Rocky Mountain Chocolate Factory reported third-quarter fiscal 2026 revenue of $7.5 million, down from $7.9 million in the prior-year period, reflecting an intentional pullback from lower-margin channels. Despite the top-line decline, the company narrowed its net loss to $0.2 million (-$0.02 per share) versus a $0.8 million loss (-$0.11 per share) a year earlier. Adjusted EBITDA swung to positive $0.4 million from negative $0.4 million, underscoring the impact of the company’s margin-first transformation strategy on profitability metrics even as revenue was curtailed by channel reshaping efforts.

Gross profit rose to $1.4 million from $0.7 million in the year-ago quarter, driven by targeted pricing actions, a more profitable product mix and labor efficiencies. Manufacturing margin surged to 21.4% for the quarter ended November 30, 2025, compared with 10% in the same period a year earlier and negative 0.6% in the prior quarter. Total operating expenses fell to $7.5 million from $8.6 million, reflecting savings across nearly all areas of operations and SKU rationalization that eliminated hundreds of low-contributing items and reduced overtime and temporary labor costs.

The company’s franchise development pipeline comprises two new stores under construction and 34 units governed by recently signed area development agreements spanning four franchisees. Rocky Mountain Chocolate Factory continues to prioritize partnerships with well-capitalized operators, requiring new locations to achieve at least $1 million in annual retail sales within three years. The existing estate of more than 250 franchised and licensed outlets is being optimized through selective closures of underperforming stores, while cross-selling opportunities in approximately 140 locations aim to boost same-store sales by increasing factory-produced chocolate penetration.

Subsequent to quarter end, the company raised $2.7 million in equity capital, using $1.2 million to reduce debt and retaining $1.5 million to bolster working capital. Management indicated that future capital allocation will emphasize debt reduction and targeted reinvestment in technology, franchise support and manufacturing efficiencies, funded primarily through free cash flow rather than additional equity issuance. The move positions the company to fund its remodel program—scheduled to begin March 2026—and accelerate digital initiatives such as store-level e-commerce integrations and a new loyalty platform.