Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF) posted a smaller loss for its third quarter, reflecting early progress from its margin-focused turnaround, but the results still fell short of market expectations.
Shares of the chocolate maker and franchiser dropped 2.34% in pre-market trading following the announcement.
For the fiscal third quarter ended November 30, 2025, the company reported a net loss of $0.02 per share on revenue of $7.5 million. Sales declined from $7.9 million a year earlier, a drop the company attributed to its deliberate withdrawal from lower-margin specialty and wholesale channels as part of a broader strategy to prioritise profitability.
Despite lower revenue, profitability metrics improved markedly. Gross profit rose to $1.4 million from $0.7 million in the same quarter last year, supported by pricing initiatives, a more favourable product mix and improved labour efficiency. EBITDA swung to a positive $0.4 million, compared with a loss of $0.4 million in the prior-year period.
“During the third quarter, we continued to execute our margin-first transformation, making deliberate decisions to exit lower-margin revenue streams and prioritize profitability,” said Jeff Geygan, Interim CEO of Rocky Mountain Chocolate Factory. “This led to meaningful improvement in gross profit and margin, which remains our primary focus as we reposition the business for sustainable growth.”
The company also pointed to positive developments in its franchise pipeline, announcing a new Area Development Agreement with four franchise partners that is expected to result in 34 new store openings. Two of those locations are already under construction.
Total costs and expenses fell to $7.5 million during the quarter, down from $8.6 million a year earlier, with savings achieved across most areas of operations.
After the quarter ended, Rocky Mountain Chocolate Factory completed a $2.7 million equity raise, aimed at strengthening its balance sheet, reducing leverage and providing additional working capital to support strategic initiatives.