Jennifer Convertibles Reports 1.6% Comparable Store Sales Increase

Furniture World News

Jennifer Convertibles, Inc. announced its financial results for the fourth quarter and fiscal year ended August 26, 2006. For the fourth quarter, revenue from continuing operations increased by 2.2% to $36.2 million from the $35.4 million reported for the same period last year. For the fiscal year 2006, revenue from continuing operations increased 15.8% to $140.4 million from the $121.2 reported in the same period last year. For the fourth quarter, the Company generated net income of $1,573,000, or $0.21 and $0.18 per basic and diluted share, respectively, compared to net income of $2,585,000, which included a $600,000 collection of receivables from the Private Company, or $0.36 per basic and $0.35 per diluted share for the same period last year. For the fiscal year 2006, net income was $5,220,000 or $0.71 and $0.62 per basic and diluted share, respectively, compared to a net loss of $3,870,000 or ($.67) per basic and diluted share for the same period last year. Operating margins from continuing operations remained constant during the current three month period and increased during the twelve month period to 31.9% and 31.6%, respectively, compared to operating margins from continuing operations of 31.9% and 28.6%, respectively, during the three and twelve month periods last year. For the fourth quarter, selling, general and administrative expenses from continuing operations increased to 26.7% as a percentage of revenue from continuing operations compared to 25.7% for the same period last year. For the twelve month period, selling, general and administrative expenses from continuing operations decreased to 27.4% compared to 30.8% for the same period last year. During the fourth quarter, the Company did not close any stores. During fiscal 2006, the Company closed three stores, of which the operating results were reported as discontinued operations. Loss from discontinued operations amounted to $0 and ($85,000) in the fourth quarter of 2006 and 2005, respectively. For the twelve month periods for fiscal 2006 and 2005, income (loss) from discontinued operations amounted to $91,000 and ($1,039,000), respectively. Commenting on the results of the year, Harley J. Greenfield, Chief Executive Officer of Jennifer said, "We are extremely pleased with the results we achieved during Fiscal 2006. We reported significant increases in revenues and operating results for the year, demonstrating that our supply chain and merchandising strategy is producing strong top and bottom line growth". Mr. Greenfield added, "We were able to generate positive revenue and comparable store sales growth for the quarter, despite being up against an extremely strong fourth quarter of last fiscal year. We have recently seen a softening of demand, which may have an impact on the first quarter results, but are confident that the results for fiscal 2007 will continue to show solid revenues and operating results." Commenting on the agreement with Ashley Furniture HomeStores, Mr. Greenfield said, "We have signed a lease to open our first store in Carle Place, New York. Based on our due diligence of Ashley Furniture HomeStores that were opened in similar metropolitan areas, we believe that the stores that we plan to open should generate between $15 and $20 million in revenues. By capitalizing on our infrastructure, we believe that we should be able to bring to the bottom line margins similar to that of Jennifer. I am excited about this potential for increased growth and profitability." Jennifer Convertibles is the owner and licensor of the largest group of sofabed specialty retail stores in the United States, with 175 Jennifer Convertibles® stores and is the largest specialty retailer of leather furniture with 16 Jennifer Leather stores. As of November 21, 2006, the Company owned 166 stores and licensed 25 stores. Of the 25 stores, 24 are owned and operated by a related private company and one is managed by the private company.