Rocky Mountain Chocolate net climbs 28% in Q2

by Eric Schroeder
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DURANGO, COLO. — Rocky Mountain Chocolate Factory, Inc., an international franchiser of gourmet chocolate and confection stores, posted a 28% improvement in net income in the second quarter, highlighted by the signing of an airport franchise development agreement with The Grove, Inc., a privately-owned retailer of natural snacks and other branded products.

Net income in the quarter ended Aug. 31 was $1,333,000, equal to 21c per share on the common stock, up from $1,040,000, or 16c per share, in the second quarter of fiscal 2006. Net sales for the quarter totaled $7,548,000, up 11% from $6,780,000.

The company said same-store sales at franchised retail outlets rose 1.6% during the quarter, while same-store pounds purchased by franchisees from the company’s factory decreased 9%.

For the six months ended Aug. 31, net income was $2,365,000, or 37c per share, up from $1,970,000, or 30c per share. Sales were $14,827,000, up 9% from $13,548,000.

The Grove, which owns and operates food and beverage units and retail stores in 13 airports throughout the United States, will get the right to open Rocky Mountain Chocolate Factory stores in all airports where there currently are no stores operating or under development.

"This is an exciting development for our company because retail stores that are currently operated by franchisees at airports, in general, outperform the average Rocky Mountain Chocolate Factory store by a factor of more than two-to-one," said Bryan Merryman, chief operating officer, Rocky Mountain. "We currently have nine retail airport locations in operation and plans call for at least eight additional airport stores to be operating under the agreement with The Grove within the next two years."

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