Final Thoughts on RMCF

Stocks closed today at $6.17. I looked back and when I started this blog the stock price was $6.24, not bad just a seven cent decrease. I believe that their stocks will go up, especially if the cobranding with Cold Stone Creamery is successful.
The CEO, President and Chairman of the Board are the same person he started the company in 1982, and has maintained his position. He can remain Chairman of the Board, but he must step down for the future growth of the company. This business has positive cashflow, net income, capital surplus, along with no R&D, the only operating expense is selling. The following list are my recommendations for RMCF future growth:
1. New transactional CEO with international experience and R&D in the chocolate industry.
2. Expansion east and internationally into Japan, and China. They are currently in the west, airports, Canada, and Arab Emirates.
3. Start R&D for research into tasty high cocoa count dark chocolate. This targets the growing "green" market of consumers that are becoming health conscience.
4. Expand the website by offering more options to buy online and look into a joint venture with UPS or FEDEX to transport the chocolate in cooler vehicles at the most economical price and within 3 days from the order.
5. My last thought "I Love Chocolate" and will continue to purchase chocolate to keep the industry going!!!

Stock Price

Stocks closed at $6.08. Earnings per share growth for the 1st quarter of the year were down 29.8% along with revenue growth 15.10%, but they are number one in the industry in dividend yield. This company must expand their franchise into the east coast, not just in airports but in malls and heavy traffic areas and increase advertising. If they continue the status quo without change, eventually the company will cease or be taken over.

Being compared to Warren Buffet's See's Candies

First thing first stocks ended the week at $5.55 down from the previous week, but I just found a positive article on RMCF. The author of the article talks about how when Warren Buffett bought See's Candies the market is almost the same now and that RMCF has been buying back shares and paying dividends. They make money but they give it back to their shareholders. If you go further and read what else people are saying about the company it is not favorable. I have read a lot on RMCF, they need to get a new CEO and marketing executive. RMCF is running in quick sand, except for the new cobranding they have not built anymore stores. The sell their chocolate for premium prices and differentiate by quality. This must be marketed to customers along with implementing less packaging to become environmentally friendly. I have been to their website and it does not entice me to buy from them. I will give a change in their top management more thought.
http://seekingalpha.com/article/132899-rocky-mountain-chocolate-factory-rocky-mountain-cash-factory?source=yahoo

Stock Price

It ended yesterday at $5.64. Stock prices seem so volatile right now. The news has a big impact on whether the stock market goes up or down. Lately the news has revolved around companies that are seeing a decrease in profits in the first quarter of this year, what we need to talk about is that Hershey actually saw a rise in profits of 20% for the first of this year, because they raised their prices and Easter sales were higher than expected. Sometimes I think that the only thing that makes news in negative information, what every person should see are great ideas happening every where in the world.
http://finance.yahoo.com/news/PreEaster-bounce-helps-lift-apf-15010029.html?.v=4

Deal with Cold Stone Creamery

The stock price went down today to $5.96, but I expect it to go up tomorrow because RMCF and Cold Stone Creamery are starting the 7 cobranding stores for a test run of 1 year. On top of this new deal with RMCF, Cold Stone came out today and said that they had double digit sales increases since February, this is because of a new innovative product "Ice Cream Cupcake". Both companies should see an increase in stock prices because of their franchising together and the products that Cold Stone Creamery are coming out with. I had not heard much about Cold Stone Creamery until about a two years ago, when my daughter in law said that Owensboro had one and it was in her opinion the best ice cream. I have not tried it, but I will now when I go to Owensboro the next time, so that I can try the new ice cream cupcakes.

http://tampabay.bizjournals.com/tampabay/stories/2009/04/13/daily55.html?ana=yfcpc

http://biz.yahoo.com/e/090421/rmcf8-k.html

Price Fixing and Stock Price

It's Friday and it was not a good week for RMCF, their stock price decreased and ended the day at $6.00. The rest of the industry saw an overall decrease for the week, except Tootsie Roll they had a .08% increase.

