Rocky Mountain Chocolate Factory Stock Surge: Operational Efficiency and Brand Modernization Drive Growth Despite Lower Q4 Earnings

Shares of Rocky Mountain Chocolate Factory, Inc. (RMCF) have gained 21.4% since the company reported its earnings for the quarter ended Feb. 28, 2025. This impressive surge compares to the S&P 500 Index’s 0.4% loss over the same time frame. Over the past month, the stock has gained 15.5%, outperforming the S&P 500’s 3.6% rise.

Financial Highlights

For the fourth quarter of fiscal 2025, RMCF reported total revenues of $8.9 million, up 22.6% from $7.3 million in the year-ago quarter. This improvement was driven by higher product sales, which rose 27.5% to $7.1 million from $5.6 million, while franchise and royalty fees were up 6.4% to $1.8 million from $1.7 million. However, the company posted a net loss from continuing operations of $2.9 million, or $(0.37) per share, widening from a loss of $1.6 million, or $(0.25) per share, in the same quarter last year.

Gross profit from product and retail operations was $(0.8) million compared with a profit of $0.1 million a year ago, primarily due to rising raw material costs, particularly cocoa. Total costs and expenses surged 31.3% to $11.6 million from $8.8 million, reflecting investments in the brand refresh, administrative infrastructure, and a new prototype store rollout.

On a full-year basis, fiscal 2025 revenues increased 5.8% to $29.6 million from $27.9 million. However, annual gross profit plummeted to $0.1 million from $1.4 million, reflecting higher cocoa prices, inflationary pressures, and lower production volume. The net loss from continuing operations widened to $6.1 million, or $(0.86) per share, from $4.9 million, or $(0.77) per share, in fiscal 2024.

Operational Efficiency and System Overhaul

Rocky Mountain undertook a comprehensive restructuring effort during fiscal 2025. Notably, the company ceased co-packing operations in Salt Lake City in February 2025, an initiative expected to eliminate $1.5 million in annual losses. Consumer packaging operations were brought back in-house to Durango, leading to better workflow control and cost savings.

Additionally, the implementation of a new ERP system and a modern point-of-sale platform provided store-level data visibility for the first time, enabling smarter, real-time decisions on production, pricing, and inventory management across over 100 stores. This infrastructure upgrade, coupled with strategic SKU rationalization and better cost controls, positions RMCF for improved decision-making going forward.

Strategic Vision

Interim CEO Jeff Geygan characterized fiscal 2025 as a foundational year, marked by hard operational corrections and cultural resets. The leadership team initiated deep structural reforms, including revamping the organizational structure, upgrading manufacturing systems, and onboarding new executive talent.

Management emphasized a move toward "fewer, stronger" franchise operators with multi-unit capabilities. Store transfers to capable operators have shown strong early results, including significant year-over-year sales growth in transferred units. Meanwhile, Rocky Mountain avoided unprofitable specialty market partnerships while renegotiating pricing with key clients to support long-term financial health.

Digital and Brand Modernization

Rocky Mountain is rolling out a full brand refresh, including a new logo, modernized store designs, updated packaging, and a redesigned website slated for July 2025. Early response from franchisees and consumers to the Charleston prototype store has been overwhelmingly positive