Q1 2011 Earnings Call
May 23, 2011 5:00 pm ET
Karen Luey - Chief Financial Officer, Principal Accounting Officer and Senior Vice President
James White - Chairman of the Board, Chief Executive Officer and President
Kurt Frederick - Wedbush Securities Inc.
Conrad Lyon - B. Riley & Co., LLC
Gregory McKinley - Dougherty & Company LLC
Chris Krueger - Northland Securities Inc.
Previous Statements by JMBA
» Jamba's CEO Discusses Q4 2010 Results - Earnings Call Transcript
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» Jamba, Inc. Q4 2009 Earnings Call Transcript
Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Jamba First Quarter 2011 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Monday, May 23, 2011. Now I'd like to turn the conference over to Ms. Karen Luey, Senior Vice President, Chief Financial Officer. Please go ahead, ma'am.
Thank you, operator. Good afternoon. With me on today's call is James D. White, our Chairman, President and CEO. During today's call, I will review our first quarter financial results. James will follow with an update on our 2011 progress against plan and a review of our 2011 guidance. We will then open up the call for questions.
I would like to remind all listeners that this call is being broadcast and recorded live over the Internet at jambajuice.com. The webcast is available on our website, and the replay will be available via telephone until June 13, 2011.
This conference call will include forward-looking statements within the meanings of the Securities Law. These forward-looking statements will include discussions about the company's strategic priorities and certain statements of our expectations and plans. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements that are contained in the company's filings with the SEC, including the Risk Factors section in our Form 10-K. The company does not assume any obligation to publicly release any revisions to the forward-looking statements discussed during the call.
With that said, I would like to turn it over to James.
Thank you, Karen. Welcome to our first quarter call. When I spoke on our last earnings call, I said 2011 would be a year of accelerated growth for Jamba, and based on our first quarter performance, I can say we have a solid start to deliver on those expectations. Q1 had several accomplishments that I'll highlight briefly and cover later in more detail. Importantly, we had comparable store sales for our company-owned stores that increased for the second consecutive quarter, giving us sequential sales increases in 7 of the last 8 quarters, and comparable store sales also were positive for our franchise stores.
We significantly improved our operating profit margin. We expanded our menu innovation with the launch of several new and improved on-trend products. We accelerated our consumer brand products with the introduction of new lines and expansion of existing products. We continued our global franchise growth with the signing of an agreement for the Philippines, our second major international market.
We had the opening of our first Jamba location in South Korea and of 8 locations in the U.S. We completed our re-franchising program with the sale of 41 stores in the Midwest. We implemented several initiatives to improve our customer service, deliver enhanced leadership training and ensure excellence in our store operations, and we recently announced a relationship with the international tennis superstar and Jamba fan, Venus Williams, who plans to open 5 stores over the next 2 years in the Washington, D.C. and Maryland at Marketplace.
Our improved balance sheet, including our current cash position, increased our ability to make investments in marketing and G&A to accelerate 3 critical initiatives: product innovation, CPG licensing and international expansion. I will return to provide additional perspective on these accomplishments and share more about the key initiatives that will drive our results for the balance of 2011.
With that overview, I will now ask Karen to take us through the financials.
Thank you, James. On a GAAP basis, our results for the first quarter of 2011 were a net loss of $6.5 million compared to a net loss of $5.3 million for the prior year same quarter. Net loss adjusted for the impact of nonroutine items such as lease terminations. Gain or loss from re-franchising and impairment improved by $1 million to a net loss of $5.4 million. Our non-GAAP adjusted operating profit excluding re-franchising removed the impact of the 147 stores re-franchised after fiscal 2009, improved by $1.4 million to $9.3 million or an improvement of 220 basis points to 15.2% compared to 13% in the prior year. The definition of adjusted operating profit can be found in our earnings release, and we believe that this is the best gauge of our ongoing core business.
The improvement is primarily related to our second sequential quarter of positive comparable store sales, continued efficiencies in cost of sales and labor, and some leverage of our fixed costs. We remain on track to meet our commitment, and all components of our fiscal 2011 guidance remains unchanged.
We completed our re-franchise initiative at the end of the first quarter with the closing of the Midwest deal of 41 store locations. In aggregate, the re-franchise initiative has brought in cash proceeds of $21.5 million, and we took that note totaling $2.3 million. We reported company comparable store sales of 2.2%, which is our second straight quarter of positive comps and reflects sequential improvement in 7 of our last 8 quarters. The results of our comparable store sales for the quarter includes a 380 basis point increase due to average check, and a 160 basis point decrease related to traffic primarily weather-related.