My news for today is price fixing, last year my teammates and I gave a presentation on Hershey being sued for price fixing, I thought that this had been settled, but it hasn't. Hershey, Mars, Nestle, and Cadbury that control 75% of the US chocolate market shares, are accused of price fixing from 2002-2007. The chocolate companies tried to get the price fixing thrown out of court, but the judge said "no" and told them that they could appeal his decision. Consequently, the US, Canada, Europe, and Germany of looking into whether the price fixing actually occurred. They raised prices three times between 2002-2007 first by 10%, 6%, and 5% and they planned on raising prices again in 2008. I actually believe that the companies did fix the prices, they act like a cartel and then just decided what they would charge and what the output would be. Over the years candy prices have had extreme price increases and there is less chocolate in the package, but overall I do not think will hurt them, because it is not in the news about the price fixing and if the companies are found quilty, they will pay the fines, continue business like normal, offer an apology, but will probably lobby Congress and the judges to keep this quiet or get it thrown out of the courts.
http://finance.yahoo.com/news/Judge-allows-appeal-in-candy-apf-14897349.html?.v=2

http://www.law.com/jsp/article.jsp?id=1202429840615

Falling Stock Price and Cocoa Grinding

RMCF has fallen with the stock market and it closed yesterday at $6.08. I talked earlier about how German cocoa grinders are probably going to have a decrease in grinding and that is what happened they had a decrease of 21.3%. This is really about who the end users are. Germany grinds cocoa for Eastern Europe and Russia, these countries have had a devaluation of their money and the countries are poor. I see these customers as spending money on essential like food, water and a place to stay warm, but countries with larger economies like US, and UK the chocolate is still being bought, because people see chocolate as an inferior good, so our income has decreased, but chocolate is still being savored. Germany is mad because European grinding figures rose .1%, they think something funny is happening, but I don't I think it is the economies of the countries that each grinder supplies.
http://www.flex-news-food.com/pages/23140/Chocolate/Cocoa/Germany/german-q1-cocoa-grind-falls-213-pct-year.html

Small Companies Increase Sales

A small chocolate shop in Jeffersonville, IN is having a great year. They have not had to increase their advertising or marketing of any kind, but they still saw a 10 - 15% increase in sales in the last couple of months. Easter was great for them. The reason is that people know the economy is bad, so they are shopping at local small businesses to keep them going. This is just another article that stresses chocolate is more recession proof than other industries.
http://www.wave3.com/Global/story.asp?S=10164110

Stock Price

I was looking at my blogs for the past week and realized that I have not put the stock price in. I had been checking it, but I forgot to mention it. Today they closed at $6.55 they had a high of $6.75 at one point and then went down. Rocky Mountain's percentage of change in their stock price is doing better than Hershey at this point and the average in the confectionary industry. This company does not have a big share of the chocolate market, but they have a good return of equity for the shareholders. If I was putting money in the stock market I would invest some in RMCF, you may not make millions like investing in "Google". I am adding the address, so you can go to the yahoo finance and look at the comparison of RMCF v. HSY.

http://finance.yahoo.com/q/bc?t=5d&s=RMCF&l=on&z=m&q=l&c=HSY

Is Chocolate Recession Proof?

In the US companies think that chocolate is recession proof, and I believe this is true, but in emerging countries chocolate processing is down. Germany grinds cocoa beans for East Europe and Russia, they are estimated to have a decrease of 20% this year. The difference in this is that chocolate is engrained into our culture, but in Russia they do not spend any of their money on something as frivilous as chocolate when they are fighting to feed their families. We see chocolate as a low cost treat in these tough economic times. This article demonstrates how business strategies must be differentiated in different cultures and how some may have to adapt during recession times and others will have to adapt less.
http://www.guardian.co.uk/business/feedarticle/8441780

