Loading...
01/11 11:26
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Despite revenue growth and strategic initiatives like dynamic pricing and brand repositioning, the company faces challenges such as consistent net losses, high-interest debt, and unclear guidance on store openings. The Q&A highlighted uncertainties in cash burn and factory improvements. Although cocoa price easing may improve margins, the overall sentiment remains negative due to financial strain and lack of clear positive catalysts.
Total Revenue $6.8 million compared to $6.4 million in the same period last year, reflecting a year-over-year increase. The increase is attributed to higher product sales and franchise and royalty fees.
Product Sales $5.2 million compared to $4.9 million last year, showing a year-over-year increase. This growth is due to improved factory efficiency and operational improvements.
Franchise and Royalty Fees $1.6 million, up from $1.5 million in the same period last year, indicating a year-over-year increase. This is likely due to franchise development momentum and increased franchisee engagement.
Total Product and Retail Gross Profit Negative $33,000 compared to $0.6 million last year, showing a significant year-over-year decline. The decrease is attributed to timing of inventory adjustments, despite being partially offset by factory efficiency gains.
Total Costs and Expenses $7.3 million, which were essentially flat compared to the same period last year, indicating no significant year-over-year change.
Net Loss $0.7 million or a negative $0.09 per share, compared to a net loss of $0.7 million or a negative $0.11 per share in the second fiscal quarter of '25. The loss remained consistent year-over-year.
Cash $2 million as of August 31, 2025, compared to $0.7 million at February 28, 2025, showing an increase. The increase is due to $1.8 million in new borrowings to support working capital and seasonal needs.
Total Debt Outstanding $7.8 million as of August 31, 2025, reflecting an increase due to new borrowings, including a $1.2 million term loan and $0.6 million incremental loan under the existing credit facility.
New product packaging: Rolled out to most stores with positive feedback from franchisees and customers. Modular design allows for rapid adjustments based on customer data.
R&D executive hire: Hired a new world-class R&D executive with confectionery experience to accelerate new product introductions.
Franchise development: Momentum continues with new VP of Franchise Development hired in August. New store agreements signed for locations in California, New Jersey, and negotiations for Houston Hobby Airport.
Geographic expansion: Focus on developing new markets, including areas with little or no presence, both north and south of the border.
Operational improvements: New VP of Operations implemented strategies to reduce overtime, scrap, and waste, and improve inventory management. Warehouse and logistics operations overhauled to ensure lean inventory and frequent deliveries.
Digital initiatives: Refreshed website launched, loyalty program planned for early next year, and expanded third-party delivery partnerships with DoorDash and others.
Rebranding efforts: Modernized customer touchpoints including logo, store design, packaging, website, and mascot. Remodels planned for early 2026 to align stores with new brand identity.
Company-owned store acquisition: Acquired a store in Camarillo, California for $165,000, expected to improve profitability and serve as a test bed for new practices.
Operational Challenges: The company is facing ongoing operational challenges, including inefficiencies in warehouse and logistics operations, which require overhauls to ensure lean inventory levels and frequent delivery to franchise locations.
Personnel and Operating Decisions: Difficult personnel and operating decisions have been made, incurring immediate costs, which are necessary for long-term potential but pose short-term financial strain.
Production and Supply Chain: The company is working to eliminate overtime compensation, reduce scrap and waste, and improve in-stock items to fulfill franchisee orders. However, these changes are still in progress and critical for financial improvement.
Franchise Development: While franchise development is progressing, there is a need for strategic planning to expand into new markets and ensure quality over quantity in franchise recruitment.
Financial Performance: The company reported a net loss of $0.7 million for the quarter, reflecting challenges in achieving profitability despite revenue growth.
Debt and Interest Rates: The company has increased its debt to $7.8 million, with loans carrying a high 12% interest rate, which could strain financial resources.
Holiday Season Preparedness: The company is preparing for the busy holiday season but must ensure operational execution to meet franchisee and customer demand effectively.
Brand and Store Remodels: The rebranding and store remodels are resource-intensive and will take time to align all stores with the new brand identity, posing a challenge to short-term financials.
Return to historic levels of profitability: The company aims to return to historic levels of profitability over the coming quarters and years through improved sales, production, and franchise development.
Operational improvements for Q3 and Q4: The company is implementing operational improvements, including cost-saving strategies, lean inventory levels, and enhanced logistics, to meet demand during the busy holiday seasons of Q3 and Q4.
Franchise development and geographic expansion: The company plans to open new stores in underrepresented markets, including international locations, and focus on increasing store ownership per franchisee. New store builds and remodels are expected to align with the refreshed brand identity by early 2026.
Rebranding and store remodels: The company expects to complete most store remodels by early 2026, aligning with the new brand identity, including updated signage, layouts, and merchandising.
New product development and R&D: The company has hired a new R&D executive to accelerate the introduction of new products, enhancing offerings for franchisees and customers.
Digital initiatives and customer engagement: The company is rolling out a new loyalty program in early 2026, expanding third-party delivery partnerships, and enhancing its digital presence to drive customer engagement and incremental growth.
Company-owned store acquisitions: The company plans to acquire more company-owned stores in strategic markets to test and develop best practices, with the expectation of improved profitability and operational insights.
The selected topic was not discussed during the call.
Despite revenue growth and strategic initiatives like dynamic pricing and brand repositioning, the company faces challenges such as consistent net losses, high-interest debt, and unclear guidance on store openings. The Q&A highlighted uncertainties in cash burn and factory improvements. Although cocoa price easing may improve margins, the overall sentiment remains negative due to financial strain and lack of clear positive catalysts.
The earnings call highlights improved financial metrics, including first positive EBITDA in years and reduced net loss, which are strong indicators of financial recovery. Despite flat revenue, improved margins and reduced expenses are positive. The Q&A section reveals management's focus on operational efficiencies and franchisee support, but a lack of specific guidance and leadership clarity could temper optimism. Overall, the financial improvements and strategic focus suggest a positive stock reaction, tempered by uncertainties in leadership and future guidance.
The earnings call highlights several negative factors: increased losses, higher costs, supply chain issues, and competitive pressures. Refinancing increased debt, and cash reserves decreased significantly. While revenue grew, margins declined due to raw material costs. The Q&A section did not alleviate concerns, with management providing unclear responses. Despite some positive feedback on rebranding, the overall financial and operational challenges suggest a likely negative stock price reaction in the short term.
The earnings call presents a mixed picture: slight revenue growth, improved EBITDA, and strategic initiatives like ERP and rebranding are positive. However, margin pressures, increased expenses, and a net loss are concerning. The Q&A reveals enthusiasm for rebranding but lacks clarity on ERP benefits and store expansion. The credit facility improves liquidity but adds debt. Overall, the sentiment is balanced, with no strong catalysts for significant stock movement, likely leading to a neutral market reaction.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
