This Initiative Could Turn Jamba Juice Into a Superstar

Source: Jamba Juice

It should come as no surprise to learn that with the cold, refreshing beverages Jamba (NASDAQ: JMBA  )  serves, it's the company's time to shine when it's hot out. With its chilly first-quarter results now in the rearview mirror, the all-important summer months are now in bloom and may determine the fate of the company going forward. This will be a time that will test its new whole foods blended drinks.

The juicy results
Jamba reported fiscal first-quarter results on May 8. Revenue slipped 7.4% to $51.6 million. Systemwide same-store sales ticked up 0.3%. Net loss dropped significantly from $1.2 million to $0.2 million. Jamba cited bad winter weather as a headwind.

Jamba's net loss improved despite the  overall revenue drop.  This was partially due to lower costs from delayed marketing expenses. Jamba is rolling out its new "Whole Food Blending and Juicing platform" nationally, and the company saved its marketing budget for this roll-out during the seasonally superior second and third quarters.

Thickening the blend
The company may expect the whole foods blend to be a game-changer. Back in January, Jamba announced a platform that included whole foods such as vegetables, seeds, and Greek yogurt. It sounds like a meal in a drink and Jamba is marketing it to customers as such because they can enjoy it for breakfast, lunch, or a snack on-the-go.  

Going forward, James D. White, CEO of Jamba, stated in the earnings release, "We're redefining good-for-you fruit and vegetable juices, smoothies and blends as a foundation for active, healthy living." Earlier in the same release he mentioned that results "will vary" by quarter during the roll-out but the company is confident about its guidance.

Source: Jamba Juice

Vary by quarter? It reads like Jamba's executives don't entirely know how successful the roll-out will be, which could be very good or a not-so-good thing. The company guided for same-store sales growth of between 2% and 4%. It plans to add between 60 and 80 new locations this year which is significant for a chain with only 854 locations at last count.

You are what you drink
During the conference call, the company executives offered more words of encouragement. White stated, "The popularity and momentum for juicing continues to grow from a coastal trend to a mainstream health and wellness option to add more whole foods to our diet and is spreading across the country."

He believes Jamba Juice's brand name gives it instant credibility and a "very strong" competitive advantage in this area. White added, "I've never seen our franchise community more energized by a launch in the 5 years that I've been with the company."

It seems like Jamba is going with the Chipotle Mexican Grill bandwagon in terms of marketing. While it doesn't claim to be GMO-free or any of that, White did say "freshly squeezed whole foods, blended straight from the earth." It's a similar message of "all natural."

Source: Jamba Juice

Summer of love for nutrition
Jamba will make the whole foods blend available at three times as many locations this summer, from an almost immaterial 20% of the chain during the cold months to more than half of the system by the end of the summer. The raw numbers will then give us some idea of whether it had a material impact on Jamba's same-store sales.

Jamba could use a boost. For a while now it has shown lackluster results although its bottom line has improved because of cost cutting and refranchising. Oftentimes a quick-serve company is just one great product innovation away from great results and growth again. Fools should keep a close eye on Jamba to see if this is it. 

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