Cadbury may Merge with Hershey

I have just finished reading the case on Arcelor-Mittel where the #1 and #2 steel companies merged, and industry analysists thought it was a good idea. Then I came across an article yesterday on Cadbury. They have changed their key strategy to target their core business of chocolate, so they seperated from Dr. Pepper/Snapple as a seperate US entity. When Cadbury focused on chocolate they saw an increase in sales by 7%, and they raised their prices by 10%. This was 7% more than their competitors, and then the recession hit and they have seen a 20% decrease in sales more than their competitors; thus, industry analysists are saying that they are sitting pretty for a takeover from one of the large chocolate manufacturers like Nestle or Mars. They do not want to be taken over, so they may look at merging with Hershey. This is similar to Arcelor-Mittel, but Hershey is only #1 in chocolate in the North America and Cadbury is not second by they are in the top five. Both of these companies have brand name recognition. Sometimes I am not sure industry analysists are correct, because a lot of work goes into making a successful merger like a new business strategy and integration of company culture.
http://community.investopedia.com/news/IA/2009/A-Sweet-Combination-CBY-HSY0406.aspx

Duke Analysis and Chocolate

I just finished looking at the Duke analysis. Retail shows a decrease across the board, but everything I have been reading lately. Chocolate is the one thing that is not in a decline. Chocolate is a comfort food and an inferior good and people have been buying more of it especially at small business stores. The Duke analysis is closer for the high cost and quality premium chocolate. Everyone is looking for ways to cut cost, so they are not going to pay $4.00 for one chocolate covered strawberry.

EASTER TRIVIA

I found myself searching the web today looking for chocolate news, and stumbled across some interesting facts.
EASTER FUN FACTS
• The first chocolate eggs were made in Europe in the early 19th century and remain among the most popular treats associated with Easter.
• 90 million chocolate Easter bunnies are made for Easter each year.
• 16 billion jelly beans are made for Easter.
• Each day, five million marshmallow chicks and bunnies are produced in preparation for Easter.
• 76 percent of people eat the ears on chocolate bunnies first.
• Red jelly beans are kids' favorite.
• According to the Guinness Book of World Records, the largest candy Easter egg ever made was just over 25 feet high and made of chocolate and marshmallow. The egg weighed 8,968 pounds and was supported by an internal steel frame.
• 88 percent of adults carry on the Easter tradition of creating Easter baskets for their kids.
Source: National Confectioners Association
http://www.delawareonline.com/article/20090401/LIFE/904010332

Stock Price

Stock price is on the rise at $6.22 today, RMCF still has increasing stock price over the last months when their competitors are still in the negative.

End of the Week

Stocks closed at $6.12 down from $6.40. The news this week in the confectionary industry has been pretty dull, not much going on. http://finance.yahoo.com/q/in?s=RMCF I did find something interesting on yahoo finance that Rocky Mountain Chocolate Factory is number one among its competitors in Dividend Yield and is second in ROE behind Hershey, so their shareholder should be happy with the company overall.

Stock Price

Stock price closed yesterday at $6.30 it is moving up. I hope it gets to $7.00 before we closed the semester.http://finance.yahoo.com/q?s=rmcf

New Chocolate Packaging

First thing is that the stock price soared yesterday, just as NYSE soared. All of the stock prices come from Yahoo Finance http://finance.yahoo.com/q?s=rmcf RMCF closed at $6.14.

Nestle' a competitor is developing Kansei design for their chocolate. Basically it is a design feature used for cars and Nestle is using it for Chocolate it is supposed to tap into consumers emotions Nestle says is will increase sales, profits and target specific markets. Toyota has been doing this for years and it must be working for them because their sales and profits have definitely increased. I am going to add a picture of the packaging that Nestle is using, I do like it it looks nice and appealing. If Nestle gets ahead of the competition with this idea, it should bring in more market share from their competitors. http://www.dexigner.com/product/news-g17348.html The picture is at the above web address.

Turning Chocolate shells in to "GREEN" fuel

Lindts is not a leader in the confectionary industry yet, but Lindt USA corporat strategy is to horizontally integrate backward. They plan to import cocoa beans directly from the source, produce its own product and they sell them. They are trying a new technology that burn the shell of the cocoa bean to produce a fuel source that will lower their carbon foot print. If Lindt can accomplish this it would be a great innovation, that they can then market especially to "green" consumers. I am going to follow this story to see if Lindt can pull it off.
http://www.confectionerynews.com/The-Big-Picture/Lindt-trials-chocolate-powered-fuel?nocount

