Rocky Mountain Chocolate Factory (RMCF) Q4 2016 Earnings

posted in: Earnings Call, Notes | 0

Rocky Mountain Chocolate Factory (RMCF) CFO Bryan Merryman said they are closing underperforming store locations

“Royalty and marketing fees decreased 3.1%. We had a decline in domestic Rocky Mountain Chocolate Factory units in operation of 5.3%. And we also had a decline of 11.1% in total franchised units in operations, the result of store closures and acquired yogurt franchise systems, in line with expectations that poor performing stores would close.”

Experienced higher cost of raw goods

“We also saw a higher commodity prices, particularly in the first six months of the year with a little of abatement in the second-half of the year, but still pressured our margins.”

Opened 40 stores total in fiscal 2016

“We opened 40 new locations in fiscal 2016, including 11 U-Swirl locations, 10 Cold Stone Creamery locations and 14 international locations, as well as 5 domestic standalone Rocky Mount Chocolate Factory openings.”

Rocky Mountain Chocolate Factory (RMCF) CEO Frank Crail is focused on opening more international locations as opposed to domestic locations

“I believe that we’ll see continued international growth opportunities and see more international openings and we do have domestically. I believe also that on a longer-term basis. International would be a contributor to our profitability long-term. We don’t expect it to move the needle in the short-term, but I still see faster growth international than we’ll see domestically.”

Hoping to grow their online chocolate sales business

“I think the candy bars, we have less opportunities going right now, then we do with the ability of expand our online sales to Rocky Mountain Chocolate Factory or I think there is a great opportunity for that, I think that in our plans for the fiscal year that we are in right now is to grow that business significantly. From a small base, but still grow at significantly. We won’t really know how successful we are with those efforts until Q3, Q4. That business will be a gifting business and we’ll be seasonal like most chocolate sales.”