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Revenue at chocolate factory drops 15%
CEO Bryan Merryman says he will remain confident in long-term value
Herald Staff Writer
Chief Operating Officer Bryan Merryman, in a conference call Thursday, said the company was still "solidly profitable" in the "worst macroeconomic environment since the company was founded in 1981."
I think everybody knows that the credit environment is very, very poor and it's very difficult to finance anything right now.
- Bryan Merryman, COO, Rocky Mountain Chocolate Factory
The company is traded on Nasdaq under the symbol "RMCF" and is the only publicly traded company that has its headquarters in Durango. Its stock rose 0.24 percent to 5.89 on Friday.
Revenue in the quarter dropped from $8.8 million in 2007 to $7.4 million in 2008.
Same-store sales at franchises dropped 8.1 percent in the third quarter, while operating expenses increased 5.1 percent.
"The decrease in third-quarter revenues and earnings," Merryman said in a news release, "was not unexpected and was primarily due to the widely reported decline in customer traffic at regional shopping malls during the preholiday shopping period - a trend that continued through the month of December - along with a tendency for franchisees to emphasize store-made products over factory-made products during this period of economic uncertainty."
Store-made product retail at a lower price than factory-made chocolates and confections, Chief Executive Officer Frank Crail said in the conference call, making store-made products appealing to price-conscious consumers.
Merryman said the company was holding price increases low to encourage franchisees to stock more factory-made goods.
Credit remains tight, affecting prospective franchisees.
"I think everybody knows that the credit environment is very, very poor and it's very difficult to finance anything right now," Merryman said.
Rocky Mountain Chocolate Factory is experimenting with co-branded stores with Cold Stone Creamery, the ice-cream retailer. Merryman said early results show Rocky Mountain products running about 30 percent of sales in those stores.
Merryman said he was "pleased with the performance" of a new store in Farmington.
On Dec. 12, the company paid a quarterly cash dividend of $0.10 per share.
"The outlook for the U.S. economy remains unsettled, and while Rocky Mountain Chocolate Factory is far from immune to macroeconomic factors, we believe that our business model should allow the company to perform better than most retailers in the current environment," Crail said in a news release. "We look forward to the next economic recovery and remain confident in the long-term value that we can deliver to our franchisees and shareholders."
chuck@durangoherald.com
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