Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
JMBA > SEC Filings for JMBA > Form 10-Q on 6-Aug-2013All Recent SEC Filings

Show all filings for JAMBA, INC. | Request a Trial to NEW EDGAR Online Pro

Form 10-Q for JAMBA, INC.


6-Aug-2013

Quarterly Report


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis in conjunction with our financial statements and related notes included elsewhere in this report. Except for historical information, the discussion in this report contains certain forward-looking statements that involve risks and uncertainties. We have based these forward-looking statements on our current expectations and assumptions about future events. In some cases, you can identify forward-looking statements by terminology, such as "may," "should," "could," "predict," "potential," "continue," "expect," "anticipate," "future," "intend," "plan," "believe," "estimate," "forecast" and similar expressions (or the negative of such expressions.) Forward-looking statements include, but are not limited to, statements concerning projected new store openings, 2013 revenue growth rates, and capital expenditures. Forward-looking statements are based on our beliefs as well as assumptions based on information currently available to us, including financial and operational information, the volatility of our stock price, and current competitive conditions. As a result, these statements are subject to various risks and uncertainties. For a discussion of material risks and uncertainties that the Company faces, see the discussion titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended January 1, 2013.

JAMBA, INC. OVERVIEW

Jamba, Inc., a Delaware corporation (the "Company"), and its wholly-owned subsidiary, Jamba Juice Company, is a healthy, active lifestyle brand with a global business driven by a portfolio of company-owned and franchised Jamba Juice® stores, innovative product platforms that utilize our JambaGO® and Jamba Smoothie Station™ formats, and Jamba-branded consumer packaged goods ("CPG"). As a leading "better-for-you," specialty food and beverage brand, Jamba offers great tasting, whole fruit smoothies, fresh juices, hot oatmeal, breakfast wraps, bistro sandwiches and mini-wraps, California Flatbreads™, frozen yogurt, and a variety of baked goods and snacks in our restaurants. Jamba Juice Company has expanded the Jamba brand by direct selling of CPG products and licensing its trademarks.

EXECUTIVE OVERVIEW

Key Overall Strategies

Jamba's strategic priorities were established in order to support our objective to accelerate growth and develop Jamba as a global healthy, active lifestyle brand, offering consumers compelling and differentiated products and experiences at Jamba Juice stores and through other retail distribution channels.

In 2013, we are focusing our resources on initiatives designed to drive transformative growth through multi-channel brand building, product and menu innovation, new and improved store format and design, and by leveraging unique partnerships. Our BLEND Plan continues to provide the blueprint for growing our global footprint and expanding our business model. Our key strategic priorities as described in our BLEND Plan 3.0 include:

• Brand Building and Total Innovation

• Lifestyle Engagement

• Expand Growth Initiatives

• New Products, Partners, Channels and Markets

• Drive Enterprise Efficiencies

2013 Second Quarter Financial Highlights

• Net income increased 37.5% to $6.4 million for the 13 weeks ended July 2, 2013 compared to $4.6 million for the 13 weeks ended July 3, 2012. The increase in net income was driven primarily by an:

• Increase in comparable Company Store sales of 2.2%, including 160 basis points related to increased traffic and 60 basis points related to average check increase.

• Increase in franchise and other revenue of $1.0 million.

• Diluted earnings per share was $0.36 for the 13 weeks ended July 2, 2013, compared to $0.27 per share for the 13 weeks ended July 3, 2012 resulting in a 51% increase to $6.2 million from $4.1 million, in net income available to common stockholders.

• Company Store comparable sales increased 2.2% for the 13 weeks ended July 2, 2013 as compared to the prior period in which Company Store comparable sales was 5.1%.

