White knows this is a major hurdle in the industry that's why he always claims they will be ahead of peers in the industry which is true to many degrees. But the underlying concern here is how to turn the chain consistently profitable and growing. It is true that mcdonalds won't be able to take away marketshare from jamba for smoothie only customers but in the same manner it has been proven that white was unable to also convince someone to go healthy and take their customers and bring them from mcdonalds.
The mentioned problems also explains why they have difficulty finding international partners because the partners have trouble quantifying building a scale in a new country and having the ability to make high margins on a model that just is prohibited to such.
my most recent frustration with white is he confuses consumer spending with the consumer being confused. he doesn't realize they are confused because he keeps increasing costs, and they are not loyal to jamba because the quality and consistency of the experience is hit or miss each time.
you might ask then why I invested in jamba in the first place having knowing this. I did so thinking white would be able to diversify from this with more food additions, hot drinks, distributions of CPG, and jambago. Even if the stores stayed steady, but they increased footprint we would have seen more continued growth on a store expansion level, we would have been able to grow on all fronts with all that they had.
I would think that Heyer's recent purchases are more of a signal to show his interest to capitalize on the failures that White is beginning to face, in this to make a bigger move to push the board to take immediate action on the problems they will face. My gut is after this year's slight profitability, they will encounter another headwind next year.
White was able to buy himself time by cutting plenty of costs, raising cash through sales of stores, but the reality was he was never able to fix efficiencies needed to oversee the stores and maintain a good consistency and quality, while maintaining the high margins to actually make money. I noticed margins are a big issue here when you see their drinks go up 20-40 cents in small increments at a time, and only us shareholders who don't mind paying extra $1.00 in 1 year for the same smoothie don't notice it, but the majority of their potential customers do complain.
The key that everyone probably even within jamba juice knew was they needed to increase sales to have a scale and have the ability to really reach higher profits, then reinvest to grow further by sacrificing again higher margins to get better quality, and better consistency. You notice margins hardly increase with large increases in revenue, which mean they don't really have additional savings in costs or labor through more efficiency with added sales volume. In short this is a diminishing returns scenario for them which is very difficult to manage. That is the reason why white has always been trying to add another product outside of their core such as food to increase margins across the board, but the problem is their smoothie is always their core. Nobody is going to walk into a store for a cup of oatmeal or a waffle even if it tastes so good, when the purpose of jamba stores is for smoothies. That's like saying I will only go to mcdonalds for their French fries.
This explains why the first fly to drop was Schroder because he is underpressure to meet such concerns of quality and consistency in operations, while white's focus is to figure a way to raise those revenues, but since he failed in doing so with the approved campaigns, so now the heat went on Schroder and he will be the first to be blamed on the team.
only until this last second half of the year after confirmation from jamba management did I realize that jamba stores will never be able consistently drive profit for a parent to become a global smoothie chain and here's the reason:
1. In order for a chain to be successful they need to first be consistent across the board period. Being a franchise has not helped that much, hence the reason why some stores make money and some don't which lead to major hurdles Franchises ultimately exhaust parent resources causing more difficult to drive much needed consistency to all stores leading to a unique customer experience that sets the brand above all. No ifs or buts.
Consistency is flawed at jamba for the fact they are trying to work high margins with low labor costs and low cost of goods. Everytime you pull in cheap labor, you get cheap quality. Period. again quality goes down, and so does the customer experience. I can go on and on about this one topic, and this is what drives sales in the long term, quality consistency which leads to customer repetition and continued growth. This is no secret in the industry. In fact I got into a fast casual startup venture for understanding the fundamentals for a business like jamba juice's chain model and begun to learn the intricacies of running this type of business which has taught me even more in recent times. The primary purpose of going chain is to get the full value of branding and customer image just like mcdonald's has done, starbucks, etc.
I've pretty much taken all my long term holdings from jamba and only hold a few call options that I had which should have been for short term profit taking had things panned out as they guided. I will probably lose those before they can find a buyer to save them from the troubles they will be ready to face.
I admit the likelihood of true shenanigans these guys were playing all along while stringing us shareholders along to rape and milk the company for a few years,
from a previous article in april 2013: Although smoothie shop business Jamba Inc. lost $7 million in its fourth quarter and $1.9 million in the year ended Jan. 1, the company nevertheless raised the salary of CEO and President James White to $600,000 on Jan. 2.
The increase for White was 4.3 percent, or $25,000 extra per year.
Chief Financial Officer Karen Luey, who is also chief administrative officer and secretary of the Emeryville company (NASDAQ: JMBA), got a $24,000 raise to bring her salary to $352,000.
Chief Operating Officer Bruce Schroder had his salary raised 8 percent, or $24,000, to $324,000. And Chief Brand Officer Julie Washington got a 5.3 percent raise of $15,000 to make her salary $300,000.
This was a telling tale of what was going on.
I believe CPG was reduced probably because Talbott was pulled and they could no longer factor in $1mm because Talbott is thrown to the scrap heap. Jambago I also believed was going to be a brand winner, but I doubt anything will bring more people to the stores, I will post in another thread why I think this is doomed now.
Maybe I should have listened to those board shorts who come off as disgruntled employees, who probably have more access to info to know these guys pretty much were crooks.
James white, Karen Luey, Bruce Schroder, you took at least $5mm combined dollars worth which should have been for Jamba shareholders.
they've done the lower guidance, now they're letting the stock fall. here comes the sandbagging when they make a few extra dollars off the jambago and the cpg's.
did anyone bother asking them what they plan to do with talbott teas?
