Jones Soda (JSDA): How low can you go?

Jones Soda Co. (NASDAQ:JSDA) 'swings' (man I hate that term) to a Q2 loss which put shares at $2.35 in today's trading, just a few cents above their 52-week low. So does anyone believe in the company these days?

Here's the lowdown from the conference call:

Jones Soda reported a loss of $2.7 million, or 10 cents per share, compared with a profit of $40,726, or break-even per share, in the year ago quarter.

Revenue fell 10 percent to $11.7 million from $13 million in the prior-year period, missing analysts' forecast of $14.4 million. The latest results reflect a reduction of $2.3 million in promotional allowances and slotting fees, compared to $250,000 a year earlier.

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Analysts polled by Thomson Financial, on average, expected a loss of 7 cents per share on revenue of $11.1 million.

Chief Executive Stephen Jones noted: “We continue the transition of the Jones Soda Co, started in 2007, in what is described as a difficult economic period.

The Chart shows that in spades:

 
“We continue to learn and adjust our perspective, and sharpen our tactics to increase sales and margin at the same time.”

Jones – which made its name by offering unusual flavours and featuring photos taken by consumers on its labels – recently expanded its product portfolio by launching 24C, a new line of fruit-flavoured multivitamin drinks.

Rollout and relisting
“Our second quarter performance was highlighted by the ongoing rollout of 24C across North America through our DSD network, and the relisting of multiple Jones Soda SKUs in a majority of Target locations,” said Stephen Jones.

“In addition, concentrate sales to National Beverage increased 34%, due primarily to shipments in preparation for the launch of Jones Cola, Jones Sugar Free Cola and Jones Lemon Lime.

“We also shipped our traditional flavours during the quarter. We did experience some softness in our core bottle business during the second quarter, but are pleased with bottle performance in key markets.”

The CEO concluded: “While we are pleased with progress on many fronts, we increased promotion allowances and slotting fees in order to support the new can presence and bolster the bottle business.

“This had a negative impact on our net sales and profitability. We believe these key expenditures will result in greater awareness of our beverages and a stronger market position for our company.”

So how much lower can Jones shares go?  Tough question, but at this rate, it's best to wait for a new 52-week low before you think about buying on the dip. Wall Street's expectations are too high for the small time soda maker with big time dreams.  It's going to take at least one good quarter for investors to get behind Jones and actually hold their shares for longer than one week.  Love the product, love the company, but hate the share price.

SOURCE: http://foodbev.com/ArticleDetail.aspx?contentId=1339

Disclaimer: No positions in JSDA