DURANGO, Colo., Oct. 9 /PRNewswire-FirstCall/ -- Rocky Mountain Chocolate
Factory, Inc. (Nasdaq: RMCF) (the "Company"), which franchises gourmet
chocolate and confection stores and manufactures an extensive line of premium
chocolates and other confectionery products, today reported its operating
results for the second quarter and first half of FY2009.
For the three months ended August 31, 2008, revenues decreased 16.7
percent to approximately $6.3 million, compared with revenues of approximately
$7.5 million in the second quarter of the previous fiscal year. Same-store
sales at franchised retail outlets decreased 2.3 percent, while same-store
pounds of products purchased by franchisees from the Company's factory
declined 10 percent during the most recent quarter, when compared with the
prior-year period. Total factory product sales declined 22.4 percent from
last year's second quarter, primarily due to an 83.8 percent reduction in
product shipments to customers outside the Company's system of franchised
retail stores. The decline in such third-party sales primarily reflected the
absence of a large order from a warehouse club customer that was shipped in
the second quarter of FY2008. The product shipment decline to customers
outside the Company's system of franchised retail stores accounted for 88.0
percent of the total revenue decrease of 16.7 percent and 91.1 percent of the
total factory revenue decrease of 22.4 percent. Total factory sales to the
Company's system of franchised retail stores declined 2.0 percent in the
second quarter of FY2009, compared with same period in the prior year.
Net income for the three months ended August 31, 2008 declined 37.5
percent to $833,000, compared with net income of $1,333,000 for the three
months ended August 31, 2007. Basic and diluted earnings per share totaled
$0.14 and $0.14, respectively, for the three months ended August 31, 2008,
compared with $0.21 and $0.20, respectively, for the three months ended August
31, 2007.
For the six months ended August 31, 2008, revenues decreased 10.0 percent
to approximately $13.4 million, compared with revenues of approximately $14.8
million in the first half of FY2008. Same-store sales at franchised retail
outlets declined 2.3 percent during the six months ended August 31, 2008,
while same-store pounds of products purchased from the Company's factory by
franchisees decreased 12 percent, when compared with the corresponding period
of the previous fiscal year. Total factory sales declined 15.1 percent in the
first half of FY2009, versus the prior-year period, primarily due to a 52.0
percent reduction in product shipments to third-party customers, as discussed
above. The product shipment decline to customers outside the Company's system
of franchised retail stores accounted for over 100 percent of the total
revenue decrease of 10.0 percent and 92.7 percent of the total factory revenue
decrease of 15.1 percent. Total factory sales to the Company's system of
franchised retail stores declined 1.1 percent in the six months ended August
31, 2008, compared with the same period in the prior year.
Net income for the first half of FY2009 declined 22.3 percent to
$1,837,000 compared with net income of $2,365,000 in the first half of FY2008.
Basic earnings per share declined 16.2 percent to $0.31 for the six months
ended August 31, 2008, compared with $0.37 for the six months ended August 31,
2007. Diluted earnings per share decreased 16.7 percent to a $0.30 for the
first half of FY2009, versus $0.36 for the first half of FY2008.
Total retail sales for the Company's network of stores increased 3.3
percent to a record of approximately $56.8 million in the six months ended
August 31, 2008, compared with system-wide sales of approximately $54.9
million in the corresponding period of the previous year.
"While our operating results for the second quarter and first half of
Fiscal 2009 were disappointing relative to the Company's performance in recent
years, we remained solidly profitable during a period of great economic stress
that has significantly impacted the sales of most retailers and the levels of
customer traffic in regional shopping malls and other venues where our stores
are located," noted Bryan Merryman, Chief Operating Officer of Rocky Mountain
Chocolate Factory. "We are monitoring our expenses carefully and believe that
our sales and profit margins will recover once the U.S. economic environment
improves. Until such time as a stabilization in the economy becomes evident,
we are not comfortable issuing sales and earnings guidance for the balance of
the current fiscal year."