• System-wide comparable store sales increased by 1.7% for the 13 weeks ended July 2, 2013 and Franchise Stores comparable sales increased 1.2% for the 13 weeks ended July 2, 2013. For the 13 week period ended July 3, 2012, system-wide comparable store sales increased 5.7% and Franchise Store comparable sales increased 6.4%. System-wide and Franchise Store comparable store sales are non-GAAP financial measures representing the change in year-over-year sales for all Company Stores and Franchise Stores (system-wide) and for all Franchise Stores, respectively, opened for at least one full fiscal year.

• Total revenue increased 1.9% to $67.3 million for the 13 weeks ended July 2, 2013, compared to $66.0 million for the 13 weeks ended July 3, 2012. The change in total revenue was primarily due to the increase in comparable store sales and increase in franchise and other revenue.

• Income from operations increased 32.1% to $6.6 million for 13 weeks ended July 2, 2013, reflecting Company Store comparable sales growth, increased franchise revenue and expanding CPG sales. Operating margin improved by 230 basis points to 9.9% for the 13 weeks ended July 2, 2013 compared to the prior year period.

• General and administrative expenses decreased 5.4% to $10.2 million for the 13 weeks ended July 2, 2013, compared to $10.8 million for the 13 weeks ended July 3, 2012.

• Franchisees opened 11 new Jamba Juice stores, globally; nine new Franchise Stores, which include six Jamba Smoothie Stations ("smoothie stations"), in the United States and two new International Stores during the 13 weeks ended July 2, 2013.

• Two Company Store locations were opened and JambaGO locations served increased to 636.

2013 Second Quarter Business Highlights

Brand Building, Total Innovation and Lifestyle Engagement

We focus on building total brand value through multi-channel marketing and total innovation initiatives, including consumer loyalty and engaging marketing programs and partnerships. We address consumer health and wellness needs by offering specialty beverages and new product platforms that will meet consumer needs across all day-parts.

We continue to seek ways to become more relevant to the consumer through product introductions like our fresh-squeezed juice, which utilizes fresh vegetables and fruits and is hand-crafted for the consumer. As of July 2, 2013, we had 23 locations that offered this platform. We continue to target up to 50 locations serving fresh-squeezed juice by the end of fiscal 2013.

During the 13 week period ended July 2, 2013, sales at Company Stores opened more than one full fiscal year increased 2.2% and Franchise Store comparable sales increased 1.2%, resulting in system-wide comparable store sales increase of 1.7%. The increase in Company Store comparable sales during the quarter was largely attributable to improved traffic and an average check increase.

Television sports commentator and former Olympic champion Summer Sanders became a Jamba spokesperson and a member of the Jamba Healthy Living Council™ during the quarter. The Council expects to benefit from her knowledge and passion for healthy living, and we anticipate that consumers seeking common sense advice for living healthier lives will be drawn to, and inspired by, Ms. Sanders' contributions. Additionally, in April 2013, Jake Steinfeld, known for his popular "Body by Jake" brand, became a spokesperson for the Jamba brand and a member of the Healthy Living Council. Mr. Steinfeld launched the Jamba Healthy Living Fitness Council and will host promotional events and other activities in support of our new and expanded fresh-squeezed juice offerings, primarily at our Company Store in Santa Monica, California.

In May 2013 we successfully met our commitment to help raise funds and generate awareness for the Greater Bay Area Chapter of the American Heart Association. We engaged consumers through multi-faceted fundraising promotions in our "Whirl'd Hearts" program. In addition, our employees participated in a silent auction of donated items at our headquarters in Emeryville, California. During the quarter, we implemented various marketing promotions and consumer communications. We entered into a partnership with USA Water Polo to support a variety of activities aimed at inspiring and simplifying healthy, active lifestyles. USA Water Polo also will promote Jamba's naturally caffeinated energy drink made with 70% juice.

In July 2013, we announced our first major theatrical motion picture promotion with The Walt Disney Company for the release of "Disney's Planes," an action-packed 3D animated comedy adventure, slated to be at theaters this summer. Jamba Juice is the exclusive Quick Service Restaurant and beverage provider in the U.S. chosen to participate in promotional activities for the movie's release.

