Despite trumping sales estimates, Jamba Juice (NASDAQ:JMBA) revealed a sharp decline in first-quarter revenue that sent its loss plummeting from the year-earlier period as it continued selling company-owned stores to franchises as part of its strategic overhaul efforts.
Out of Jamba’s 741 stores, only 307 are company owned, with the rest operated by franchises. During the last quarter, Jamba sold another 42 company-owned stores to franchises, resulting in the completion of the refranchising initiative.
As part of the initiative, the company has been streamlining operations and targeting a smaller, more geographically concentrated company-owned store base to cut costs.
The Emeryville, Calif.-based smoothie maker posted a widened net loss of $6.5 million, or 11 cents a share, compared with a loss of $5.3 million, or 13 cents a share, in the same quarter last year. The performance was worse than expected with Thomson Reuters analysts expecting a loss of 7 cents.
Revenue for the three months ending April 19 was $66.2 million, down 17.7% from $80.4 million a year ago, but beating the Street’s view of $61.72 million. The sales slipped primarily on a reduction of company-owned stores as a part of its refranchising initiative, and a lower transaction count blamed on poor weather.
Still, the retailer said system-wide comparable store sales climbed 3.1% during the period, cushioned by a 4.6% drop in general and administrative expenses to $10.4 million. Franchise and other revenues grew 51.8% due to a higher number of franchise-operated stores.
“Our performance this quarter puts us on a solid path to deliver our overall objectives for the year,” Jamba CEO James White said in a statement. “Most importantly, we achieved positive company-store comparable sales for our second consecutive quarter, reflecting sequential improvement in seven of the last eight quarters.”
During the quarter, Jamba increased marketing expenses to introduce new beverage offerings such as its yogurt blends platform and fruit and vegetable platform. The company also launched its baked goods refresh.
Looking ahead, the retailer said it plans on delivering positive company-owned comparable store sales of 2% to 4% in 2011, while developing 50 to 70 U.S. locations as traditional, non-traditional and express franchise stores.