Rocky Mountain Chocolate Factory Reports $7.9M Revenue and $847K Net Loss for Quarter Ended November 30, 2024

Rocky Mountain Chocolate Factory, Inc. reported a total revenue of $7.9 million for the three months ended November 30, 2024, reflecting a 2.5% increase from $7.7 million in the same period last year. The company's revenue for the nine months ended November 30, 2024, remained stable at $20.7 million, slightly down from $20.7 million in the prior year. The company experienced a net loss of $847,000 for the quarter, compared to a loss of $757,000 in the same quarter of the previous year. For the nine-month period, the net loss increased to $3.2 million from $2.6 million year-over-year.

The company’s financial performance was impacted by various factors, including increased costs of sales, which rose to $6.0 million for the quarter, up from $5.8 million a year earlier. General and administrative expenses also increased to $1.4 million from $1.3 million. The gross margin percentage for the quarter was 10.0%, slightly down from 10.2% in the prior year. The company attributed the decline in profitability to rising raw material and labor costs, which have been exacerbated by inflationary pressures and supply chain disruptions.

In terms of strategic developments, Rocky Mountain Chocolate Factory completed the sale of its U-Swirl subsidiary in May 2023, which has since been reported as discontinued operations. The divestiture was part of a strategy to focus on its core confectionery business. Additionally, the company entered into a new credit agreement in September 2024, securing $6.0 million to support ongoing operations and capital investments. The proceeds from this agreement were used to pay off a previous credit facility and to bolster working capital.

Operationally, the company reported a total of 264 stores operating under its brand as of November 30, 2024, a decrease from 269 stores at the end of the previous fiscal year. The company’s franchise and royalty fees generated $1.2 million in the latest quarter, down from $1.3 million a year prior, reflecting changes in franchise agreements. The company continues to explore opportunities for geographic expansion and new franchise openings, although it faces challenges related to site availability and franchisee recruitment.

Looking ahead, Rocky Mountain Chocolate Factory expressed caution regarding its ability to continue as a going concern, citing ongoing losses and cash flow challenges. The company plans to focus on reducing overhead costs, improving manufacturing efficiencies, and increasing sales through its e-commerce channel. Management remains optimistic about leveraging the holiday season for increased sales but acknowledges the risks associated with market conditions and operational execution.