Expand Growth Initiatives, New Products, Partners, Channels and Markets

Our growth initiatives encompass the multiple portfolio opportunities we have to expand our restaurant business on a global basis, including traditional and non-traditional stores, smaller footprint Jamba Smoothie Stations and the JambaGO format. We believe these opportunities will position us for growth in market share, reduce capital outlays, provide better overall margins, allow us to open more locations at an accelerated rate, increase our brand presence to support other Company initiatives such as consumer products licensing and direct selling, and increase customer frequency.

As of July 2, 2013, we had 829 Jamba Juice stores, globally, represented by 295 Company Stores and 492 Franchise Stores in the United States, and 42 International Stores. The system is comprised of approximately 64% Franchise and International Store locations and 36% Company Store locations. During the 26 week period ended July 2, 2013, 34 Franchise Stores were opened. We expect to open 60 to 80 stores and smoothie stations by the end of fiscal 2013, globally, primarily through franchisees. The actual number of openings may differ from our expectations due to various factors, including franchisee access to capital and economic conditions.

Global Development

In the U.S. during the 13 week period ended July 2, 2013, franchisees developed and opened nine new Franchise Stores, of which one was traditional, three were non-traditional stores and six were smoothie stations. We continued expansion of our JambaGO concept in K-12 schools, convenience stores and other similar locations during the quarter. We also opened two Company Stores during the quarter. As of July 2, 2013, JambaGO is offered at 636 locations and we expect to serve approximately 1,400 to 1,500 locations by the end of fiscal 2013. Internationally, we opened two stores.

We expect to complete the remodel and refresh of approximately 50 store locations by the end of fiscal 2013. Our refresh and remodel program includes transforming our store layout and format to (1) provide customers with an enhanced experience in our stores by using environmentally friendly building materials, brighter lighting, updated graphics and bold colors as well as seating arrangements compatible with the individual store footprint and (2) facilitate fresh-squeezed juice bars in certain store locations.

In California, we have entered into development agreements with new and existing franchisees to develop 57 new Franchise Stores over the next six years, with options to open a total of nine more stores at the end of certain franchise terms. A portion of the development agreements is included in the refranchise of seven Company Stores located in California. We are working on additional packages for California, which will generate commitments to develop 27 stores with options to add a total of four more stores at the end of certain franchise terms. In addition to California, we have signed agreements to develop stores in Philadelphia, St. Louis, Kansas City, Charlotte, Nashville and Ft. Myers/Naples. These agreements represent an additional 30 new Jamba Juice stores.

Consumer Packaged Goods

We continue to explore new partnerships to extend the brand into relevant categories providing additional points of accessibility for consumers. During the quarter, we expanded distribution of our CPG direct sell businesses, Energy Drinks and Frozen Novelties, to new channels including 3,000 Rite Aid stores and online via the retailer, Fresh Direct. Jamba-branded products continue to have a presence in all 50 states.

Drive Enterprise Efficiencies

Our priorities are to drive overall profitability which includes improving store-level margin and returns for our system. Strong store-level economics are critical to our success and management is diligently focused on initiatives to improve these metrics.

We continue to experience commodity pricing pressure, particularly in areas such as dairy and fuel and our cost savings initiatives help to mitigate commodity price increases. We also focus our attention on techniques to refine our labor deployment and service tools to ensure efficient service to our customers.

During the 13 week period ended July 2, 2013, our Company Store-level margins continued to improve due to the leverage of the fixed cost component in labor and store operating costs, as a result of our comparable store sales growth. Our operating margin for the quarter increased by 230 basis points or $1.6 million primarily due to growth in our CPG model and our improved store portfolio economics.

