On January 29, 2024, Rocky Mountain Chocolate Factory, Inc. (NASDAQ: RMCF) (“Rocky Mountain” or the “Company”) announced a CEO transition as part of the Company’s ongoing turnaround efforts. A link to the Company’s press release can be found here. To get further clarity on the appointment, we sat down with Global Value Investment Corporation’s (“GVIC”) Vice President of Investment Research, Malcolm “Mac” MacLaren.
Yesterday morning, Rocky Mountain announced that, effective immediately, it appointed current independent board member Starlette B. Johnson as interim CEO of the Company. In conjunction with this news, the Company terminated the employment of Robert Sarlls, who was appointed as CEO in May 2022. Mr. Sarlls was terminated without cause and stepped down from his seat on the board of directors.
Can you give us your take beyond the headlines?
The Company’s press release stated that Ms. Johnson will act as interim CEO and would continue to serve while a search for a permanent CEO is conducted. During this time, GVIC expects that Rocky Mountain’s management team will continue to execute on the long-term strategic plan developed by the executive management team, with oversight from the board of directors. The Company has used the last two years to bolster its management team at all levels of the organization as well as refresh the board of directors. We feel that the collective experience and skills of the current management and board are well suited to guide the Company’s future growth. The board refresh included the March 2023 appointment of Ms. Johnson, who has significant operational and financial experience at national and international consumer-facing retail companies.
How does the appointment affect GVIC’s view of Rocky Mountain?
As the largest shareholder* of Rocky Mountain, GVIC continues to be supportive of the board of directors, management, and the Company’s network of franchise operators across the country. When GVIC first invested in Rocky Mountain in April 2021, we believed the Company was undervalued based on our assessment of long-term profitability, and the strong connection the Company’s customers have with its brand. Our view has not changed.
Has GVIC interacted yet with Ms. Johnson in her capacity as interim CEO?
We look forward to speaking with Ms. Johnson and remain enthusiastic about the Company’s long-term strategic plan. GVIC is a global investment management firm that deploys patient capital to build generational wealth. We regularly engage with senior management of the companies in which we invest to understand business operations and capital allocation.
*As of November 20, 2023, GVIC beneficially owns 951,376 shares, or 15.06%, of the common stock of Rocky Mountain Chocolate Factory, Inc., based on 6,315,259 shares outstanding as of January 15, 2024, as reported in the Form 10-Q for the fiscal quarter ended November 30, 2023, of Rocky Mountain Chocolate Factory, Inc.