I won't be surprised that Heyer's purchases were to plan for a potential board struggle, white will need to go as Chairman. presiding as such as prevented past takeover offers if there were any, because white was most likely in a position telling the board they have better chances of staying independent. Now a $4 takeout would have looked like the right thing to accept.
white is truly a sandbagging moron like I said in previous posts, what happened to the childrens drinks. complete garbage disaster, you notice he doesn't talk about that anymore?
I am thinking it will go lower when market continues downward, I am sorry to say we will test new 52 week lows again with this type of news. the upside movement was all based on outperformance,nobody is expecting this to be break even. 12 is a good add in, but because I am not expecting any upside surprises in the next 2 q's, I expect downward pressures nearterm from the market.
honestly white had managed this time to bungle things, who thinks I am putting them down too much by calling it sandbagging, I don't know what it is called at this time.
very few has been talking about minimum wage increases in California and how it will affect jamba since more than 50% of their stores are in CA. they need to merge with a Panera or another QSR before they lose scale leverage.
looks to me they can guide lower, and then let stock fall a bit and follow up with another sandbag.
KDP, sorry I thought you were an accountant hence my misstatement. However I do know based on your seekingalpha posts you have a good understanding of the balance sheet and PNL.
I saw that also white was trying to subtly hint that it is more difficult to have consistent growth in the market and blame the consumer. although mcd and starbucks are struggling to find consistent growth these days the bottom line is they have such huge numbers it is different than jamba's case which is still in its infancy compared to the life of the former.
my mention of them sandbagging is due to the fact that they have always put out a small new product or idea to make us believe that will be the next big thing, and instead of really going out and trying to capitalize and make the best of it, they kill it before they have a chance to even try.
you'll never really make it big in life if you don't really try. so what's in it for them to play this tune? to keep their job. all those guys, even ron Johnson made a big move in JC penney to try and prove his way works, even though it costed him his job. White should put his neck out on the line and try to work hard on something big, we don't want to own a 7-11. 7-11 is big, but how much growth have they experienced in the last 5-10 years compared to their last 30 years?
why is it that everytime you show up the stock goes down? you are a hyper that's always on the tail end of a rise, stop trading.
as I indicated earlier, I believe now that white is doing enough just to make him and the team look good. that's all, they're stringing it along at the pace of making enough targets to get the maximum pay without breaking the bank. seriously the bottom line if he was a believe like jobs or bufffett in his own capacity, he would opt to be paid very razor thin and get compensated with long term incentives like shares and less pay
what I wanted to ask you is whether it is possible for them to book some CPGs in this quarter by aggressively discounting or giving some sort of promo so they can beat on some fronts on the quarter if same store sales is down or isn't tracking to give a 4-6% gain for the year. Because I feel most likely they are behind on S3 based on ocular checks on the stores.
I have a strong feeling they are cutting things very short to meet the profitability goal but at the same time are sacrificing and risking losing customers by deteriorating the quality of customer service and support.
for some reason, the rest of my message was cut off after asking if you are a cpa, because I had some accounting questions related to jamba I wanted to clarify with you.
What I can say is they are not covering all their channels. Something is missing or they are covering some major deficiencies and covering up running ops thin to cut expenses to meet projections. the website store has no inventory, so obviously ecommerce sales is not being watched by anyone. for a company the size and scale of jamba to have nobody dedicated to drive sales, means they are spread too thin, I don't really know anymore how hard james white works to make sure all these things are not falling through the cracks.
perhaps white is always campaigning to the board how they will be in trouble and lacking a CEO if he doesn't get the pay he wants. something really just doesn't add up here, and we better get some serious answers oct 7.
frankly I think they will meet their goals to be profitable this year, even if they end up short the 7mm they projected, they will find a way to convince the remaining shareholders that 4mm although not 7mm is better than -3 million.
as my last post indicated sandbagging at best, I don't know what you call it when they cut expenses to the point you can see quality and innovation suffering. white did ironically say if they didn't continue expenses on R&D they wouldn't have come up with things like Jambago, but then again this underscores how it Is now obvious he is more of a salesman than an executioner.
I've run out of patience with this 18 month cycle of we have this new product that will be the gamechanger, and hope the next pack that buys into it will not realize the same tune was played since 2008.
I won't be surprised if oct 7 for jambago they say they only make max avg $500 net profit off each machine each year, and even though the number is small, we found a way to saturate these in 30k stores within 3 years because capital cost is almost free for the company, and the distributors can use any existing taylor machine. this is the tune I am talking about.
the proper way to value IMMU is to look not at the pipeline drug sales potential but what their patent/IP portfolio is valued at and the potential to unleash cash from that portfolio.
Take a look at a tech company similar to IMMU's model in OLED. OLED has made very little revenue off their portfolio, but continued to be valued at over 1bb market cap simply because it had superior OLED technology for screens, which someday all manufacturers had to use their technology at some point in the future.
IMMU has the potential just like OLED to make millions off their IP in the cancer therapeutic market, so it deserves a higher sustainable value in the near term once people recognize this, which is starting to happen.
this company has way too much potential, it is not just the pipeline but the foundation of all their drug development that will make it a winner. it will put PCYC to shame in a few years. I would hold and throw the shares away in your mattress because this will make you catch up on stock gains you missed from AAPL, TSLA, and BRKA combined!
don't worry about today's move, it was just driven by some mention of it in roche conference. check the siliconinvestor bulletin board to find out what.
just read about their cancer curing drugs, they attack the cancer cells directly with the minimal amount of damage to healthy cells. think of it like a magnet that pulls out all the bad cells while the good cells don't notice it.