Core Insights - Tokyo Lifestyle Co., Ltd. plans to open a new flagship store in Kowloon, Hong Kong, to expand its retail presence and enhance brand visibility in the market [1][3] - The new store is scheduled to open in September 2025 and will feature products inspired by Japanese lifestyle and culture [2] - The location is in AIRSIDE, a significant mixed-use development in the Kai Tak area, which is expected to have substantial commercial potential [2][3] Company Overview - Tokyo Lifestyle Co., Ltd. is a retailer and wholesaler of various products, including beauty, health, luxury, electronic, and trending products across multiple regions, including Hong Kong, Japan, North America, Thailand, and the United Kingdom [4] - The company offers a wide range of beauty products, health products, sundry products, and other items, selling through directly-operated stores, online platforms, and franchise and wholesale channels [4]

Core Insights - Rocky Mountain Chocolate Factory Inc. is launching its first fully redesigned store in Charleston, South Carolina, on June 3, 2025, marking its entry into the state and initiating a nationwide brand transformation [1][5] Company Expansion - The new store is operated by experienced franchisees Ross and Mackenzie Theesen, along with local operator Mike Hill, highlighting their commitment to the brand and its future [2] - This opening is part of a broader strategy to refresh nearly 150 locations across the U.S. and nearly 100 co-branded stores with Cold Stone Creamery [4] Brand Transformation - The Charleston store features a reimagined design, updated logo, fresh packaging, and a new color palette, reflecting the company's vision for the future [3] - The transformation also includes a relaunch of RMCF's E-Commerce channels with a redesigned website and cohesive brand messaging [4] Market Strategy - Charleston was chosen for its cultural heritage and tourism, aligning with the company's growth strategy targeting major metropolitan areas [5] - The long-term goal is to exceed $100 million in annual retail sales [5] Store Operations - The Charleston location will operate daily from 10:00 AM to 10:00 PM, offering a full assortment of handcrafted chocolates and confections [6] Company Background - Rocky Mountain Chocolate Factory has been producing premium chocolates since 1981 and operates nearly 260 stores across the U.S. and internationally [7]

Financial Data and Key Metrics Changes - The company reported a record revenue of €574 million for the second quarter, representing a 19% year-over-year increase and an 18% increase in constant currency, exceeding the annual guidance of 15% to 17% [6][15][22] - Gross margin improved to 57.7%, up 140 basis points year-over-year, driven by better cost absorption and selected price adjustments [16][19] - Adjusted EBITDA for the quarter was €200 million, up 23% year-over-year, with a margin of 34.8%, an increase of 110 basis points [17][22] - Adjusted net profit reached €103 million, a 33% increase year-over-year, with adjusted EPS rising to €0.55 from €0.41 [18][22] Business Line Data and Key Metrics Changes - Revenue growth was balanced between B2B and DTC channels, with B2B up 18% and DTC up 17% in constant currency [8][15] - Closed toe silhouettes saw revenue growth at twice the rate of the overall group, increasing their share of business by 400 basis points [9][12] - The DTC channel's growth was supported by investments in online and owned retail stores, with a membership base exceeding 10 million, up over 25% year-over-year [8][15] Market Data and Key Metrics Changes - In the Americas, revenue increased by 23% in reported currency and 20% in constant currency, with strong growth in both B2B and DTC channels [10][12] - EMEA experienced 12% growth, with DTC outpacing B2B growth by 1.5 times [11][12] - The APAC region was the fastest-growing segment, with a 30% increase driven by strong DTC growth [12][13] Company Strategy and Development Direction - The company aims to expand its retail presence, targeting 100 owned stores by the end of the fiscal year, with a long-term goal of 150 stores by 2027 [9][56] - The strategy includes leveraging vertical integration to mitigate tariff impacts and maintain pricing flexibility [20][21] - The company is focused on capturing market share and shelf space, particularly in regions where competitors are struggling [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic uncertainties, viewing the current environment as an opportunity rather than a risk [5][29] - The company anticipates continued strong demand across all product channels and categories, with expectations to meet or exceed financial targets for fiscal year 2025 [22][24] - Management noted that the recent depreciation of the dollar may create headwinds for reported growth and margins in the latter half of the year [21][22] Other Important Information - The company is proactively managing working capital, improving its inventory-to-sales ratio to 36% from 40% year-over-year [19] - Capital expenditures for the quarter were approximately €21 million, with plans to invest around €80 million for the year [19][75] Q&A Session Summary Question: Confidence in outlook despite macro uncertainty - Management views the current situation as an opportunity and is confident in fully offsetting tariff effects, with no changes in consumer demand observed [29][30] Question: DTC strength and implied top-line deceleration - Management acknowledged reduced visibility in the second half due to a heavier DTC mix but emphasized strong order books and continued growth in closed toe products [38][39] Question: Plans for tariff mitigation - The company is less exposed to tariffs due to European sourcing and manufacturing, allowing for pricing flexibility without impacting consumer demand [46][47] Question: Gross margin drivers and future expectations - Management expects gross margin improvements to continue, with better absorption and pricing strategies contributing positively [40][41] Question: Cash flow and uses in the back half of the year - The company prioritizes investments in business growth and debt reduction, with potential for share repurchases considered [74][75] Question: Trends in younger customers and in-person shopping - A global trend of younger consumers preferring in-person shopping was noted, enhancing brand engagement [78] Question: Demand outlook in the back half of the year - Management sees no significant impact on demand from tariffs, maintaining a balance of stock to sales [81][82] Question: Membership growth and its impact on DTC sales - Membership has grown significantly, with members spending 20% more on average, indicating a strong return on investment for marketing efforts [113][129] Question: Pricing strategy and product performance - Consumers are increasingly favoring higher price points, with closed toe products outpacing sandals in growth [131]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $2.5 