10-Q · July 14, 2026
Rocky Mountain Chocolate Factory reported disappointing Q4 FY 2026 results, with revenues of $7 million, down 4.1% year-over-year, and a diluted EPS of -$0.41, missing analyst estimates. The company's gross margin…
Earnings analysis · 10-Q
RMCF earnings analysis
Filed October 19, 2026 · Our reading of the company's report
The latest report
RMCF's quarterly revenue declined 2.5% year over year to $6.652 million, while royalty revenue fell 18.3% and the operating loss widened to $1.1 million. Gross margin recovered to 8.0% from negative 0.6%, but higher…
Read full summary
RMCF's quarterly revenue declined 2.5% year over year to $6.652 million, while royalty revenue fell 18.3% and the operating loss widened to $1.1 million. Gross margin recovered to 8.0% from negative 0.6%, but higher G&A, franchise, and retail operating expenses more than offset the improvement. Liquidity deteriorated materially, with $0.4 million of cash, a $6.5 million working-capital deficit, covenant breaches, and management's continuing going-concern warning. The post-quarter $6.6 million sale-leaseback and $2.0 million Alpine Bank loan provide liquidity, but also increase reliance on secured financing and leased operations.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $-0.14
What stood out
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Product sales offset weaker royalties
Revenue was $6.652 million, down 2.5% from $6.823 million in the prior-year quarter. Durango product and retail sales increased 2.5% to $5.310 million, but royalty and marketing fees fell 18.3% to $1.314 million.
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Gross margin recovered sharply
Gross margin improved to 8.0% from negative 0.6% a year earlier, an 8.6 percentage-point improvement, primarily due to production efficiencies.
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Higher expenses overwhelmed margin recovery
Operating loss widened to $1.1 million from $0.5 million, implying an operating margin of approximately negative 16.5%. Total costs and expenses increased 6.0% to $7.737 million.
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Overhead and retail costs rose
General and administrative expense increased 36.1% year over year, and G&A reached 20.0% of revenue versus 14.3%. Retail operating expense increased 91.6% following the addition of corporate-owned stores.
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Cash balance continued to contract
Cash and equivalents declined to $0.4 million from $1.2 million at February 28, 2026. Six-month operating cash flow was negative $0.5 million, while investing cash flow was negative $0.3 million, including $0.2 million of property and equipment purchases.
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Post-quarter financing improved liquidity
Subsequent to quarter-end, the company sold and leased back its Durango manufacturing facility for $6.6 million, repaid $6.6 million of 12% debt, and obtained a $2.0 million Alpine Bank working-capital loan.
What to watch
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Severe working-capital deficit
The company reported a $6.5 million working-capital deficit at August 31, 2026 versus positive working capital of $2.2 million at February 28, 2026. The current ratio was 0.52 to 1.0 versus 1.33 to 1.0.
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Debt covenant breaches
The company breached both debt covenants: liabilities to tangible net worth was 8.96 to 1.0 versus a maximum of 2.0 to 1.0, and the current ratio was 0.52 to 1.0 versus a minimum of 1.25 to 1.0. No waiver had been received through August 31, 2026, and the related debt was classified as current.
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Going-concern uncertainty
Management stated that substantial doubt exists regarding the company's ability to continue as a going concern for at least one year from issuance. Six-month net loss was $2.4 million and operating activities used $0.5 million of cash.
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High-cost secured debt
Outstanding debt under the two 12% credit facilities totaled $6.6 million at August 31, 2026, consisting of $6.0 million under the Credit Agreement and $0.6 million under the RMCF2 agreement. The debt was secured by the Durango property, inventory, receivables, and cash accounts.
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Input-cost and supply-chain pressure
Management expects continued inflationary pressure on raw materials, labor, and freight and reported supply-chain risks that could cause lost sales. The company also had approximately $2.7 million of purchase obligations, primarily for manufacturing commodities.
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Franchise royalty weakness
Royalty and marketing fees declined $0.294 million, or 18.3%, in the quarter and $0.717 million, or 22.2%, for the six months, reflecting lower store sales subject to royalty fees.
Management's outlook
No quantitative revenue or EPS guidance was provided. Management stated that it expects higher raw material, labor, and freight costs to continue, while it intends to reduce overhead, improve manufacturing efficiencies, benefit from the historically busy holiday season, and pursue supplemental liquidity resources.
Earlier filings 4
10-K · May 29, 2026
Rocky Mountain Chocolate Factory (RMCF) reported a total revenue of $27.5 million for FY 2026, a decrease of 7% from the previous year, alongside a significant net loss of $4.6 million attributed to higher operational…
10-Q · October 14, 2025
Rocky Mountain Chocolate Factory (RMCF) reported a total revenue of $6.8 million for the second quarter of fiscal 2026, a slight increase from $6.4 million in the previous year, reflecting a growth driven by improved…
10-Q · July 15, 2025
Rocky Mountain Chocolate Factory reported total revenue of $6,373,000 for the three months ended May 31, 2025, roughly flat versus the prior year ($6,407,000) while gross margin expanded materially to 31.1% and the…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.