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Jamba outlines strategy after big 2nd-Q loss

EMERYVILLE Calif. After reporting a second quarter loss of $89.2 million, Jamba Inc.’s new management team, which has been on the job for three weeks, said it would close additional Jamba Juice locations, terminate more employees and shift the company’s focus to franchised unit growth and its ready-to-drink retail products.

The parent company to 518 Jamba Juice stores and franchisor to an additional 218 units said it identified about 20 restaurants it could soon close, depending on negotiations with landlords. So far this year Jamba has closed 11 restaurants and terminated leases on 13 un-built locations. In addition, Jamba said it terminated 16 corporate employees this week, bringing its total number of firings since April to 71 positions, or 30 percent of the company’s corporate support staff.

“Our plan going forward assumes that [economic] headwinds will remain through the middle of 2009, if not longer,” said Steven Berrard, Jamba’s chief executive and president. “As such, our strategy is focused on changes in our business model shifting our focus from corporate store growth to franchising and in some cases refranchising. We are seeking to maximize revenue streams from the Jamba brand based on our initial results from our relationship with Nestle.”

In May, Jamba partnered with Nestle to introduce a line of ready-to-drink beverages that are sold in supermarkets and convenience stores in eight Western states. The company said results have exceeded initial expectations, but it did not reveal details.

The Jamba Juice chain has been hard hit by a same-store sales slump, particularly in its home state of California, where a severe housing-market collapse and increased gas prices have dampened consumer spending. The smoothie specialist has worked this year to increase menu items, especially during the breakfast daypart, and last month orchestrated a management shakeup in which longtime chief executive Paul Clayton was replaced by Berrard.

For its second quarter ended July 15, Jamba posted a net loss of $89.2 million, or $1.69 per share, compared with a year-ago profit of $2.3 million, or 4 cents per share. Included in the latest quarter were two charges: one of $5.5 million for the store closures and lease termination costs; and another totaling $82.6 million for trademark impairment, or the reduction in carrying value of the brand’s trademarks.

Total revenues for the second quarter rose 10 percent from a year ago to $98.6 million. Same-store sales at corporate locations fell 7.3 percent.

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