Rocky Mountain Chocolate Factory Inc. is eyeing possible purchase opportunities as the frozen yogurt business appears set for a wave of consolidation.
“It’s way overbuilt, and consolidation needs to happen,” said Bryan Merryman, the company’s chief operating and chief financial officer, in a conference call last week when it also announced that revenues were up 12.1 percent in its most recent quarter.
Although historically a chocolate retailer, Rocky Mountain anticipates faster growth in its frozen yogurt business, U-Swirl.
“Right now, the chocolate operation dwarfs the yogurt operation,” Merryman said. “There’s certainly the opportunity for the yogurt business to become at least as big as the chocolate business.”
The company opened 13 new stores in its most recent quarter, including eight U-Swirl frozen yogurt locations. U-Swirl is a wholly owned subsidiary of Rocky Mountain Chocolate Factory.
RMCF is watching consolidation trends in the frozen yogurt retail business, Merryman said.
“There’s clearly pressure on the industry to consolidate stores,” he said. “However, we believe there’s good stores in almost every target we’ve looked at that will be there for the long term.”
The company is looking at affordable acquisitions, Merryman said.
RMCF reported a 12.1 percent increase in revenue for its most recent fiscal quarter, ending Aug. 31. The Durango-based company also reported a 1.7 percent increase in domestic same-store sales, a key indicator of retailer health.
RMCF now has 438 stores around the world, including five new stores this year in South Korea.
RMCF is the only publicly traded company based in Durango. The company, based in Bodo Industrial Park, has 200 to 230 employees in Durango, which varies seasonally.
Rocky Mountain Chocolate Factory is traded on the Nasdaq exchange under the symbol RMCF. The stock closed at $12.71 on Friday, continuing steady gains seen this month.
The company has been a reliable payer of dividends to investors, paying out its 41st consecutive quarterly dividend of 11 cents per share Sept. 13.
RMCF also is awaiting the rollout in 2014 of Kellogg’s Rocky Mountain Chocolate Factory Chocolatey Almond cereal.
In Durango, the company’s corporate-owned store at 561 Main Ave. continues to do a brisk business.
“We’ve been doing great,” said Jessica Elkan, retail operations manager. “Summer was fantastic.”
The store now is ramping up for the busy Christmas season, she said.
cslothower@durangoherald.com
