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Jamba reports sales declines for Q3

Consumer spending, adverse weather affected smoothie sales

November 5, 2013
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Jamba Inc., Emeryville, Calif., reported its unaudited financial results for its fiscal third quarter, which ended Oct. 1. Jamba’s results for the quarter were impacted by constraints on consumer spending and adverse weather in key markets. As a result, same-store sales, revenue, income from operations and operating margins all declined for the quarter compared with the prior-year period. However, franchise and other revenue, such as consumer packaged goods (CPG) and JambaGo express smoothie units, increased.

For the 13 weeks ending Oct. 1, total revenue decreased 6.3 percent to $61.4 million from $65.5 million in the prior-year period. The decrease is because of a 5.5 percent decrease in company-owned comparable store sales, partially offset by an increase in franchise and other revenue of $600,000. In the third quarter, franchise-operated comparable store sales also decreased 1.3 percent. However, franchise and other revenue increased 15.8 percent to $4.3 million from $3.7 million in the prior-year period. Revenue for CPG and JambaGo was $800,000 in the quarter compared with $700,000 in the prior-year period.

JambaGo express smoothie units are opening in more than 1,000 retail locations across the country, which is the company’s largest expansion to date. Additionally, fresh-squeezed premium juice, now being added to a growing number of California units, is boosting same-store sales. And, a recently initiated major cost and productivity program is expected to yield savings of 100 to 200 basis points in operating margin.

Jamba’s operating margin was 5.4 percent for the third quarter compared with 6.9 percent for the prior-year quarter, a decrease of 150 basis points. Income from operations for the third quarter of 2013 was $3.3 million compared with $4.5 million for the third quarter of 2012, which represents a 26.9 percent decrease, reflecting the effects of decreased company-owned comparable store sales, partially offset by increased franchise revenue and reduced general and administrative expenses.

During the quarter, franchisees opened 29 new stores globally, 26 of which were in the United States. No new company-owned stores opened.

“We faced a challenging quarter that was atypical of our past performance during which we had more than two years of same-store sales growth, but we believe the setbacks will be transient while the growth prospects resulting from our achievements will be long term,” said James D. White, chairman, president and chief executive of Jamba, in a statement. “We have a powerful position in the on-trend, fast-growing healthy food, beverage and premium juice segments. Our domestic and international development prospects are growing. Our digital marketing programs are now in high gear with the national rollout of the Isis Mobile Wallet launch. And our JambaGo expansion will give many customers who are new to Jamba the opportunity to experience our great smoothies.”

For fiscal-year 2013, Jamba expects its company-owned comparable store sales to be flat to 1 percent, operating margin to be 1 to 2 percent of revenue, and CPG revenue to reach $3 million. It also plans to have between 60 and 80 new locations in the United States and abroad as well as 1,500 new JambaGo served locations.

In 2014, it expects positive company-owned comparable store sales between 2 and 4 percent, operating margin between 2 and 3 percent, between 60 and 80 new U.S. and international store locations, and as many as 1,000 new JambaGo installations.

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