Jamba, Inc. First Quarter 2014 Comparable Store Sales Increase for Company-Owned and Franchise Stores

2014-05-12
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  • Jamba Jamba, Inc. (NASDAQ:JMBA) reported unaudited financial results for the first fiscal quarter ended April 1, 2014. The Company recorded quarterly comparable store sales(1) increases for Company-owned and franchise-operated stores, driven by increases in average check.

    Jamba, Inc. (NASDAQ:JMBA) reported unaudited financial results for the first fiscal quarter ended April 1, 2014. The Company recorded quarterly comparable store sales(1) increases for Company-owned and franchise-operated stores, driven by increases in average check.

    Jamba® also reported accelerated expansion of its on-trend fresh-squeezed juice and whole food blending platform, which by quarter end was in 130 units. Strong acceptance of Jamba’s new customer loyalty program attracted more than 500,000 users in its initial two months. Redemptions of Jamba’s million free smoothie and juice promotion, in partnership with ISIS and featuring their Mobile Wallet technology, grew during the quarter to more than 270,000. The Company expects to reach the maximum one million level by fall.

    Highlights for the 13 weeks ended April 1, 2014, compared to the 13 weeks ended April 2, 2013:

    • Company-owned comparable store sales(1) increased 0.6% for the quarter compared to the prior year period.
    • System-wide comparable store sales(1) increased 0.3% for the quarter and franchise-operated comparable store sales(1) increased 0.1% for the quarter compared to the prior year period.
    • Net loss narrowed sharply to $(0.2) million, or $(0.01) diluted loss per share for the quarter, compared to net loss of $(1.2) million or $(0.11) diluted loss per share for the prior year period.
    • Total revenue for the 13 weeks ended April 1, 2014 was $51.6 million compared to total revenue of $55.7 million for the prior year period.
    • Jamba’s loss from operations decreased $1.1 million to $(0.2) million for the 13 weeks ended April 1, 2014, reflecting Company-owned store comparable sales growth and increased franchise revenue. Operating margin improved by 190 basis points to (0.4)% for the 13 weeks ended April 1, 2014 compared to the prior year period.
    • General and administrative expenses for the 13 weeks ended April 1, 2014 decreased 8.9% to $8.4 million compared with $9.2 million for the prior year period.
    • During the quarter, franchisees opened 11 new stores globally; nine new franchise stores in the U.S. and two new international stores.
    • Within the last four weeks, one store, the first of 80 units planned for Mexico, opened.

    “Our first quarter results reflect meaningful accomplishments on several fronts,” said James D. White, chairman, president and CEO of Jamba, Inc. “Our same store sales gains were nominal, but outpaced our competitive set by 2-3%. We made excellent progress in the national rollout of our whole food blending and juice platform that we plan to have in over 500 units before year-end. As the popularity of juicing and whole food blends grows, we believe our competitive advantages of brand strength, know-how, development skills and supply chain efficiencies will make Jamba® the leader with a significant advantage over our nearest competitors. While we anticipate results will vary by quarter during this major rollout, we remain confident about our full-year guidance.”

    Mr. White continued, “Jamba’s use of technology to build customer satisfaction was enhanced with the introduction of the very popular Jamba Insider Rewards loyalty program and the growing appeal of our million-smoothie giveaway that features the ISIS Mobile Wallet with tap-and-pay smartphone technology. We believe this initiative has placed Jamba among the best in class for overall customer satisfaction ratings for two consecutive quarters.”

    “Importantly, our multifaceted marketing program and product innovations are repositioning the Jamba brand to fully align it with juicing for existing and new consumers. We’re redefining good-for-you fruit and vegetable juices, smoothies and blends as a foundation for active, healthy living,” concluded Mr. White.

    First Quarter Fiscal 2014 Results

    Revenue

    For the 13 weeks ended April 1, 2014, total revenue decreased 7.3% to $51.6 million from $55.7 million in the prior year period. The decrease is primarily due to the reduction in the number of Company-owned stores pursuant to the Company’s refranchising strategy partially offset by the 0.6% increase in Company-owned comparable store sales(1). The number of Company-owned stores at the end of the 13 week periods ended April 1, 2014 and April 2, 2013 was 263 and 300, respectively. The increase in Company-owned comparable store sales(1) of 0.6% was driven primarily by an increase in average check of 650 basis points, partially offset by a decrease in transaction count of 590 basis points. During the 13 week period ended April 1, 2014, franchise-operated comparable store sales(1) increased 0.1%. Franchise and other revenue increased 11.4% to $4.4 million from $3.9 million in the prior year period. JambaGO® and CPG revenue was $1.0 million in both the 13 week periods ended April 1, 2014 and April 2, 2013.