RESULTS OF OPERATIONS - 13 WEEK PERIOD ENDED JULY 2, 2013 AS COMPARED TO 13 WEEK
PERIOD ENDED JULY 3, 2012 (UNAUDITED)



                                  13 Week                            13 Week
                               Period Ended                       Period Ended
                                  July 2,                            July 3,
(In thousands)                     2013             % (1)             2012             % (1)
Revenue:
Company Stores                 $      62,798            93.4 %    $      62,530            94.7 %
Franchise and other revenue            4,469             6.6 %            3,514             5.3 %
Total revenue                         67,267           100.0 %           66,044           100.0 %
Costs and operating
expenses:
Cost of sales                         14,858            23.7 %           13,975            22.3 %
Labor                                 16,849            26.8 %           17,148            27.4 %
Occupancy                              7,319            11.7 %            7,326            11.7 %
Store operating                        8,523            13.6 %            8,955            14.3 %
Depreciation and
amortization                           2,768             4.1 %            2,813             4.3 %
General and administrative            10,237            15.2 %           10,823            16.4 %
    Impairment of long-lived
assets                                   167             0.2 %              175             0.3 %
    Other operating, net                 (97 )          (0.1 )%            (200 )          (0.3 )%
Total costs and operating
expenses                              60,624            90.1 %           61,015            92.4 %
Income from operations                 6,643             9.9 %            5,029             7.6 %
Other income (expense), net:
Interest income                            -             0.0 %               20             0.0 %
Interest expense                         (59 )          (0.1 )%              22             0.1 %
Total other income
(expense), net                           (59 )          (0.1 )%              42             0.1 %
Income before income taxes             6,584             9.8 %            5,071             7.7 %
Income tax expense                      (234 )          (0.3 )%            (453 )          (0.7 )%
Net income                             6,350             9.5 %            4,618             7.0 %
Preferred stock dividends
and deemed dividends                    (104 )          (0.2 )%            (472 )          (0.7 )%
Net income available to
common stockholders            $       6,246             9.3 %    $       4,146             6.3 %

(1) Cost of sales, labor, occupancy and store operating percentages are calculated using Company Stores revenue. All other line items are calculated using total revenue.

Revenue

(in 000's)



                                 13 Week           % of          13 Week           % of
                               Period Ended       Total        Period Ended       Total
                               July 2, 2013      Revenue       July 3, 2012      Revenue
Revenue:
Company stores                $       62,798         93.4 %   $       62,530         94.7 %
Franchise and other revenue            4,469          6.6 %            3,514          5.3 %
Total revenue                 $       67,267        100.0 %   $       66,044        100.0 %

Total revenue is comprised of revenue from Company Stores, royalties and fees from Franchise Stores and International Stores, and revenue from CPG licensing and direct selling.

Total revenue for the 13 week period ended July 2, 2013 was $67.3 million, an increase of $1.2 million or 1.9%, compared to $66.0 million for the 13 week period ended July 3, 2012.

Company Store revenue

Company Store revenue for the 13 week period ended July 2, 2013 was $62.8 million, an increase of $0.3 million, or 0.4%, compared to Company Store revenue of $62.5 million for the 13 week period ended July 3, 2012. The increase was primarily due to Company Store comparable sales improvement as illustrated by the following table:

                                                       Company Store
                                                    Increase in Revenue
                                                        (in 000's)
                                                  Second quarter 2013 vs.
                                                    Second quarter 2012
Company Store comparable sales increase                              1,308
Reduction in the number of Company Stores, net                      (1,040 )

Total change in Company Store revenue            $                     268

Company Store comparable sales increased by $1.3 million for the 13 week period ended July 2, 2013, or 2.2%, and was attributable to an increase of 0.6% in average check and in transaction count of 1.6% as compared to the same period in the prior year. Company Store comparable sales represents the change in year-over-year sales for all Company Stores opened for at least a full fiscal year. As of July 2, 2013, approximately 99% of our Company Stores had been open for at least one full fiscal year.