million, a significant decrease from $11.4 million in Q1 2024, primarily due to softening demand and increased competitive pressure [7] - Gross profit in Q1 2025 was $1.1 million compared to $4.6 million in the same period last year, with a gross margin improvement to 45% from 41% year-over-year [8] - Net loss for Q1 2025 was $2.6 million, or a loss of $0.23 per diluted share, compared to net income of $511,000, or $0.06 per diluted share, in Q1 2024 [9] - Adjusted EBITDA for Q1 2025 was negative $800,000, down from $2.5 million in Q1 2024 [9] - Cash and cash equivalents at the end of Q1 2025 were $1.6 million, down from $3.7 million at the end of 2024 [10] Business Line Data and Key Metrics Changes - The company reported a 79% increase in revenue from Q4 2024 to Q1 2025, indicating a recovery trend [4] - The freeze-dried candy line has seen renewed consumer enthusiasm, although competitive pressure from larger CPG companies remains a challenge [5] Market Data and Key Metrics Changes - The company is experiencing a slow increase in sell-through data, with units per door rising from 12-13 to 16 over recent weeks [26] - Retail partners like Five Below and Ace Hardware are showing positive initial demand and reorders, indicating a return to normal reorder cadences [28][30] Company Strategy and Development Direction - The company is focusing on cost savings, cash conservation, and expanding candy distribution while exploring new category opportunities [11] - Strategic actions include reducing overhead costs, implementing automation in packaging, and postponing certain production activations to align with demand [12][13] - The company is also pursuing international expansion, having launched products in the Middle East with positive initial orders [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about a gradual recovery in sales, expecting Q2 to show modest improvement over Q1 [21] - The company is focused on maintaining quality and innovation while navigating a competitive landscape with both large and small competitors [22] Other Important Information - The company has entered into exchange agreements with noteholders to extend maturities by five years, reflecting confidence in the recovery plan [10][13] - The management team is actively evaluating strategies to improve cash position, including converting inventory to cash [50] Q&A Session Summary Question: Can you share insights on consumer enthusiasm and retail inventory? - Management noted a slow increase in sell-through data, with a return to normal reorder cadences as consumers return to the brand after trying competitors [26][30] Question: What is the current number of retail doors? - The company is currently in approximately 1,900 to 2,000 retail doors [34] Question: How is the quality of the inventory and plans for working it down? - Management indicated that most heat-affected inventory has been identified and removed, with a focus on working through remaining inventory strategically [35][36] Question: What are the competitive dynamics with larger CPG companies? - Management observed that smaller competitors have exited the space, while larger CPGs are not performing as expected, indicating room for improvement in product quality [38][40] Question: What are the plans for spare capacity in production? - The company is exploring opportunities for private labeling and home manufacturing to utilize spare capacity effectively [46] Question: What strategies are in place to improve cash position? - Management is focused on converting inventory to cash and evaluating all strategies to enhance cash flow [50]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $2.5 million, a significant decrease from $11.4 million in Q1 2024, primarily due to softening demand and increased competitive pressure [7] - Gross profit in Q1 2025 was $1.1 million compared to $4.6 million in the same period last year, with a gross margin improvement to 45% from 41% due to lower cost of goods sold [8][10] - Net loss for Q1 2025 was $2.6 million, or a loss of $0.23 per diluted share, compared to net income of $511,000, or $0.06 per diluted share, in Q1 2024 [10] - Adjusted EBITDA for Q1 2025 was negative $800,000, down from $2.5 million in Q1 2024 [10] - Cash and cash equivalents decreased to $1.6 million from $3.7 million as of December 31, 2024 [10] Business Line Data and Key Metrics Changes - The company reported a 79% increase in revenue from Q4 2024, indicating a recovery trend despite the overall decline year-over-year [5] - The freeze-dried candy line has seen renewed consumer enthusiasm, although competitive pressure from larger CPG companies remains a challenge [6] Market Data and Key Metrics Changes - The company is experiencing a slow increase in sell-through data, with units per door rising from 12-13 to 16 over recent weeks [27] - Retail partners like Five Below and Ace Hardware are showing positive initial demand and reorders, indicating a return to normal reorder cadences [29][31] Company Strategy and Development Direction - The company is focusing on cost savings, cash conservation, and expanding candy distribution while exploring new category opportunities [12] - Strategic actions include reducing overhead costs, enhancing operational efficiency through automation, and postponing certain production activations to align with demand [13][14] - The company plans to enter new categories such as beef jerky and freeze-dried yogurt snacks, emphasizing clean label ingredients [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery trajectory, expecting modest improvement in Q2 over Q1 as new partnerships take hold [23] - The company acknowledges ongoing challenges but believes it is positioning itself to emerge stronger through innovation and category expansion [24] Other Important Information - The company has entered into exchange agreements with noteholders to extend maturities by five years, reflecting confidence in its recovery plan [11][14] - Initial orders from the Middle East market exceeded expectations, presenting a significant growth opportunity [20] Q&A Session Summary Question: What is the trend in weekly or monthly velocities and retail inventory position? - Management noted a slow increase in sell-through data, with units per door rising to 16, and excess inventory at Five Below is being worked through successfully [27][29] Question: How does the company view its inventory quality and expectations for the next quarters? - Management indicated that most heat-affected inventory has been identified and removed, and they have a two-year shelf life on most products, allowing time to work through remaining inventory [37][38] Question: What are the competitive dynamics with larger CPG companies? - Management observed that smaller competitors have exited the space, and while larger CPGs have entered, they are not performing as expected, with significant declines in their sell-through rates [41][43]