Jamba Juice Company, a subsidiary of Jamba Inc. (JMBA), is planning a massive expansion in its home-court California, over the next six-to-seven years. The company’s growth plans include the launch of up to 120 stores in more than 100 business areas and 25 mall locations across Northern, Central and Southern California.
Jamba Juice currently operates more than 788 stores. The company plans to open the new stores through both new and existing franchises. It is also preparing for the launch of many company-owned stores.
The company’s founding state, California, remains an ideal location for development as it is one of the most populous and widespread state in the U.S. The promising restaurant industry in this state is a major driving force to the U.S. economy. In 2012, the total revenue from the restaurant sector in California is projected around $63.8 billion.
We believe that the development plan will further strengthen Jamba Juice’s position in its prime California market, going forward. However, the company will likely face stiff competition in that area from its peers like Starbucks Corporation (SBUX) and Caribou Coffee Company Inc. (CBOU).
Jamba has always remained focused on expansion and expects accelerated growth in both core existing markets as well as new geographic areas. For 2012, Jamba plans to open 40–50 new stores in the U.S. locations and 15 new stores internationally. In 2013, the company plans to further speed up its development process by opening 60 to 80 U.S. and international stores.
Jamba, currently carries a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Our long-term recommendation for the stock remains ‘Underperform’.
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