Rocky Mountain Chocolate Factory, Inc. reported third‑quarter fiscal 2026 results that showed a $7.5 million revenue total and a net loss of $0.02 per share, a significant narrowing from the $0.11 per share loss reported a year earlier. The company’s gross manufacturing margin more than doubled to 21.4% from 10% in the same quarter a year ago, reflecting a sharp improvement in cost efficiency and pricing power.
Revenue fell 4% year‑over‑year, a decline that the company attributes to the strategic exit of low‑margin retail channels. While the overall top line contracted, the shift toward higher‑margin franchise operations has begun to offset the revenue loss, positioning the business for a more sustainable growth trajectory.
The franchise segment, which now accounts for 86% of total profit, reported a 27% increase in revenue and a 236% jump in segment profit. This surge is driven by the opening of more than 120 franchise stores on the company’s new point‑of‑sale platform, which provides franchisees with real‑time data on customer behavior and store performance, thereby enhancing profitability.
Margin expansion was further supported by dynamic pricing initiatives and SKU rationalization, which have reduced inventory carrying costs and improved product mix. These operational changes, combined with disciplined cost control, have allowed the company to maintain higher gross margins even as input costs rise.
Following the quarter‑end, RMCF completed a $2.7 million equity capital raise, reducing leverage and strengthening liquidity. Management reiterated its fiscal 2026 guidance, maintaining confidence in the company’s ability to sustain margin growth while expanding the franchise pipeline. CEO Jeff Geygan emphasized that the company’s “margin‑first transformation” is delivering tangible results, noting that the combination of pricing power, operational efficiencies, and a robust franchise network is setting the stage for long‑term profitability.
Investors reacted negatively to the earnings release, citing the revenue decline as the primary concern. Management’s focus on margin improvement and franchise expansion, however, signals a strategic pivot toward a more profitable business model, which may influence future investor sentiment.
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