    Loss from Operations and Operating Margin

    Jamba’s operating margin improved by 190 basis points to (0.4)% for the first quarter of 2014 compared to (2.3)% for the quarter ended April 2, 2013. On a dollar basis, the $(0.2) million loss from operations for the first quarter of 2014 was a $1.1 million improvement from the $(1.3) million loss from operations in the first quarter of 2013 reflecting the increased franchise and other revenue, reduced general and administration expenses and improved leveraging of fixed costs resulting from the Company-owned store comparable sales growth.

    Retail Growth

    As of April 1, 2014, system-wide, Jamba® has 807 stores in the United States, of which 544 are franchise-operated stores, and 263 are Company-owned. Franchise-operated stores include 39 Jamba Smoothie Stations™, our limited menu express format. During the quarter, Jamba opened nine new domestic franchise-operated stores, four non-traditional and five traditional, and two international store locations, one in Canada and one in South Korea. No new Company-owned stores opened during the quarter. During the quarter, eight store locations were closed globally. As of April 1, 2014 there were 47 international store locations, all of which are franchise-operated. During the quarter, over 1,800 JambaGO® units were in operation. As of April 1, 2014, 130 Jamba Juice® store locations offered the fresh-squeezed juice platform and the Company expects this platform to be available at more than 500 store locations by the end of 2014.

    Liquidity

    On April 1, 2014, the Company held $25.3 million in cash and cash equivalents as compared to $32.4 million cash and cash equivalents at December 31, 2013. As of April 1, 2014 and April 2, 2013, the Company did not have any restricted cash.

    Outlook for 2014

    The Company continues to expect to achieve the following results for fiscal 2014:

    • Positive Company-owned comparable store sales(1) of 2.0% - 4.0% ;
    • Store-level margin of 18.0% - 19.0%;
    • Operating margin of 2.0% - 3.0%;
    • 60 - 80 new U.S. and international store locations;
    • Up to 1,000 new JambaGO installations.

    About Jamba, Inc.

    Jamba, Inc., (the “Company”) owns and franchises Jamba Juice® stores through its wholly-owned subsidiary, Jamba Juice Company. Jamba Juice Company is a leading restaurant retailer of better-for-you, specialty beverage and food offerings, which include great tasting, whole fruit smoothies, fresh-squeezed juices and juice blends, hot teas and a variety of food items including, hot oatmeal, breakfast wraps, sandwiches, Artisan Flatbreads™, baked goods and snacks. As of April 1, 2014, there were 854 store locations globally. There were 263 Company-owned and operated stores and 544 franchise-operated stores in the United States, and 47 franchise-operated international stores. Jamba Juice Company expanded the Jamba brand by direct selling of consumer packaged goods (“CPG”) and licensing its trademarks. CPG products for at-home enjoyment are also available online, through select retailers across the nation and in Jamba® outlets in the United States.

    Non-GAAP Financial Measures

    The Company provides certain supplemental non-GAAP financial measures to its investors as a complement to the most comparable GAAP measures. The Company believes that providing these non-GAAP measures to its investors, in addition to corresponding GAAP income statement measures, provides investors the benefit of viewing the Company's performance using the same financial metrics that the management team uses in making many key decisions and understanding how the Company's core business operations may perform and may look in the future. The non-GAAP financial measures are discussed further in Footnotes below.

    Non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States of America. Non-GAAP measures should not be considered in isolation from or as a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies.

