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August 21, 2007

I SO Love and Hate Jamba Juice

posted by MR WAVETHEORY at 8/21/2007 03:56:00 PM
I don't go to Jamba Juice (Nasdaq JMBA also known as Jamba, Inc.) as I often as I used to but today when I went there, I noticed they raised prices. They also started a buy 1 get 1 free promo and added several new smoothies. If you're not in California or New York, you need to try out Jamba Juice smoothies. They're delicious. Unfortunately, they apparently aren't doing so well because of rising orange prices.

First, they raised prices on nearly all their smoothies by 10 cents or more. I hate that! They made them more expensive --- arrggghh. I couldn't do without a smoothie so I got a Fit n. Fruitful today for $4.70. It's a new smoothie they introduced and I swear that's close to a dollar more than I used to pay. I used to be able to walk out of their with an Original Acai Super Charger for around $4 and now its closer to $5.

Second, they are doing more promos. They handed me a buy 1 get 1 free coupon for any Functional Smoothie. That includes Acai Super Antioxidant, Protein Berry Workout, Fit n Fruitful, Coldbuster, and Heart Defender. The coupon is a cool lid actually that goes over the straw. The coupon is good until 11/7/2007 and says "Buy 1 Functional Smoothie and a FriendGets 1 Free." Note to self: Save the lid for next time!

The third thing that was different was they renamed their smoothies - you could call it a makeover. Acai Supercharger is now Acai Super-antioxidant. They added Fit n Fruitful and Heart Defender. Also, they added several new boosts which cost $.50 each - these are premium boosts as opposed to the free boosts that come with every smoothie. Adding more items expands the menu and my guess is they are trying to expand the average selling price of the smoothies.

I started doing some reading of some of the in store brochures and Jamba has been growing and building out stores like crazy within Safeway and Albertons stores in California. That's a new move.

I love Jamba Juice but I have been holding out on buying Jamba Juice stock. I love the product, but there are several looming issues. Number one is whether the idea scales outside of California and New York. California is the number market for Jamba Juice and has the most stores. Jamba Juice is well known here and the weather is just right because its so hot during the summer. Would it work in a state where there is not so much sun? Issue number 2 is whether this idea can attract a larger customer base. Most of the customers today are kids, teens, and 20-30 year olds. That's because it's a youth brand. You see soccer moms buying smoothies for their kid's birthday parties, high school sports teams lining up after a game, and teens of groups lining up for their PowerBoost. What you don't see are middle aged men and women standing in line. Can they attract older customers? They are apparently trying to do that with their new functional smoothies which emphasize cardiac health (Heart Defender) and anti-aging (Acai Super anti oxidant) . The answer will be key to Jamba's growth because Jamba may be facing slowing sales growth and saturation - same store sales growth which was -3.3% for the latest quarter.

Financially, the company has not delivered the outsized growth that they promised. Jamba Juice stock is trading close to the price of a Jamba Juice smoothie - at $6.69 today - and that's near its low for the past year. A year ago, it was trading at $12, so it's kind of a do or die time for the stock. Jamba Juice has been expanding the store base and maybe that's why the performance is not reflected in the results yet. Soros owns some Jamba Juice stock. I am tempted to do some nibbling on this stock.

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