Ahead Of The Bell: Analyst Waits On Jamba Recovery

NEW YORK (AP) — Spending on smoothies appears to be a low priority to consumers given the downturn in the economy, an analyst said, following a disappointing first-quarter report from Jamba Inc., which owns and franchises Jamba Juice stores.

After the market closed Thursday, Jamba said its loss widened in the first quarter mainly due to a big drop in sales.

Overall revenue fell 13 percent while same-store sales, or sales at stores open at least a year, declined 13.8 percent.

Jefferies & Co. analyst Jeff Farmer said in a note to investors the company's same-store sales drop was the worst in the company's history despite the launch of oatmeal in the quarter.

"The same-store sales pressure does not come as a huge surprise with more than 65 percent of company stores located in California — which hit an 11 percent unemployment rate in April — and a core smoothie product that is a highly discretionary treat for most consumers," Farmer said. "However, we view Jamba to be made or broken on a meaningful same-store sales recovery, which we do not see in the near future."

The company also said Thursday it would refranchise up to 150 stores, mainly outside of California.

Farmer said "we are fans" of the strategy but that it is still "only a start."