Stock Price compared to competitors

RMCF ended the week at $5.74 for their stock price, it is coming up, but they are the only confectionary that is consistently above the industry average and their other competitors. It could be because they have a low price on their stock and they do not have as much stock out as the other companies, but it is amazing that they have had an overall positive stock price compared to the competition. I am adding a chart that shows RMCF compared to their competitors over the last three days.
http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1237592374750&chddm=1173&cmpto=NYSE:HSY;NYSE:TR;NASDAQ:JBSS;NASDAQ:LNCE;NYSE:CBY&cmptzos=-18000;-18000;-18000;-18000;-18000&q=NASDAQ:RMCF&ntsp=0

Hershey CEO gets "BIG" Bonus

I am watching the morning news and they are talking about the bonuses paid out by AIG and online there is a story that the CEO of Hershey just received a huge bonus. He received a bonus of $6.2 million after stopping Hershey's two year slide. David West was the COO, but he was promoted and to turn the loss of market share around for Hershey, he poured money into marketing, which is a good tactic to get customers aware of your brand. I had noticed more and more commercials on tv about Hershey "Kisses" these are the first ads I have seen for a long time.

Another bit of information in this article was that Hershey had lost their 1st place in candy sales in the US, in October Mars bought Wrigley Jr and became the #1 candy maker in the US, you do not here much on Mars because they are a private company, but Hershey is still the leader as a chocolate producer.

I still think that CEO's compensation should be tied to their performance and the profits of the company. If the company increases profits then top management should receive a small percent like the rest of the workers and they can receive a bonus like a profit bonus, that is only a small part of the profits. I do not believe that CEO's are the backbone of the company and that they are the only reason that the business increased profits. All workers should earn a part of the profits. http://biz.yahoo.com/ap/090316/hershey_executive_compensation.html?.v=1

business strategy/stock

I just checked yahoo finance and their stock price ended on March 13th at $5.40 it is increasing a little bit.

Classes before spring break were talking about business strategy and corporate strategy. RMCF is pretty easy, they use a differentiation strategy. The stores are premium chocolate stores. They make most of their chocolate on site, use premium chocolate, and this allows them to charge premium prices for goods. Last time I bought a Chocolate covered strawberry from RMCF in NM it was $4.00 up from $3.00, but I pay it because they are some of the best strawberries.

The corporate structure is a backward integration they have retail, that is their core business but they also produce the final product that they sell.

Co-branding with ice cream

I found this article and it was in Nov. 08. Rocky Mountain Chocolate Factory and Cold Stone Creamery are going to hae a test license agreement, that has 7 co-branded stores. They want to give people a reason to patronize both brands all year long.

This is strategically thinking, because they have a long term strategy to hopefully even out the seasonality of their businesses. I think that it will work better for the chocolate industry than it would for ice cream, especially if they put any of the stores in areas that get cold in the winter months.
http://web.ebscohost.com/ezproxy.waterfield.murraystate.edu/ehost/pdf?vid=26&hid=a44c3671-cd91-4ea7-8ba7-3bvf6a659555e%40SRCSM

Stocks currently at $4.84

Barry Callebaut selling consumer division

Barry Callebaut is a major player in the chocolate business. They are the global leader in bulk chocolate, which means that they supply most of the chocolate manufacturers. A few minutes ago they announced that they are selling their consumer division to Natra a Spanish company. If the deal goes through they will focus solely on B2B transactions.

When this deal was announced both companies stock prices increased Barry by 4.6% and Natra by 7.6%. http://money.cnn.com/news/newsfeeds/articles/djf500/200903030704DOWJONESDJONLINE000282_FORTUNE5.htm

Callebaut is focusing on supplying the chocolate to all manufacturers. with the economy the way it is many companies will be refocusing their core business. This is a good idea.

Increase in cost of chocolate supplies

I'll start out with the stock price down $.50 to $5.27. I did not think it would go to $4 but it may.

