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Rocky Mountain Chocolate Factory Inc. Reports Operating Results (10-Q)

July 13, 2012 | About:
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10qk

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Rocky Mountain Chocolate Factory Inc. (RMCF) filed Quarterly Report for the period ended 2012-05-31.

Rocky Mountain Chocolate Factory, Inc. has a market cap of $74.9 million; its shares were traded at around $12.1499 with a P/E ratio of 19.6 and P/S ratio of 2.2. The dividend yield of Rocky Mountain Chocolate Factory, Inc. stocks is 3.6%. Rocky Mountain Chocolate Factory, Inc. had an annual average earning growth of 4.9% over the past 10 years.

Highlight of Business Operations:

Basic earnings per share increased 13.3% from $.15 for the three months ended May 31, 2011 to $.17 during the three months ended May 31, 2012. Revenues increased by $1.02 million in the three months ended May 31, 2012 compared to the three months ended May 31, 2011. This increase in revenues was due primarily to an increase in shipments of product to customers outside our network of franchised retail stores and an increase in retail sales. Operating income increased 16.0% from $1.40 million for the three months ended May 31, 2011 to $1.62 million for the three months ended May 31, 2012. Net income increased 15.5% from $920,000 in the three months ended May 31, 2011 to $1.06 million in the three months ended May 31, 2012. The increase in net income was due primarily to increased revenue.

The increase in factory sales for the three months ended May 31, 2012 versus the three months ended May 31, 2011 was primarily due to a 13.2% increase in shipments of product to customers outside our network of franchised retail stores and a 10.3% increase in sales to domestic and international franchised and licensed stores, partially offset by a 2.8% decrease in the average number of domestic Rocky Mountain Chocolate Factory franchised stores in operation. These increases were partially offset by a 5.0% decline in same-store pounds purchased by our network of franchised stores.

The increase in royalties and marketing fees from the three months ended May 31, 2011 to the three months ended May 31, 2012 resulted from an increase of 1.1% in same store sales and an increase in royalty revenue resulting from the Company s purchase-based royalty structure. These increases were partially offset by a 2.8% decline in domestic franchise stores in operation from the three months ended May 31, 2011 to the three months ended May 31, 2012. The average number of domestic franchise stores in operation decreased from 246 in the three months ended May 31, 2011 to 239 during the three months ended May 31, 2012. Franchise fee revenues increased as a result of the license fees associated with the Master Licensing Agreement for the development and franchising of Rocky Mountain Chocolate Factory stores in Japan, which we entered into in April 2012. This increase was mostly offset by a decrease in the number of domestic franchise store openings from four in the three months ended May 31, 2011 to two openings in the three months ended May 31, 2012, and a decrease in Cold Stone Creamery co-branded location openings from three during the three months ended May 31, 2011 to two in the three months ended May 31, 2012.

The increase in franchise costs in the three months ended May 31, 2012 versus the three months ended May 31, 2011 is due primarily to an increase in travel and support costs associated with our international development initiative and an increase in franchise opportunity advertising costs. As a percentage of total royalty and marketing fees and franchise fee revenue, franchise costs increased to 34.7% in the three months ended May 31, 2012 from 28.5% in the three months ended May 31, 2011. This increase as a percentage of royalty, marketing and franchise fees is primarily a result of a 33.8% increase in franchise costs.

The increase in retail operating expenses for the three months ended May 31, 2012 compared to the three months ended May 31, 2011 was due primarily to an increase in the average number of Company-owned stores in operation as a result of the opening of five Company-owned ALY locations and one Company-owned Rocky Mountain Chocolate Factory location between June 2011 and February 2012, partially offset by the sale or closure of four Company-owned Rocky Mountain Chocolate Factory locations during May 2011 and June 2011. Retail operating expenses, as a percentage of retail sales, decreased from 61.8% in the three months ended May 31, 2011 to 58.1% in the three months ended May 31, 2012.

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