The Rocky Mountain Chocolate Factory has seen sales drop during the first three months of the fiscal, as consumers reign in spending in response to the economic recession.

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The premium US chocolate marker and retailer today (9 July) posted a 5.5% decline in revenue for the first quarter ended 31 May. Revenue dropped to US$6.7m, down from $7.1m for the comparable period of last year.


Same-store sales at franchised retail units decreased 6.7%, the company added, attributing the drop to the economic recession.


Poor economic conditions continue to negatively impact retailing in general and regional shopping mall customer traffic, in particular, the company said.


Total factory sales declined at a slower rate of 3.8%, primarily due to a 6% decrease in same-store pounds purchased by franchised stores and a 1% decrease in the average number of franchised stores in operation.

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This was partially offset by an 18.4% increase in product shipments to customers outside of the company’s system of franchised retail stores, Rocky Mountain said.


Net earnings declined 25.5% to $747,749 in the quarter, due to lower royalty, marketing and franchise fees, along with the decline in same-store pounds of factory products purchased by franchisees.


“Our operating results continued to suffer from the effects of economic recession and a lack of available credit for new store openings by our franchisees during the most recent quarter,” commented Bryan Merryman, chief operating officer and chief financial officer.


“However, I would note that the 6.7% decline in same-store sales and 6% decrease in same-store pounds purchased by franchisees were not as great as in the fourth quarter of FY2009, and this provides us with some ‘cautious optimism’ that the US retailing environment may be stabilizing,” he added.

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