Found an article on Trinidad & Tobago that their food prices have gone down except for sugar, jam and confectionary. They have respectively increased by 18.3%, 30.6%, and 17%. All other food was declining, but not these items and fish, this is interesting that people even in the bad economy want to have sweets and confectionary products. http://www.trinidadexpress.com/index.pl/article_news?id=161445926

Peanut Butter Recall Affects Chocolate

I just got a recall that Fresh & Easy Neighborhood Market is recalling four of their products that contain peanut butter and chocolate. This is mainly granola bars. It deals with stores in Nevada, California, and Arizona. You may not know off the top of your head, but I actually eat one of their recalled products and it is the Sweat & Salty Granola Bars, I love these things. This peanut butter recall is a Threat to the whole confectionary industry. Even though it is peanuts a lot of chocolate candy is made with some kind of peanuts or peanut butter creme. When I was at the grocery store yesterday, I noticed a company was trying to combat the peanut butter scare, they put a flyer around the store saying that none of their products were made with the recalled peanut butter. This is one threat that even if your company does not use the recalled product it will be hurt, just by using peanut butter. http://pr-canada.net/index.php?option=com_content&task=view&id=82112&Itemid=65

By the way stock closed friday at $5.77 down just a few cents.

Corporate Structure

Stock price closed at $5.86, going up slowly. I went on their home page to see if they said anything about their corporate structure and there is not very much. They are an international franchiser and they only put their stores in four locations:
1) Factory Outlet Malls
2) Tourist Areas
3) Regional Malls
4) Street fronts

They have started a new system with kiosk's that are only 250 square feet, of the 300 items that they normally have they have cut it down to around 25 for the kiosks and they make the candy on site. What I found interesting is that 40% of their chocolate is prepared on the premises. It is a little difficult to find information on them, because they have had the same people running the company since it started and it is a small company.

This is why every time that I am in an airport I will find a RMCF and have dark chocolate covered strawberries, there is nothing like it right before you have to fly.

Competitor gets ahead & falling stock prices

RMCF's stock is not immune to the massive drop in the stock market. Today they closed at $5.69 and all of the candy manufacturers have an opportunity to follow Nestle's example.

Nestle UK is the first company to cut excess plastic out of their easter egg candy packaging. They reduced packaging by 30% which will decrease all of the easter candy plastic by 4500 tons a year. This is huge, because customers do want to be greener. I know that I am always looking at companies that have efficient products or that have less waste. When I buy my easter candy for my granddaughters I will buy Nestle, because of this fact. http://www.thepress.co.uk/news/4142552.York_Nestl___factory_driven_by_chocolate_profits/

This was an article that I found and it was printed on February 3rd. Everyone thinks that the chocolate industry is recession proof, but they have been having problems also. What is so interesting is that these problems are part of the SWOT analysis that we did this past week. There are giants in the chocolate industry: Hershey, Nestle, Cadbury, and Tootsie, but RMCF has been able to carve out a niche for themselves. They make $20-$30million in revenue a year, it is nothing like Hershey's $5 Billion, but they survive and this is a Strength. The big threats right now are the prices of cocoa, milk and other ingredients they need for making their product. Then consumers are not spending the money they were before and distribution costs have increased. I talked about their weaknesses earlier and it is the diversity with their Board members, there is none. They have the opportunity to stay under the radar of the big chocolate industry leaders, and continue to carve out their niche. Oh, by the way the stock took a nose dive and closed Friday 20th at $5.61.
http://community.investopedia.com/news/IA/2009/A-Slightly-Sweeter-Hershey-HSY-CBY-NSRGY0203.aspx?partner=YahooSA

Stock Price

Stock price ended yesterday at $6.55. I think that it will go up, I saw a video on MSN and they talked about how chocolate is recession proof, because everyone always wants chocolate. This includes myself, I look for excellent dark chocolate, anyway this guy on MSN said that people need to buy stock in the chocolate companies. We will see if people follow this advise or not.

Hershey

The Hershey Company nonexecutive Chairman Kenneth Wolfe resigned today to be replaced by James Nevels. Wolfe was only on the Board since 2007.

RMCF had a press release today that stated they were going to pay a fourth quarter dividend of $.10 per share. This is found at http://www.news.moneycentral.msn.com/ticker/article.aspx?Feed=PR&Date=20090217&ID=9615060&Symbol=RMCF

At this time of day there stock price is increasing, which is different than everyone else in the industry because their stock price is declining.

