Rocky Mountain Chocolate Factory saw an 11% revenue increase during its third fiscal quarter, according to an earnings report.
Total revenue increased to $9.5 million for the three months – September through November – compared to $8.5 million for the same quarter in 2021. Total gross profit also increased 17% to $2.1 million compared to the third fiscal quarter of 2021.
“Our fiscal Q3 was highlighted by our strongest third quarter of sales since 2017, as well as our strongest third quarter of adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) since 2020,” said Rob Sarlls, CEO of Rocky Mountain Chocolate Factory in a news release. “We also generated record sales at our flagship Durango store, which was up 34% year-over-year for the quarter.”
Sarlls said later in an interview that the Durango flagship store’s success was a result of the company’s more concerted effort with the Durango location, appointing a new operations manager and better tourism during the fall months.
He cited an uptick in COVID-19 cases during 2021 as a reason that the Durango location sales could’ve been lower during the previous third fiscal quarter.
An even more surprising number was that the company’s loss from operations reduced significantly to $212,000 compared to $2 million during the same time last year.
The decrease was primarily driven by lower costs associated with the contested solicitation of proxies, as well as increased operational efficiencies. A proxy contest is a campaign to solicit votes in opposition to management at an annual stockholder meeting or through action by written consent.
In December, the company entered a standstill agreement until 2025 with dissident shareholders and as the result of a lawsuit against AB Value/Radoff Group being dismissed.
Sarlls said future quarters are sure to look better in the loss from operations category because the company is no longer fighting an expensive legal battle.
Overall, Sarlls attested the company’s improved third quarter to a better-than-expected uptick in holiday purchases, social media marketing campaigns and the ability to keep stores stocked with product.
“We are still underway with developing and deploying our strategic transformation, however these early wins are very encouraging and indicate that we are on the right path,” said Sarlls in a news release Thursday. “We plan to continue fostering dialogue with all of our stakeholders as we develop and finalize our strategic plan in the weeks ahead.”
The company is trying to strengthen existing franchisee relationships and expand efforts to attract new ones. Part of the plan has been to reinvest in the Durango flagship store and renew its commitment to community outreach.
tbrown@durangoherald.com
