ROCKY MOUNTAIN CHOCOLATE FACTORY

About ROCKY MOUNTAIN CHOCOLATE FACTORY

Rocky Mountain Chocolate Factory knows that tourists often leave their diets at home. That's why many of its candy stores are intentionally placed in factory outlet malls, regional malls, and tourist areas. It boasts about 20 company-owned Rocky Mountain Chocolate Factory and Aspen Leaf Yogurt stores, as well as more than 50 co-branded  Cold Stone Creamery shops. Another – more... 250 franchised locations span 40 US states, Canada, Japan, and the United Arab Emirates. Its products are also wholesaled and sold through fundraising programs and a company website. Most of the retailer's sales come from its 300 factory-made premium chocolates and confections; the remainder comes from franchise fees.

As a manufacturer and retailer of chocolate, Rocky Mountain Chocolate Factory specializes in producing and peddling clusters, truffles, fudge, barks, caramels, and molded chocolates. The company banks on the scent of chocolate-making in its stores to lure customers to impulse-shop. To its detriment, however, sales had cooled in recent years as consumers tightened their belts and rivals turned to heavy promotional activity to push their own products. Rocky Mountain Chocolate Factory, as a result, has cited slower foot traffic at its stores since 2008 that has caused sales declines through fiscal 2011.

Working to climb back as a top maker of retailed chocolate, the chain is showing signs of a turnaround in 2012. A 9% sales increase among its factory segment has helped to turn the tide, as well as a 42% boost in total retail sales, thanks to 19 company-owned stores being in operation vs. eight during fiscal year 2010.

To aid in the rebound, Rocky Mountain Chocolate Factory has been concentrating on boosting same-store sales; it logged a 7% rise in same-store sales in 2012 vs. 2011 due in part to a bigger network of stores. Beginning in 2008, the candy peddler's same-store sales had dropped, hitting a historic low in 2009 at a 5% decline. The candy maker's stores -- mostly located in regional centers, tourist areas, outlet centers, street fronts, airports, and entertainment-oriented shopping centers -- offer about 100 different candies, with that number doubling during holidays. The company is banking on this vast product selection to spur consumers to impulse shop during the holidays.

Also, Rocky Mountain Chocolate Factory's launch of Aspen Leaf Yogurt, a franchisor and retailer of self-serve yogurt, is simultaneously working to expand the yogurt retailer. Through a licensing agreement with Kahala Franchise Corp., Rocky Mountain Chocolate Factory operates more than 50 co-branded stores with Cold Stone Creamery.

The company has an eye on growth while it waits for a full turnaround. Its expansion strategy includes focusing on regional locations that have high traffic. To ensure that it offers a consistent shopping experience among its stores, Rocky Mountain Chocolate enlisted the help of a design firm to update its original Victorian façade. More than 220 of its stores now incorporate the new design. Coupled with its new store design, Rocky Mountain Chocolate plans to continue to target US regional centers through its established relationships with major developers.

Hodges Capital Management owns 17% of the company and chairman and president Franklin E. Crail owns 12%. – less

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