Stock Price

$7.05

They are keeping their stock price pretty even over the long run.

Financials

Yesterday we talked about different financial ratios, so I went to edgar and these numbers are from the last quarter that ended in Nov. 08.

Profit Margin 21.99%
ROA 21.99%
ROE 28.52%
Revenue $29.08 million
Qtrly revenue growth -15.10% EPS is $.646 industry = $.65
Total Cash $343.21 thousand Gross Margin = 38.58% Industry=32.59%
Current Ratio 2.835
Operating Cash Flow $4.45 million
Outstanding Shares 5.99 million
Highest Stock Price was on 3-7-08 $13.29

The industry ROE = 9.20%

Market Cap.
Cadbury $56.6 Billion
The Hershey Company $8.4 Billion
Tootsie Roll $1.3 Billion
Imperial Sugar Company $123.8 Billion
RMCF $41 Million
Industry Average is $1.01 Billion

Even though Hershey is leading the industry and they have the largest market share RMCF has good financials.

Hershey statement & Stock Price

The Hershey Company is eliminating one of two California based premium chocolate brands that they purchased in 2005.

$6.91

stock price

$7.38 I am thinking about buying some stock, but I think I will wait to see if it goes back down, which it probably will.

Board of Directors

Officers Age

Franklin Crail (67) Chairman of Board, President, CEO since (1981)
Bryan Merryman (48) CFO, COO, Treasurer, Director (1997)
Edward Dudley (45) Senior VP Sales & Marketing (1997)
Gregory Pope (42) Senior VP Development (2001)
Donna Coupe (43) VP Franchise Support & Training (2008)
Jeremy Kinney (31) VP Finance (2008)
Jay Haws (59) VP Creative (1991)
William Jobson (53) CIO (2001)
Virginia Perez (71) Corporate Secretary (1997)

Directors

The first two officers are Directors then there are three others:
Clyde Engle (66) 2000
Gerald Kien (77) 1995
Lee Mortenson (73) 1987

As you can see from the list this company does not change its Board of Directors to often. In the By-Laws it states that they can have no fewer than 3 and no more than 9.
The Directors are voted on every year, but they have no limit on how long they can serve, as long as they are doing a good job they sit on the Board forever.

I researched their competition "The Hershey Company" last year and I found the same problem with them. No women or diversity of the Board, just a bunch of older men. This is a problem, diversity brings new ideas and creativeness to the company.

The information came from RMCF home page.

Stock Price

$7.70 Wow can you believe that the stock has risen a $1 in the past couple of weeks. I hope it keeps up.

Ice Storm 09'

Been without heat, computer, and phone for a week so I haven't looked at anything. Today is my first time online in a while.

The stock price is going up. today it is at $7.25

Today in class we talked about mission statements and the Board of Directors.

Rocky Mountain Chocolate Factory has no mission statement they were incorporated in 1982 in Durango, CO. They are a retail operator in the US, Canada, and United Arab Emirates. They get money from sales of franchises, other of chocolates, and other confectionary products manufactured by the company. RMCF has over 300 chocolate candies.

Stock Price

going up to $6.85. I may not post for a few days because we are expected to have a terrible storm tomorrow, so today I will get ready for it. Make sure that I have food and gas in my vehicles.

Stock Price

Today it rose to $6.45 It is a slow rise for the stock, but it will probably not go very high, not like its competitors; Hershey, Godiva, Tootsie.

Peanut Butter Scare

Today RMCF released a statement saying "All of our product are safe to consume. No products are made with the recalled peanut butter" at http://www.news.moneycentral.msn.com/ticker/article.aspx?Feed=PR&Date=20090120&ID=9527374&Symbol=RMCF


It is a good idea to get out ahead of the incident and not set around to see what is going to happen, because this peanut butter scare could have an impact on their premium chocolate business. A lot of their money comes from people flying to different destinations in the US.

Starting blog on company

I decided to look at the Rocky Mountain Chocolate Factory, because they are pretty close to my home town in Colorado. The company started in Durango, CO.

RMCF is a premium chocolate manufacturer. The SIC Code is 2066.

Stock Price = $6.24