JMBA: CEO Comments on Q3 Results and Outlines Improvement Plan for 2009
Submitted By Knobias ClipReport
JMBA: CEO Comments on Q3 Results and Outlines Improvement Plan for 2009
By Fain Hughes, fhughes@knobias.com
Jamba, Inc. (JMBA) reported its financial results for the third quarter ended October 7, 2008 after the bell on Monday.
Total Q3 revenue of $86.6 million was an increase of 3.6% from $83.6 million in Q3 of 2007. Diluted earnings (loss) per share of $(0.23) in Q3 of 2008, compared to $0.40 in Q3 of 2007. Diluted loss per share in Q3 of 2008 would have been $(0.11) compared to $(0.01), excluding store impairment, lease termination and store closure costs and gain (loss) from derivative liabilities.
Steven R. Berrard, Chairman and interim President and CEO, commented in a conference call, “While we are extremely disappointed in our Q3 sales results, we remain confident that the initiatives that we have implemented will drive improvement in 2009, especially in the second half of 2009. Due to the economic environment, we see little or no growth for the remainder of 2008. We expect low single digit growth in 2009.”
He explained, “We believe, based on our recent and in-depth review and evaluation, that Jamba’s poor performance over the last couple of years was attributed to a high degree of inflexibility in regards to its business model, a lack of technological investment, limited cost controls, inconsistent real estate site selection, aging stores without necessary refreshes, deterioration in quality of customer service, abandonment of local store marketing programs and cannibalization of existing stores. We estimate that only 196, or 37%, of our 520 stores have not been cannibalized. We estimate that there were more than 800 competitors operating within a two-mile radius of our company stores.”
Mr. Berrard continued, “There is little we can do about the state of the economy, but there is much we can do to address and improve on our past performance and create value going forward. We have developed a number of revenue, cost and expense initiatives that address the specific issues related to this performance. These initiatives, which are currently underway, have been prioritized into twenty different programs. Our 2009 plan will be built on these initiatives. We are the category leader with an iconic brand and great potential to restore outstanding stand-alone economics. We have a 36% awareness nationally and 89% awareness in California. Our addressable market is over $2.3 billion and is expected to grow. We have 100 million annual customer visits and strong strategic partnerships with companies like Nestle and Nike. We also have growth opportunities through franchising and licensing without the need for significant capital expenditures. The current economic environment is an excellent time for an industry leader to aggressively seek market share as an avenue of growth.”
“Our current strategic focus is management of liquidity, changes in our business model, improving store performance and profitability, maximizing revenue opportunities from the Jamba brand and reducing costs. Our 2009 capital expenditure plan is mostly discretionary, and we will focus on store refurbishment and technology investments to drive sales growth and help us operated more effectively and efficiently. We have implemented strict guidelines for site selections These stricter requirements seem to be working as evidenced by the performance of some of our new store openings.”
Mr. Berrard added, “We will also expand our presence with a greater emphasis on franchising. Our goal is to more evenly weigh company-owned and franchised stores. We believe this will better position us for growth in market share, reduce capital outlay, provide greater overall margins, allow us to open more stores faster, increase brand presence and increase customer frequency. We will also accelerate our focus on airports, transit hubs, supermarkets and college campuses. Our 2009 plan calls for 50-55 new franchise locations, of which 30-35 will be non-traditional. We intend to delay our international development until 2010. Our focus will also be to restore 20% EBITDA store margins through cost and expense reductions and improved sales.”
The Company also announced today the appointment of James White as its President and CEO and as a member of its Board of Directors. Mr. White’s planned start date is December 1, 2008. Mr. Berrard will be stepping down as the Company’s interim Chief Executive Officer and President but will remain as the Company’s Chairman of the Board of Directors.
Mr. White was most recently Senior Vice President of Consumer Brands at Safeway, Inc. (SWY). Mr. White also held the position of Senior Vice President of Business Development, North America, for The Gillette Company.
November 19th, 2008 at 10:01 am
This new CEO has no experience as a CEO
This does not look good for Jamba. With nothing but reported loss after loss, I have little to no faith that this company can turn around. They have been hemoraging cash for the past two years and have been extremely unwise with their money. Although adding a new CEO is a positive step, they decided to add one with no experience and who is basically unknown.
Looking at the plan they’ve posted it looks completely unrealistic to me. I think Jamba is soon to meet its doom. I would dump the stock and watch it go bankrupt very soon.