Jamba Inc.’s (JMBA) second quarter 2010 earnings of 2 cents per share missed the Zacks Consensus Estimate of 6 cents, but were higher than the loss of 10 cents in the prior-year quarter.
The top line of the company continues to struggle, as consolidated revenues fell 10.9% year over year to $74.1 million, which was below the Zacks Consensus Estimate of $75.0 million. Sales at company-operated restaurants were down 11.5% to $72.3 million, due to a reduction in the number of restaurants in operation at the end of the quarter compared with the prior-year quarter. However, Franchise and other revenues grew 20.3% to $1.8 million, fueled by an advance in royalties related to the increase in the number of franchise stores.
Jamba experienced a drop in its company-owned comparable store sales, which declined to 2.4% in the reported quarter, compared with 13.7% a year ago. However, comparable store sales are improving from the last five quarters and were up 90 basis points (bps) sequentially.
Jamba’s transition to a more franchise-centric model should reduce its capital employed and stabilize cash flow generation. Currently, 58.0% of total units are company-owned. Jamba expects to launch 30 to 50 new franchise units in fiscal year 2010. After achieving this target, the company will have approximately 60% franchised and 40% company-owned stores.
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