Back to top

Analyst Blog

Jamba Inc. (JMBA - Snapshot Report) reported an adjusted loss of 13 cents per share in the fourth quarter of 2011, a penny better than the Zacks Consensus Estimate of a loss of 14 cents. On a reported basis, the company recorded a loss of 15 cents per share compared with the prior-year loss of 21 cents per share. Top-line growth and the efficiencies in its cost structure were primarily responsible for the improvement during the quarter.In full-fiscal 2011, adjusted loss was 14 cents per share versus 33 cents in the prior year.

The top line of the company turned positive, with consolidated revenue up 5.4% year over year to $44.3 million. The upside in revenue was driven by an extra week of operation and system-wide comparable restaurant sales (comps) growth of 5.7%, partially offset by lower company-owned store sales on the back of refranchising initiative. In full-fiscal 2011, total revenue fell 13.8% year over year to $226.4 million.

The comparable store sales increase was driven by product innovation in the breakfast and evening day parts. The system-wide comps growth of 3.7% for the full year marks the first fiscal year growth since 2007.

Quarter Highlights

Sales at company-operated restaurants were up 4.3% year over year to $41.6 million due to comps growth resulting from higher traffic and franchise. Other revenues increased 24.8% year over year to $2.8 million, fueled by an increase in the number of franchise stores and higher comparable store sales.

Jamba, the leading restaurant retailer of food and beverage offerings, experienced positive company-owned comparable store sales for the fifth consecutive quarter since 2007. Comps grew 7.7% in the reported quarter versus a rise of 0.2% in the year-ago quarter. The rise in company-owned comps was driven by price hike in the beginning of the second quarter, increased attachment and efficient promotional discounting. Same-restaurant sales at franchise stores grew 4.0% versus a growth of 1.6% in the year-ago quarter.

Jamba remains focused on reducing costs and driving productivity enhancements and during the quarter, Jamba succeeded in lowering its cost. On a year-over-year basis, cost of sales plunged 3.7% to $7.4 million, labor costs decreased 10.4% to $14.7 million, occupancy costs declined 3.7% to $7.4 million and store-operating expenses fell 11.4% to $7.1 million. Depreciation and amortization expense dropped 8.4% to $2.8 million, but general and administrative expenses rose 33.3% to $11.9 million due to performance-based compensation expense of $2.4 million. This led to a 12.2% surge in Jamba’s operating profit margin during the quarter.

Store Update           

In 2011, 49 stores were opened, among which 9 were company operated and the rest franchised. A total of 23 stores were closed, of which 11 were company owned. As many as 42 stores were refranchised. This brought the total number of stores to 769, of which 462 were franchised and 307 company owned.

For 2012, Jamba plans to set up 40-50 new stores in U.S. locations and 10-15 new stores internationally.

Financial Position

The company ended 2011 with cash and cash equivalents of $19.6 million and total liability of $68.1 million.


The Emeryville, California-based company continues to expect company-owned comparable store sales growth of 3-4% and adjusted operating margin in a range of 19-22%.

Our Take    

Jamba is turning around at a slow but steady pace. The company has been successful in achieving the objectives of BLEND Plan 1.0, which focused on cost reduction, better service to attract customer, expand menu across day parts; accelerate franchise growth and build a robust consumer products portfolio through licensing. Jamba is now focusing on BLEND Plan 2.0, to grow from a smoothie company to a globally recognized healthy and lifestyle brand. Moreover, apart from the domestic market, Jamba is in an expansion spree overseas. The countries that Jamba is currently eyeing are Korea, the Philippines and Canada.  

Jamba which competes with McDonald's Inc. (MCD - Analyst Report) and Starbucks Corp. (SBUX - Analyst Report) currently retains a Zacks #3 Rank, which translates into short-term Hold rating. But we are maintaining our long-term Outperform recommendation on the stock.

Please login to or register to post a comment.