Sunday, August 28, 2011

Jamba Juice To Open Its First Two Canadian Stores In Toronto

On May 23, Jamba Juice (JMBA) announced an agreement with Canada Juice Corp. to develop 80 stores across Canada over the next 10 years. The first Jamba Juice Canadian locations were anticipated to open in late 2011.

Thanks to PostCity, we now get more details about the first two openings:

The first Canadian Jamba Juice will open in three to four weeks in The Annex, at 495 Bloor Street West, in the former home of Walk in Wok Out. The second will be in Yorkdale mall. While these two locations are the only confirmed ones to date, “there is not a province we will not be in over the next 24 months,” Aaron [Serruya] says. The Canadian locations will be identical to their American counterparts.

Aaron says that Jamba’s fruit smoothies are addictive and that people are anticipating their arrival. “Customers will come everyday. It will be an alternative to coffee.”

The expansion of its international franchise stores is key to Jamba's growth – and, given the business model, future earnings and cash flow generation.

Right now, Jamba Juice operates about 310 locations, while 436 shops are franchise-owned.

The company, as James White, the CEO, remarked during the last conference call, intends to strongly expand the number of franchised locations in the next few years:

Let's move now to store expansion via our franchise system, which allows us to accelerate our growth, increase our brand presence, improve our overall margin and reduce capital requirements. Our ambition for international is significant, but very actionable and on track. We're focused on 10 priority markets where we can open 50 to 100 units in each market. We'll sign a master franchise agreement with a strong local partner who has a successful track record as a premier operator and brand developer.

A similar strategy is being pursued in the USA, as remarked in the Q&A session:

Gregory McKinley - Dougherty & Company LLC

Okay. And what's your franchise pipeline look domestically here now that the refranchising transactions are complete?

James White

For us, our market plan, as we look into the immediate future, so call that this current year and through '13, we would expect in the 50- to 70-unit range for that set of 3 years, it will be largely...

Gregory McKinley - Dougherty & Company LLC

Per year, 50 to 70?

James White

Per year. It will be largely franchise. We'll end up opening 8 or 9 company units this year. That will probably be cut in half as we look to the following 2 years, and we'll focus more on development with our current franchise partners as we fill in. We will continue to grow in our nontraditional venues, airports, college campuses and those kinds of venues moving forward.

Jamba Juice recently reported Q2 results that were much better than expected. While the company remains in the middle of its turn around plan, and shares are also suffering some pressure as two large shareholders are liquidating their position, even a partial execution of this growth plan (that also includes licensing Jamba branded consumer products, now in over 25,000 outlets) could deliver, in a few years, a completely different company, capable of reporting good earnings and a strong cash flow.

No comments: