Rocky Mountain Chocolate Factory Inc. reported a slimmer loss for its fiscal second quarter ending in August, with signs of progress in revitalizing the chocolate maker’s financial standing.
For the period ending Aug. 31, the Durango-based confectionery,reported a net loss of $700,000, or $0.11 per share, an improvement over the $1 million, or $0.16 per share, loss in the same quarter last year.
Revenue slightly declined to $6.4 million, compared with $6.6 million last year. Gross profit rose to $600,000, with an improved gross margin of 11.5% compared to 7.7% a year prior, a positive signal attributed to price increases and better operational efficiencies.
Operating expenses fell to $7.3 million, down from $7.6 million in the previous year’s quarter.
Interim CEO Jeff Geygan highlighted the progress made as the company works to execute its multiyear strategic plan.
“We have been focused on several critical areas of the business: strengthening the company’s liquidity, rebuilding a strong executive team, expanding our franchise network, and laying a solid foundation for sustainable growth and profitability,” Geygan said in a news release.
In tandem with financial adjustments, Rocky Mountain Chocolate Factory has made strides in expanding its franchise presence. It plans to open a new store in Edmond, Oklahoma, next month, part of a push into eight targeted U.S. markets.
Before the quarter ended, the company reported strengthening its financial position by securing a $6 million credit facility, which allowed it to retire its previous $4 million facility. A credit facility is a loan arrangement that enables the borrower to access funds over a set period without reapplying for a new loan each time, offering greater financial flexibility.
“With a strengthened balance sheet, improved liquidity and a committed franchise network, we believe we are well-positioned to execute our three-year strategic plan and drive RMCF toward sustainable growth and profitability,” Geygan said.
Additionally, new franchise agreements are expected to materialize in the coming weeks, and the company is nearing completion of a rebranding effort to debut a refreshed store design by the end of the year.
The company has also been making strides taking on local investors in the community. In August, the company sold about 13% of its shares to American Heritage Railways which owns the Durango & Silverton Narrow Gauge Railroad, Old Tucson and Branson Scenic Railway, among other tourist attractions.
With these moves, the company hopes to pave the way for steady revenue growth and profitability.
RMCF continues its bid to recover from a prolonged decline in stock value, following a five-year peak of $9.16 per share in January 2020. As of the market’s close on Friday, shares traded at $3.18, marking a rebound from a particularly challenging August, where prices had slumped to a low of $1.53 per share.
The modest uptick signals optimism for the company.
The year 2024 has remained challenging for the company, with its share price still below the $4 mark it held in October 2023.
tbrown@durangoherald.com
