Durango, Colo., Jan. 4 - Rocky Mountain Chocolate Factory, Inc., which franchises gourmet chocolate and confection stores and manufactures an extensive line of premium chocolates and other confectionery products, today reported record revenues and earnings for the third quarter and first nine months of FY2007.
For the quarter ended November 30, 2006, revenues increased 13.7 percent to approximately $9.1 million, compared with approximately $8.0 million in the third quarter of FY2006. Same-store sales at franchised retail outlets increased approximately 3.1 percent during the most recent quarter, when compared with the three months ended November 30, 2005. Same-store pounds of products purchased from the Company's factory by franchisees decreased 1.5 percent when compared with the third quarter of FY2006. Sales of all franchised and Company-owned stores increased 14.9% to approximately $25.4 million in the most recent quarter, compared with approximately $22.1 million in the prior-year quarter.
Net earnings for the third quarter of FY2007 increased 19.4 percent to $1,331,795, when compared with $1,115,740 in the prior-year period. Basic earnings per share rose 22.2 percent to $0.22, versus $0.18 in the quarter ended November 30, 2005, while diluted earnings per share increased 23.5 percent to $0.21, compared with $0.17 in the prior-year quarter.
"We are very pleased with the recovery in earnings growth momentum during the most recent quarter," stated Frank Crail, Chairman and Chief Executive Officer of Rocky Mountain Chocolate Factory, Inc. "Our 23.5 percent improvement in third quarter diluted earnings per share compared favorably with a 5.9 percent increase in the second quarter, which was penalized by unusually hot weather in many of our markets during the summer months. Comparable-store sales growth also resumed in the most recent quarter, and third quarter revenues benefited from the shipment of an order to a major warehouse club customer that schedules a pre-Christmas promotion of our candies each year."
"The expansion of our store network also accelerated in the most recent quarter, with franchisees opening 12 new stores in time for the seasonally important Christmas selling season," noted Bryan Merryman, Chief Operating Officer and Chief Financial Officer of the Company. "Twenty-five (25) new stores were opened during the first nine months of the fiscal year, and 7 new stores were opened in December. An additional 6 to 8 stores are scheduled to open in January and February. This will bring the number of store openings for the fiscal year to 38 to 40, which is slightly below our previously announced objective of 40 to 45 new stores."
"The trends in franchised store sales that we saw in the third quarter continued through the Christmas holiday shopping season, and we expect to report record revenues and earnings for the fourth quarter," continued Merryman. "Based on information currently available to the Company, we remain comfortable with our previous guidance that earnings for the fiscal year ending February 28, 2007 should increase 17% to 22% from the record levels reported in fiscal 2006."
During the third quarter of FY2007, franchisees opened new stores in Aurora, Colorado; Chula Vista, California; Corona, California; Dearborn, Michigan; Eugene, Oregon; Greenville, South Carolina; Houston, Texas; Maplewood, Minnesota; Mercedes, Texas; Park Ridge, Illinois and Tucson (Tucson Mall and Park Place), Arizona. During December 2006, franchisees opened stores in Cambridge, Ontario; Mississauga, Ontario; Laguna Hills, California, Longmont, Colorado; Minnetonka, Minnesota; Phoenix (Sky Harbor International Airport), Arizona and Portland, Oregon.
For the nine months ended November 30, 2006, revenues increased 13.5 percent to approximately $22.6 million, versus approximately $19.9 million in the corresponding period of the previous fiscal year. Comparable-store sales at franchised retail outlets increased approximately 0.8 percent when measured against the first nine months of FY2006. Same-store pounds of products purchased from the Company's factory by franchisees decreased 2.9 percent when compared with the first nine months of FY2006. Sales of all franchised and Company-owned stores increased 11.8% to approximately $76.6 million in the first nine months of FY2007, versus approximately $68.5 million in the nine months ended November 30, 2005.
Net earnings increased 10.3 percent to $3,302,126 in the nine months ended November 30, 2006, compared with $2,991,863 during the same period in FY2006. Basic earnings per share increased 12.5 percent to $0.54, versus $0.48 in the nine months ended November 30, 2005, while diluted earnings per share increased 15.6 percent to $0.52, compared with $0.45 in the prior-year period.
On May 25, 2006, Rocky Mountain Chocolate Factory, Inc. announced that its Board of Directors had approved the repurchase of up to an additional $2.0 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 repurchased approximately 36,800 shares of common stock under this authorization.
On December 15, 2006, the Company paid a quarterly cash dividend of $0.09 per share to shareholders of record December 1, 2006.