Durango, Colo., Oct. 10 - Rocky Mountain Chocolate Factory, Inc., which franchisesgourmet 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.
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.