Overview of Rocky Mountain Chocolate Factory, Inc.
Rocky Mountain Chocolate Factory, Inc. (NASDAQ: RMCF) revealed a loss per share of 26 cents in the first quarter of fiscal 2025, widening from 13 cents per share in the same period a year ago.
Decline in Revenues
During the fiscal first quarter, Rocky Mountain reported revenues of $6.4 million, down 0.5% compared to the previous year. The decrease was attributed to lower revenue from royalty and marketing fees.
Revenue Breakdown by Segment
Revenue sources for Rocky Mountain include Durango product and retail sales, franchise fees, and royalty and marketing fees. Durango product and retail sales brought in $5.3 million, a 5.2% increase driven by improved franchisee demand and inventory management.
Franchise fees generated $0.1 million, up 55.6% year over year due to store ownership transfer fees. Meanwhile, Royalty and marketing fees contributed $1.1 million, a 23.1% decline due to fewer stores subject to royalty fees.
Stock Performance and Analysis
Rocky Mountain’s stock price shows mixed performance in line with quarterly results.
Gross Margin and Operating Expenses
In the first quarter, the company’s gross margin shrank to (5.8)% from 5.1% in the same period last year due to rising raw material and labor costs.
Sales and marketing expenses reduced by 9.1% to $0.4 million, while general and administrative costs decreased by 35.9% to $1.2 million.
Financial Performance and Management
Operating losses increased to $1.6 million, and net losses for the quarter expanded to $1.7 million compared to $0.8 million the previous year.
Rocky Mountain ended the quarter with cash and equivalents of $0.6 million, down from $2.1 million at the end of fiscal 2024.
Analysis and Conclusion
Rocky Mountain’s Q1 results reflected a challenging period with declining top and bottom-line figures. The contraction in gross margin was concerning, leading to increased losses. However, the company saw positive revenue growth from Durango product and retail sales and Franchise fees.