"Franchisees opened 8 new stores during the second quarter and 16 new
stores during the first half of Fiscal 2009," added Merryman. "Based upon
information currently available to the Company, we anticipate that the number
of new store openings for the full year will approximate our earlier
expectations of 35 to 40 units."
"The recent slowdown in retail sales activity throughout America, combined
with a severe contraction in stock market valuations of most companies, are
factors beyond our control," observed Frank Crail, Chief Executive Officer of
Rocky Mountain Chocolate Factory, Inc. "However, we are pleased to be able to
provide our shareholders with cash dividend income during such difficult
times, and the structure of our business model has continued to allow the
Company to generate more than enough cash to fund its operations, repurchase
common stock, and support its cash dividend policy. We recently declared our
21st consecutive quarterly cash dividend which, at $0.10 per share, provided
our shareholders with an approximate 5.2 percent annualized dividend yield
based upon our closing stock price on October 8, 2008."
During the second quarter of Fiscal 2009, franchisees opened new stores in
Anaheim, California; Fairfield, California; Los Angeles (Howard Hughes),
California; London, Ontario; Manteca, California; Saint John, New Brunswick;
South Jordon, Utah and Vancouver, Washington.
On February 19, 2008, Rocky Mountain Chocolate Factory, Inc. announced
that its Board of Directors had approved the repurchase of up to approximately
$3.0 million of the Company's common stock in the open market, or in private
transactions, whenever deemed appropriate by management. The timing of any
such transactions will depend on a variety of factors, including market
conditions, and the program may be suspended or discontinued at any time. To
date, the Company has not repurchased any shares under this authorization.
On September 12, 2008, the Company paid its 21st consecutive quarterly
cash dividend, in the amount of $0.10 per share, to shareholders of record as
of September 2, 2008.
The Company will host its second quarter conference call on October 9,
2008 at 4:15 p.m. EDT. To access the conference call, please dial
800-860-2442 (international/local participants dial 412-858-4600)
approximately five minutes prior to 4:15 p.m. EDT and ask to be connected to
the "Rocky Mountain Chocolate Factory Conference Call". A replay of the
conference call will be available one hour after completion of the call until
October 16, 2008 at 5:00 p.m. EDT by dialing 877-344-7529 (international
callers dial 412-317-0088) and entering the replay access code #423975.
Rocky Mountain Chocolate Factory, Inc., headquartered in Durango,
Colorado, is an international franchiser of gourmet chocolate and confection
stores and a manufacturer of an extensive line of premium chocolates and other
confectionery products. As of October 8, 2008, the Company and its franchisees
operate 331 stores in 36 states, Canada and the United Arab Emirates. The
Company's common stock is listed on The Nasdaq Global Market under the symbol
"RMCF".
Certain statements in the press release are "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. This press release contains
forward-looking information that involves risks and uncertainties, and the
Company undertakes no obligation to update any forward-looking information.
Risks and uncertainties that could cause actual results to differ materially
include, without limitation, inability to open the number of new stores
currently anticipated to open in the Company's third fiscal quarter,
seasonality, consumer interest in the Company's products, general economic
conditions, consumer trends, costs and availability of raw materials,
competition, the effect of government regulations, and other risks. Readers
are referred to the Company's periodic reports filed with the SEC,
specifically the most recent reports which identify important risk factors
that could cause actual results to differ from those contained in the
forward-looking statements. The information contained in this press release
is a statement of the Company's present intentions, beliefs or expectations
and is based upon, among other things, the existing business environment,
industry conditions, market conditions and prices, the economy in general and
the Company's assumptions. The Company may change its intentions, beliefs or
expectations at any time and without notice, based upon any changes in such
factors, in its assumptions or otherwise. The cautionary statements contained
or referred to in this press release should be considered in connection with
any subsequent written or oral forward-looking statements that the Company or
persons acting on its behalf may issue.