    Footnotes

    (1) Comparable store sales are calculated using sales of Jamba Juice® stores open more than one full year. Company-owned comparable store sales percentages are based on sales from Company-owned stores included in our store base. Franchise-operated comparable store sales percentages are based on sales from franchised stores, as reported by franchisees, which are included in our store base. System-wide sales percentages are based on sales by both Company-owned and franchise-operated stores, as reported by our franchisees, which are included in our store base. Company-owned stores that were sold in refranchising transactions are included in the Company-owned store base for each accounting period of the fiscal quarter to the extent the sale is consummated at least three days prior to the end of such accounting period, but only for the days such stores have been Company-owned. Thereafter, such stores are excluded from the store base until such stores have been franchise-operated for at least one full fiscal period, at which point such stores are included in the franchise-operated store base and compared to sales in the comparable period of the prior year. Comparable store sales exclude closed locations. Company-owned comparable store sales percentages as used herein, may not be equivalent to Company-owned comparable store sales as defined or used by other companies. Franchise-operated comparable store sales percentages and system-wide sales percentages as used herein are non-GAAP financial measures and should not be considered in isolation or as substitute for other measures of performance prepared in accordance with generally accepted accounting principles in the United States. Management reviews the increase or decrease in Company-owned comparable store sales, franchise-operated comparable store sales and system-wide sales compared with the same period in the prior year to assess business trends and make certain business decisions. The Company believes the data is useful in assessing the overall performance of the Jamba® brand and, ultimately, the performance of the Company, the Company-owned stores, and franchise-operated stores.

     
    JAMBA, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited)
           
    April 1, December 31,
    (In thousands, except share and per share amounts)   2014     2013  
    ASSETS
    Current assets:
    Cash and cash equivalents $ 25,294 $ 32,386
    Receivables, net of allowances of $280 and $291 12,570 14,110
    Inventories 2,624 2,670
    Prepaid and refundable taxes 359 483
    Prepaid rent 2,910 307
    Prepaid expenses and other current assets   6,545     6,727  
    Total current assets 50,302 56,683
     
    Property, fixtures and equipment, net 38,320 37,485
    Goodwill 1,233 1,233
    Trademarks and other intangible assets, net 1,321 1,317
    Other long-term assets   1,147     1,198  
    Total assets $ 92,323   $ 97,916  
     
    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
    Accounts payable $ 4,874 $ 5,086
    Accrued compensation and benefits 3,827 5,538
    Workers' compensation and health insurance reserves 989 1,046
    Accrued jambacard liability 33,048 37,121
    Other current liabilities   14,691     13,082  
    Total current liabilities 57,429 61,873
     
    Deferred rent and other long-term liabilities   7,258     9,201  
    Total liabilities   64,687     71,074  
     
    Commitments and contingencies
     
     
    Stockholders' equity:
    Common stock, $.001 par value, 30,000,000 shares authorized; 17,193,163 and 17,154,655
    shares issued and outstanding at April 1, 2014 and December 31, 2013, respectively. 17 17
    Additional paid-in-capital 392,272 391,234
    Accumulated deficit   (364,653 )   (364,409 )
    Total stockholders' equity   27,636     26,842  
    Total liabilities and stockholders' equity $ 92,323   $ 97,916  
     

    Share and per share data have been adjusted for all periods presented to reflect a five-for-one reverse stock split effective May 31, 2013.

           
    JAMBA, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (Unaudited)
     
     
    13 Week     13 Week
    Period Ended Period Ended
    (In thousands except share and per share amounts) April 1, 2014 April 2, 2013
     
    Revenue:
    Company stores $ 47,272 $ 51,769
    Franchise and other revenue   4,361     3,916  
    Total revenue   51,633     55,685  
     
    Costs and operating expenses:
    Cost of sales 11,582 12,404
    Labor 14,330 15,755
    Occupancy 6,967 7,376
    Store operating 7,402 8,786
    Depreciation and amortization 2,618 2,772
    General and administrative 8,350 9,169
    Other operating, net   603     726  
    Total costs and operating expenses   51,852     56,988  
     
    Loss from operations (219 ) (1,303 )
     
    Other income (expense), net:
     
    Interest income 16 -
    Interest expense   (46 )   (78 )
    Total other expense, net   (30 )   (78 )
     
    Loss before income taxes (249 ) (1,381 )
     
    Income tax benefit 5 139
       
    Net loss   (244 )   (1,242 )
     
    Preferred stock dividends and deemed dividends - (484 )
       
    Net loss attributable to common stockholders $ (244 ) $ (1,726 )
     
     
    Weighted-average shares used in computation of loss per share:
    Basic 17,165,087 16,141,884
    Diluted 17,165,087 16,141,884
     
    Loss per share:
    Basic $ (0.01 ) $ (0.11 )
    Diluted $ (0.01 ) $ (0.11 )
     

    Share and per share data have been adjusted for all periods presented to reflect a five-for-one reverse stock split effective May 31, 2013.



    Logos, product and company names mentioned are the property of their respective owners.

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