Rocky Mountain Chocolate Factory(US:RMCF)2024-07-15 22:43Financial Data and Key Metrics Changes - The company is targeting a return to a 20% gross margin by the end of fiscal '25 and aims for gross margins in the range of 25% to 30% by the end of fiscal '27, driven by consistent revenue growth and disciplined expense control [25][46] - The company expects to return to adjusted EBITDA profitability as it exits fiscal '25 [25][46] Business Line Data and Key Metrics Changes - The company has initiated agreements for several new stores and a newly designed kiosk concept, targeting net store growth for fiscal year '25, ending a multi-year pattern of store contraction [17][18] - E-commerce currently accounts for only 3% of total revenue, with expectations to significantly increase this mix over the next three years [39] Market Data and Key Metrics Changes - The company is focusing on expanding its presence in strategic markets such as Boston, New York City, Atlanta, and Seattle, which have favorable demographics and distribution routes [31][38] - The company is also enhancing its partnerships with specialty market retailers and co-branded partners like Cold Stone Creamery to drive brand awareness and throughput [40] Company Strategy and Development Direction - The company is undergoing a strategic realignment to improve operational turnaround, focusing on enhancing store-level profitability and sales growth through data-driven insights [15][34] - The company plans to improve its liquidity position through non-core asset sales and a new term loan agreement [23][46] Management's Comments on Operating Environment and Future Outlook - Management acknowledges recent challenges due to execution missteps and supply chain inefficiencies, but expresses confidence in the strategic plan to return to sustainable growth [22][27] - The company is committed to investing in production efficiency and upgrading its ERP system to improve operational insights and responsiveness [42][43] Other Important Information - The company is in the final stages of appointing a new CFO and expects to announce this shortly [12][29] - The company has deployed over $3 million in capital expenditures towards new equipment and production efficiency investments [22] Q&A Session Summary Question: What is the current status of the search for both a permanent CEO and CFO? - The company is moving forward with both searches and expects to have announcements shortly [29] Question: Can you expand upon the product mix that you believe will help to reinvigorate sales and expand gross margins? - The company is focused on developing markets with favorable demographics and easily expandable distribution lanes [31] Question: What are the highest priorities for capital allocation in the next 12 to 36 months? - The company plans to invest in production facilities to improve cost efficiency and expand its distribution system [50]