’s supply chain and operational capabilities.
Executive Team Strengthening
Strategic hires, including a new VP of Franchise Business Support and VP of Marketing, have strengthened the executive team. With the team build-out now complete, the company is well-positioned to execute its long-term vision and strategic goals.
Flat Gross Profit and Margins
Despite the revenue growth, total product and retail gross profit remained flat at $0.7 million, with gross margins slightly decreasing to 10% from 10.2%. This decline is attributed to higher supply, third-party vendor, and labor costs.
Increased Costs and Expenses
The company reported an increase in total costs and expenses to $8.6 million from $8.5 million in the prior year, partly due to nonrecurring professional expenses. Managing these rising costs remains a focal challenge.
Net Loss and Debt Increase
Rocky Mountain Chocolate Factory recorded a net loss of $0.8 million or $0.11 per share for the quarter. Additionally, long-term debt increased to $6 million from a debt-free position at the end of the previous fiscal year, indicating a shift in financial dynamics.
Continued Margin Pressures
The company continues to face pressure on gross and operating margins due to various transitory issues. However, efforts are underway to address these challenges, with anticipated improvements expected in upcoming quarters.
Forward-looking Guidance
Looking ahead, Rocky Mountain Chocolate Factory has outlined several strategic initiatives and financial goals. With plans for new store openings and a focus on enhancing average unit volume and franchisee network quality, the company is poised for growth. The introduction of a new ERP system is expected to bolster cost management and strategic decision-making. Ongoing rebranding efforts aim to increase franchisee interest and enhance customer experience, setting a positive trajectory for future quarters.
In summary, the earnings call for Rocky Mountain Chocolate Factory reflects a slightly positive sentiment with strategic advancements in e-commerce and store expansions. While challenges persist with margins and costs, the company’s proactive measures and strategic hires position it for future success. Investors and stakeholders can expect continued efforts to address current financial pressures and drive growth through strategic initiatives.