Franchise and other revenue

Franchise and other revenue for the 13 week period ended July 2, 2013 was $4.5 million, an increase of $1.0 million, or 27.2% compared to franchise and other revenue of $3.5 million for the 13 week period ended July 3, 2012 primarily due to the net increase in the number of Franchise and International Stores (approximately $0.3 million) and the revenue generated by our CPG business (approximately $0.7 million).

The number of Franchise Stores and International Stores as of July 2, 2013 and July 3, 2012 was 534 and 478, respectively.

Cost of sales

Cost of sales is mostly comprised of fruit, dairy, and other products used to make smoothies and juices, paper products, costs related to managing our procurement program and vendor rebates. As a percentage of Company Store revenue, cost of sales increased to 23.7% for the 13 week period ended July 2, 2013, compared to 22.3% for the 13 week period ended July 3, 2012. The increase of cost of sales as a percentage of Company Store revenue was primarily due to a net product mix shift (approximately 0.8%) and increases in commodity costs (approximately 0.5%). Cost of sales for the 13 week period ended July 2, 2013 was $14.9 million compared to $14.0 million for the 13 week period ended July 3, 2012.

Labor

Labor costs are comprised of store management salaries and bonuses, hourly team member payroll, training costs and other associated fringe benefits. As a percentage of Company Store revenue, labor costs decreased to 26.8% for the 13 week period ended July 2, 2013, compared to 27.4% for the 13 week period ended July 3, 2012. The 0.6 % decrease of labor costs as a percentage of Company Store revenue was primarily due to labor efficiencies, improved sales volumes and more effective wage management achieved. Labor costs for the 13 week period ended July 2, 2013 were $16.8 million, a decrease of $0.3 million, or 1.8%, compared to $17.1 million for the 13 week period ended July 3, 2012.

Occupancy

Occupancy costs include both fixed and variable portions of rent, common area maintenance charges, property taxes, licenses and property insurance for all Company Store locations. As a percentage of Company Store revenue, occupancy costs remained flat at 11.7% for both the 13 week period ended July 2, 2013 and the 13 week period ended July 3, 2012. Occupancy costs for both the 13 week period ended July 2, 2013 and the 13 week period ended July 3, 2012 was $7.3 million.

Store operating

Store operating expenses consist primarily of various store-level costs such as utilities, marketing, repairs and maintenance, credit card fees and other store operating expenses. As a percentage of Company Store revenue, total store operating expenses decreased to 13.6% for the 13 week period ended July 2, 2013, compared to 14.3% for the 13 week period ended July 3, 2012. The decrease in total store operating expenses as a percentage of Company Store revenue was primarily due to a decrease in marketing expense (approximately 0.3%) and leverage gained as a result of higher sales (approximately 0.5%). Total store operating expenses for the 13 week period ended July 2, 2013 were $8.5 million, a decrease of $0.4 million, or 4.8%, compared to $9.0 million for the 13 week period ended July 3, 2012.

Depreciation and amortization

Depreciation and amortization expenses include the depreciation of fixed assets and the amortization of intangible assets. As a percentage of total revenue, depreciation and amortization decreased to 4.1% for the 13 week period ended July 2, 2013, compared to 4.3% for the 13 week period ended July 3, 2012. The decrease in depreciation and amortization as a percentage of total revenue was primarily due to the impact of leverage as a result of the increase in Company Store comparable sales (approximately 0.1%) and leverage gained from non-Company Store revenue (approximately 0.1%). Depreciation and amortization for the 13 week period ended July 2, 2013 was $2.8 million, remaining flat with the 13 week period ended July 3, 2012.

General and administrative

General and administrative ("G&A") expenses include costs associated with our corporate headquarters in Emeryville, CA, field supervision, bonuses, outside and contract services, accounting and legal fees, travel and travel-related expenses, share-based compensation and other. As a percentage of total revenue, total G&A expenses decreased to 15.2% for the 13 week period ended July 2, 2013 compared to 16.4% for the 13 week period ended July 3, 2012. Total G&A expenses for the 13 week period ended July 2, 2013 were $10.2 million, a decrease of $0.6 million, or 5.4%, compared to $10.8 million for the 13 week period ended July 3, 2012. The decrease of total G&A expenses was primarily due to reduced semi-annual performance related incentives (approximately $1.0 million), partially offset by expenses resulting from expanding growth initiatives (approximately $0.1 million) and an increase in share-based compensation (approximately $0.3 million).

