EPS of $-0.11 increased by 31.3% from previous year
Gross margin of 16.9%
Net income of -722.00K
""With the holiday season quickly approaching, we're carefully managing our inventory to meet the demands of each RMCF franchisee." - Jeff Geygan" - Jeff Geygan
In Q2 2025, Rocky Mountain Chocolate Factory (RMCF) reported total revenues of $6.4 million, down 2.71% from $6.6 million in the previous year. The company's net loss reduced to $722,000 ($0.11 EPS), improving from a loss of $1 million ($0.16 EPS) in Q2 2024. Despite these losses, management highlighted strategic progress on store expansions and rebranding efforts aimed at enhancing profitability. With growing pipeline opportunities and effective cost control measures, RMCF is optimistic about laying a foundation for sustainable growth and restoring fiscal health in the upcoming quarters.
Key Performance Indicators
Revenue
6.38M
QoQ: -0.42% | YoY:-2.71%
Gross Profit
1.08M
16.90% margin
QoQ: 2 664.10% | YoY:-17.84%
Operating Income
-914.00K
QoQ: 43.93% | YoY:9.57%
Net Income
-722.00K
QoQ: 56.45% | YoY:27.75%
EPS
-0.11
QoQ: 57.69% | YoY:31.25%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $6.4 million (YoY: -2.71%, QoQ: -0.42%)
Gross Profit: $1.1 million (Gross Margin: 11.5% vs 7.7% YoY)
Net Income: -$722,000 (compared to -$1 million, YoY improvement)
Operating Expenses: $7.3 million, a reduction from $7.6 million YoY.
Significant management emphasis was placed on improving operational efficiencies and increasing product pricing as catalysts for gross margin improvement.
Financial Highlights
RMCF's performance highlights include:
- Revenue: $6.4 million (YoY: -2.71%, QoQ: -0.42%)
- Gross Profit: $1.1 million (Gross Margin: 11.5% vs 7.7% YoY)
- Net Income: -$722,000 (compared to -$1 million, YoY improvement)
- Operating Expenses: $7.3 million, a reduction from $7.6 million YoY.
Significant management emphasis was placed on improving operational efficiencies and increasing product pricing as catalysts for gross margin improvement.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
6.38M
-2.71%
-0.42%
Gross Profit
1.08M
-17.84%
2 664.10%
Operating Income
-914.00K
9.57%
43.93%
Net Income
-722.00K
27.75%
56.45%
EPS
-0.11
31.25%
57.69%
Key Financial Ratios
currentRatio
1.24
grossProfitMargin
16.9%
operatingProfitMargin
-14.3%
netProfitMargin
-11.3%
returnOnAssets
-3.42%
returnOnEquity
-6.86%
debtEquityRatio
0.47
operatingCashFlowPerShare
$-0.53
freeCashFlowPerShare
$-0.69
priceToBookRatio
1.18
priceEarningsRatio
-4.28
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key themes from management included:
1. Strategic Store Openings: "We're targeting new stores across various strategic markets..." - Jeff Geygan, CEO. This reflects RMCF's commitment to expansion beyond its current footprint.
2. Employee Retention & Efficiency: "The level of retention is dramatically higher..." - Jeff Geygan discussing wage increases leading to less turnover, crucial for operational stability.
3. Liquidity Improvement: "We announced a new $6 million three-year credit facility..." - A proactive strategy to manage debt and enhance capital.
"With the holiday season quickly approaching, we're carefully managing our inventory to meet the demands of each RMCF franchisee." - Jeff Geygan
â Jeff Geygan
"We're pleased to share that Rocky Mountain Chocolate Factory has been included in the Franchise 400 for 2024..." - Jeff Geygan
â Jeff Geygan
Forward Guidance
Management's outlook indicates a cautious but positive outlook for fiscal 2025, with strategic investments in inventory management and a planned launch of a new ERP system, aiming to boost efficiencies. The execution of new store openings and improvements in e-commerce are positioned as key drivers for revenue growth as the franchise network expands.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
RMCF Focus
16.90%
-14.30%
-6.86%
-4.28%
MDLZ
33.50%
10.20%
2.17%
36.45%
TR
33.50%
10.20%
1.86%
33.24%
LDSVF
69.20%
13.20%
5.03%
2.81%
BRRLY
0.00%
0.00%
0.00%
0.00%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
RMCF's current financial position indicates a company in recovery, with improved gross margins and a strategic focus on expansion and e-commerce initiatives expected to enhance revenue as the brand matures. Although faced with challenges, the reduction in net loss and positive management strategies present a cautiously optimistic outlook for investors considering potential long-term gains.
Key Investment Factors
Growth Potential
RMCF aims to expand its footprint by opening new stores in strategic locations such as the Northeast, which has been largely untapped. Improved operational efficiencies and rebranding efforts are projected to increase customer engagement and franchise attractiveness.
Profitability Risk
The company continues to face risks from high employee turnover historically, along with challenges in supply chain logistics for holiday inventory management. Also, potential volatility in consumer discretionary spending could impact sales in the confectionery market during economic downturns.
Financial Position
RMCF's financial position shows a total debt of $4.9 million against total assets of $21.1 million, reflecting a relatively moderate debt level compared to its overall asset base. However, liquidity concerns remain with a current ratio of 1.24 and a cash balance of $1 million.
SWOT Analysis
Strengths
Strong brand recognition in the premium chocolate segment
Diverse product offerings including a variety of flavors and experiences for franchisees
Recognition in Franchise 400 enhances franchisee confidence and brand prestige
Weaknesses
Ongoing net losses indicating challenges in profitability
High employee turnover impacting operational consistency and efficiency
Opportunities
Expansion into untapped Northeastern markets aligning with consumer demographics
Improvement in e-commerce channels as a revenue growth driver
Strategic partnerships and alliances to enhance product accessibility
Threats
Increased competition in the confectionery market from established players like Mondelez and Hershey
Economic instability potentially impacting consumer discretionary spending on premium products