Rocky Mountain Chocolate Factory 2026 Q3 Earnings 81.7% Net Loss Reduction Amid Revenue Decline

Rocky Mountain Chocolate Factory (RMCF) reported a 4.4% revenue decline to $7.54 million in Q3 2026 but significantly narrowed its net loss by 81.7% year-over-year to $-155,000. The company emphasized strategic cost-cutting and margin improvements, with gross profit rising to 21.4% from 10.0% in the prior year. While revenue fell short of expectations, the earnings guidance aligned with management’s focus on profitability over growth.

Revenue

Revenue segments revealed a strategic shift: Franchising contributed $1.21 million, Manufacturing accounted for $5.71 million, and Retail added $617,000. The non-renewal of a low-margin contract and operational transitions impacted total revenue, yet pricing adjustments and SKU rationalization mitigated declines. The Retail segment, though smaller, showed resilience amid broader challenges.

Earnings/Net Income

The net loss improved to $-155,000, with EPS narrowing to -$0.02 from -$0.11 in the prior year. This reflects operational efficiencies and reduced general and administrative expenses. The EPS improvement from -$0.11 to -$0.02 reflects strategic cost-cutting and margin enhancements, signaling cautious optimism for future profitability.

Price Action

Following the earnings report, RMCF’s stock surged 28.92% month-to-date, driven by improved gross margins and positive liquidity developments. However, a historical backtest of a revenue-positive buy-and-hold strategy over 30 days underperformed by -76.74%, underscoring market skepticism. The strategy’s CAGR of -39.60% highlights risks despite recent gains.

CEO Commentary

Interim CEO Jeff Geygan highlighted progress in margin-first initiatives, including a 34-store Area Development Agreement and a $2.7 million equity raise. Digital tools like the upgraded POS platform and third-party delivery integration are expected to enhance franchisee performance. Geygan balanced optimism with caution, noting ongoing challenges in input costs and operational transitions.

Guidance

RMCF plans to scale the 34-store development agreement and advance operational efficiency initiatives. EBITDA is projected to remain positive, supported by cost discipline and strategic investments. Challenges like input costs and transitional inefficiencies may persist, but the company remains focused on long-term profitability.

Additional News

RMCF secured a $2.7 million equity raise to strengthen liquidity and signed a 34-store Area Development Agreement with multi-unit operators, signaling franchisee confidence. Interim CEO Jeff Geygan announced a new POS platform and third-party delivery integration to boost franchisee performance. The company also acquired a retail store at Camarillo Premium Outlets, expanding its footprint to three company-owned locations.