Impairment of long-lived assets

Long-lived assets are reviewed for impairment when indicators of impairment are present. Expected future cash flows associated with an asset, in addition to other quantitative and qualitative analyses, including certain assumptions about expected future operating performance and changes in economic conditions are the key factors in determining undiscounted future cash flows. If the sum of the undiscounted cash flows is less than the carrying value of the asset, we recognize an impairment loss equal to the amount by which carrying value exceeds the fair value of the asset.

Impairment of long-lived assets for the 13 week periods ended July 2, 2013 and July 3, 2012 was $0.2 million.

Other operating, net

Other operating, net consists primarily of gain or loss on disposals, income from jambacard breakage, store lease termination and closure costs, pre-opening costs and expenses related to franchise and consumer packaged goods activities. For the 13 week period ended July 2, 2013, other operating, net was income of $0.1 million, compared to income of $0.2 million for the 13 week period ended July 3, 2012. The decrease was primarily due to increased expense related to consumer packaged goods activities (approximately $0.5 million), increased expenses related to franchise activities (approximately $0.4 million), an increase in estimated sales tax audit charges (approximately $0.3 million); partially offset by gain on disposal of fixed assets resulting from refranchising of (approximately $1.0 million).

Income tax expense

We recorded income tax expense of 3.6% for the 13 week period ended July 2, 2013. This is due to the pretax income, a full valuation allowance related to deductible temporary differences originating during the current year, the alternative minimum taxes and foreign withholding taxes. It is also due to a reduction of the federal income tax liability related to the net operating loss deduction for alternative minimum tax purposes.

We recorded income tax expense of 8.9% for the 13 week period ended July 3, 2012. Our prior year tax rate was also due to the pretax income, a full valuation allowance related to deductible temporary differences originating during the current year, the alternative minimum taxes and foreign withholding taxes.

RESULTS OF OPERATIONS - 26 WEEK PERIOD ENDED JULY 2, 2013 AS COMPARED TO 26 WEEK
PERIOD ENDED JULY 3, 2012 (UNAUDITED)



                                  26 Week                            26 Week
                               Period Ended                       Period Ended
                                  July 2,                            July 3,
(In thousands)                     2013             % (1)             2012             % (1)
Revenue:
Company Stores                 $     113,938            93.1 %    $     112,555            94.5 %
Franchise and other revenue            8,385             6.9 %            6,536             5.5 %
Total revenue                        122,323           100.0 %          119,091           100.0 %
Costs and operating
expenses:
Cost of sales                         27,262            23.9 %           25,586            22.7 %
Labor                                 32,604            28.6 %           32,556            28.9 %
Occupancy                             14,695            12.9 %           14,743            13.1 %
Store operating                       16,680            14.6 %           16,830            15.0 %
Depreciation and
amortization                           5,540             4.5 %            5,736             4.8 %
General and administrative            19,390            15.9 %           19,462            16.3 %
 Impairment of long-lived
assets                                   274             0.2 %              562             0.5 %
 Other operating, net                    536             0.4 %              232             0.2 %
Total costs and operating
expenses                             116,981            95.6 %          115,707            97.2 %
Income from operations                 5,342             4.4 %            3,384             2.8 %
Other income (expense), net:
. . .
  Add JMBA to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for JMBA - All Recent SEC Filings
Sign Up for a Free Trial to the NEW EDGAR Online Pro
Detailed SEC, Financial, Ownership and Offering Data on over 12,000 U.S. Public Companies.
Actionable and easy-to-use with searching, alerting, downloading and more.
Request a Trial      Sign Up Now


Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.