Rocky Mountain Chocolate Factory, Inc. Q3 FY2025 earnings call

• New store openings: Plans for two new stores and one new kiosk in Chicago, Illinois; Charleston, South Carolina; and Brandon, Florida, with Brandon and Charleston expected in coming months and Chicago in summer. - Store transfers: Completed transfers of Vail, Colorado and Steamboat Springs, Colorado locations, allowed Tilton, New Hampshire location to close; managed by VP of Franchise Development Kara Conklin. - Holiday season: Fulfilled nearly 100% of franchisee and specialty market demand, showing improved ability to deliver under pressure. - ERP system: Launched on January 6, integrating inventory management, procurement, etc., expected to improve cost management, reduce errors, and enhance decision making. - Brand rebranding: Rebranding initiatives, new store design, and updated packaging nearly complete, aiming to improve customer experience. - E-commerce: Sales nearly tripled in October-November-December vs last year, supported by marketing efforts and data analytics; expanding loyalty program. - Personnel: Strategic hires of VP of Franchise Business Support and VP of Marketing; appointed two new Board members.

Total revenue for the fiscal third quarter of 2025 increased to $7.9 million compared to $7.7 million in the same period last year. Product sales were $6.4 million compared to $6.1 million last year, accounting for approximately 81% of total revenue. Franchise and royalty fees were $1.1 million compared to $1.2 million in the same period last year, making up around 14% of total revenue. Total product and retail gross profit was essentially flat at $0.7 million, with gross margins at 10% compared to 10.2% previously, driven by higher supply, third-party vendor, and labor costs.

Still have substantial work ahead to accelerate revenue growth and optimize costs. Facing gross and operating margin pressures but anticipate improved results in coming quarters. New ERP system will improve access to relevant data and analytics. Pursuing margin-enhancing initiatives, with efforts already yielding results.

Forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially from forward-looking statements. Risks described in company's SEC filings.

Q: What kind of benefits do you expect to drive from the new ERP system?

A: There are a host of benefits, but the real value of new ERP is we're going to have timely, accurate data and analytics to assist us in making managerial decisions to drive profitability as we go forward.

Q: Can either of you provide an update on the rebranding initiative and its potential impact on franchisee interest?

A: Had franchisee advisory council call earlier today; level of enthusiasm is high with three existing franchisees willing to open first three stores, and excitement about the new logo and store design.

Q: What progress has been made on new store openings? And are there any specific geographies that you are targeting?

A: Kara Conklin is working vigorously to create a pipeline; have three stores announced to date, including Chicago, Charleston, and Brandon, with a robust pipeline.