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Jamba Guides Higher Comps

Zacks Equity Research

The leading healthy active lifestyle brand Jamba Inc. (JMBA) recently inflated its outlook for its company-owned comparable store sales (comps) and operating margin for 2012. Comps are now guided in the range of 4-6% versus its earlier projected range of 3-4%. Its adjusted profit margin also surpassed the previous guided range of 19-22% to reach a new projection of 20-23%.

Jamba is turning around at a slow but steady pace. In its recently concluded first-quarter 2012, Jamba delivered quite an upbeat performance. The company narrowed its loss and experienced a revenue increment of 4.7%. Most importantly, the upside in revenue was driven by system-wide comps growth of 11.6%.

Jamba kicked off second-quarter 2012 on a strong note which encouraged management to raise its guidance. The company continues to garner positive same-store sales growth in all four day parts with a notable performance in breakfast. Further, some of Jamba’s introductions like Fit 'n Fruitful meal replacement smoothie launched in early 2012, coupled with probiotic yogurt as well as fruit and veggie smoothies in 2011, became well accepted among consumers and are accumulating repeat guests.

However, the company reiterated its store openings guidance. The Emeryville, California-based company continues to expect 40-50 new stores in the U.S. and 10-15 new stores internationally in 2012.

Jamba is exploring every single opportunity to transform itself from a made-to-order smoothie retail chain to a healthy, active lifestyle brand by 2013. In fact, the company remains focused on various bolt-on acquisitions to widen the reach of fresh juice offerings. In addition to this beverage line, Jamba has a far reaching plan to launch a new juice bar concept in San Francisco, New York, Los Angeles, and Seattle. These innovations are part of the company’s initiative in 2012 namely ‘BLEND’ plan 2.0.

The company is also expanding into new markets in the U.S. as well as stepping beyond the border. Management believes the brand has the potential to reach 2700 units in the U.S. marketplace. On the international level, the countries that Jamba is currently eyeing are Korea, the Philippines and Canada.

Jamba, which competes with the likes of McDonald's Inc. (MCD), currently retains a Zacks #1 Rank that translates into a short-term Strong Buy rating. We are also maintaining our long-term Outperform recommendation on the stock.

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