Another quarter, another disappointment at Jamba (Nasdaq: JMBA).
The smoothie-pouring chain posted a loss of $0.02 a share in its latest quarter before a favorable accounting charge, twice as large a deficit as analysts were expecting.
Sure, we're talking about a penny here, but this really could have been a breakthrough quarter for the company. Revenues climbed 24% higher to $83.6 million, powered by expansion and a 3.3% uptick in comps throughout the 672-unit chain.
That's a welcome contrast to its lackluster second-quarter results, when the company rained on its seasonally strongest summer period. Revenues inched just 14% higher then as a dip in comps derailed brisk expansion plans.
The culprit this year was weakness in its Californian stronghold. Despite a chainwide price hike, comps rose a mere 1.2% in California during Q3. Same-unit sales soared 12.3% higher elsewhere.
The company opened 24 company-owned stores during the period (470 of the 672 locations are owned and operated by Jamba). It is scaling back its frenetic expansion at this point, looking to open about 60 units next year.
If there is any consolation, it's that the company isn't resting on its uninspiring laurels. A lot will happen over the next few months. By the end of the year, the company expects to announce details on a ready-to-drink product at the retail level. Jamba has been testing a breakfast menu it will roll out nationwide during 2008's Q1.
The push for morning traffic has been contagious in the quick-service industry, as Wendy's (NYSE: WEN) and Starbucks (Nasdaq: SBUX) have positioned themselves to matter more in the earliest of dayparts. This comes as morning vets like Burger King (NYSE: BKC) and McDonald's (NYSE: MCD) continue to grow their breakfast businesses.
Jamba's new items include granola-topped and chunky smoothies, juices, and a refreshed line of its baked goods. It will test warm items during the period, too. Jamba will roll out new menu boards at the same time, emphasizing the health benefits of its light smoothies.
Investors have little choice but to look ahead to 2008. Seasonally, Q4 is forgettable (smoothies sell better when it's hot outside), and this year's final period will consist of only 11 weeks instead of 12.
As an investor, I feel the pain. The stock has shed more than half of its value this year. The bottom line has failed the company's killer brand and pole position.
I'm not bailing on Jamba yet. Clearly, the Jamba Juice concept is popular and growing. The fact that the company is retreating on its once-ambitious expansion schedule is troublesome, but the market has marked down the shares to the point where negativity is already baked in.
I can't be the only one hoping for chunkier performance to coincide with the rollout of the chunky smoothies next year. Don't let us down, Jamba.
Former odes to Jamba and other earthy drinks:
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