at the consumer growth conference last july jamba�s cfo don breen talked about volatility in same store growth. (it�s archived on their website, go to minute 29 of the presentation)
�One of the things we�ve talked about and have tried to be very up front about from our concept standpoint is that we have volatile comp store sales. some of the initiatives that paul has talked about are aimed at trying to mitigate some of that. we intend to try to address volatile comp store sales by continuing to increase frequency and increase our geographical diversity because our stores are impacted by weather��
There�s an interesting slide which shows same store sales ranges over an 8 year period. On a yearly basis same store sales on average come out at about flat to up 6 percent. If you look at the numbers on tighter time frames this volatility increases significantly. On a quarterly basis there is almost 15 points of variability (from negative 3.8 to positive 10.8 percent). On a 4 week basis the volatility increases to a 30 percentage point range.
Although disappointing the latest sss growth numbers aren�t that suprising. They have a high density of stores in one area and a business which is affected by, among other things, the weather. As they move eastward, grow the store count, and increase the number of non-traditional locations (indoor malls, airports, universities) the sss volatility will decrease and seasonality issues will become less important. They are just getting started.
the explanation that too many stores are concentrated in california and effected by the weather does not hold up imho
has the weather really been all that different this year?
are not prices for smoothies higher this year than last and shouldn't this have contributed to higher sss?
isn't jamba getting a quarter extra for everything with oj and shouldn't this also have let to higher sales?
what is different this year than last is that jamba no longer is promoting the $25 gift cards with offering of a free smoothie. that could possibly account for some decline but still the sales should have been growing not declining and that is a very bad omen. the "viral" marketing is just not cutting it and i for one am sick of management's use of this term.
all in all, the numbers were not good and jamba got justifiably punished. we are very disappointed.