Rocky Mountain Chocolate Factory reports Q1 2025 results

Rocky Mountain Chocolate Factory Inc., an international franchisor and producer of premium chocolates and other confectionery products including gourmet caramel apples, has reported financial and operating results for its fiscal first quarter ended May 31.

“We are in the midst of a pivotal transition as we revamp the framework of our previous transformation plan and the leadership team to execute it,” says Interim CEO Jeff Geygan. “The board of directors has outlined a clear mandate to identify and rectify deficiencies in our prior multi-year strategy, improve our near-term liquidity position, return our retail store count to growth as we exit Fiscal 2025, and establish a solid foundation to execute our three-year targets.

“Our revised strategy will more effectively align sales, marketing, and production to drive the expansion of our store network and increase factory throughput with targeted capital investments. This alignment will ensure timely delivery of products and services across all of our sales channels, including specialty market retail and co-brand partners, E-Commerce, and most importantly, our franchisee network."

“Supporting our franchisee network is our top priority. We are deploying dedicated RMCF business consultants nationwide with a mandate to work with existing franchisees to implement optimization strategies and to help franchisees operate more effectively through enhanced marketing, merchandizing, and improved customer experiences, backed by data-driven insights and analytics. We anticipate returning to same-store-sales growth in Fiscal 2025 and setting the stage to expand our total store count for the first time in many years, concurrent with our brand update which will be completed later this year. We are in the process of signing agreements for several new store and kiosk design concepts to be deployed in streetside, outdoor mall, and domestic airport locations."

“Investments in production and supply chain improvements are also essential to our sustained long-term growth. The Company’s performance during the 2024 holiday season highlighted the need for strategic changes. With over $3 million having been committed to new equipment and production efficiencies, we are continuing to improve product quality, predictability, and cost-effectiveness at our Durango production facility. We recently sold a parcel of land for nearly $1 million to partially finance these investments, adding to our overall liquidity through the ongoing sale of non-core assets. We are actively working with credit facility providers to increase our total working capital availability as well."

“Looking ahead, we have set ambitious financial and operational targets for our team. By the end of Fiscal 2025, we expect our gross margin to be at levels near historic averages, and achieve an adjusted EBITDA close to breakeven. By the end Fiscal 2027, we plan to exceed 30% gross margins and achieve a 10-12% adjusted EBITDA margin. We are prepared to announce the appointment of a new CFO who will be based in Durango and work daily from our production facility. Rocky Mountain Chocolate Factory continues to have a well-recognized brand, a very loyal consumer following and a resilient base of franchisees upon which to build. Despite the many challenges from the past year, we have a clear and actionable plan to return RMCF to growth and profitability," Geygan finishes.

Fiscal Q1 2025 financial results vs. year-ago quarter:

Total revenue was $6.4 million in the first quarter of 2025, which was essentially flat compared to the prior year. Durango product and retail sales increased $0.3 million, while royalty and marketing fees decreased by a similar amount.
Total product and retail gross profit was $(0.3) million in the first quarter of 2025 compared to $0.3 million, with gross margin of (5.8)% compared to 5.1%. The decrease was primarily due to higher raw materials and labor costs.
Total operating expenses were $8 million in the first quarter of 2025, which was essentially flat compared to the prior year.
Loss from continuing operations was $1.6 million or $(0.26) per share in the first quarter of 2025, compared to a loss from continuing operations of $0.8 million or $(0.24) per share.