Jamba's Guidance Won't Be Smoothed Over

Jamba's Guidance Won't Be Smoothed Over

Smoothie slinger Jamba sent investors scurrying for the exits after announcing lowered guidance for the 2013 fiscal year. Shares have fallen as much as 20% in trading today.

In a release regarding "Key Business Initiatives," the company said that for stores open at least one year, sales growth will be "flat to 1%." Jamba had previously guided for growth of 4% to 6%. The company cited a decrease in consumer spending, poor weather in "key markets," and more competition in the space as the culprits for lackluster growth. Jamba also expects profit margins to be smaller than originally forecast.

Motley Fool analyst Matt Argersinger thinks Jamba's key problem is the competition. Given that smoothies and juices are available in various other specialty drink stores such as Robeks, as well as leviathan chains like Starbucks and McDonald's, Jamba faces an uphill battle. Jamba investors have had a rough ride since the company went public eight years ago, and Matt thinks the stock will continue to be a speculative play.

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The article Jamba's Guidance Won't Be Smoothed Over originally appeared on Fool.com.

Erin Kennedy has no position in any stocks mentioned. Matthew Argersinger owns shares of Starbucks. The Motley Fool recommends McDonald's and Starbucks. The Motley Fool owns shares of McDonald's and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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