Jennifer Convertibles Reports Results for Fourth Quarter and Fiscal Year

Furniture World Magazine

Jennifer Convertibles, Inc. announced its results for the fourth quarter and fiscal year ended August 28, 2004. These results were impacted by an overall softness of the economy, particularly in the furniture sector, and delays in implementing the new supply chain that was moved from Italy to China. For the fourth quarter, revenue increased by 9.1% to $32.7 million from the $30.0 million reported for the same period last year. For the fiscal year 2004, revenue increased 6.0% to $134.2 million from the $126.6 million reported for the same period last year. For the fourth quarter, the Company incurred a net loss of $2,607,000 or ($0.46) per basic and diluted share compared to net loss of $1,679,000 or ($.31) per basic and diluted share for the same period last year. For the fiscal year 2004, the net loss was $4,142,000 or ($0.73) per basic and diluted share compared to net loss of $3,377,000 or ($.60) per basic and diluted share for the same period last year. Operating margins decreased in the fourth quarter to 27.5% from 28.1% in the same period last year. For the fiscal year 2004, the percentage decreased to 28.9% from 31.2% for the same period last year. For the fourth quarter, selling, general, and administrative expenses decreased to 32.5% as a percentage of revenue compared to 33.7% for the same period last year. For the fiscal year 2004, selling, general, and administrative expenses decreased to 30.4% as compared to 33.1% for the same period last year. During the fourth quarter, the Company opened one new store and closed one store. The Company has opened a total of 5 stores and closed 2 stores for the fiscal year 2004. Commenting on the results of fiscal 2004, Harley J. Greenfield, Chief Executive of Jennifer, said, "During fiscal 2004, the Company continued to be impacted by the softness in the furniture sector. Additionally, the Company experienced various delays effectuating our new supply chain that had been moved from Italy to China. This impacted our margins and impeded additional sales growth. The supply chain is now in place and we will start seeing its benefits in our second fiscal quarter." Mr. Greenfield added, "Additionally we will benefit from an Amendment to the Interim Operating Agreement with the Private Company. The Private Company has waived all shortfall payments due from us under the Agreement commencing January 2005 through the end of fiscal 2007. That payment amounted to $1,245,000 in fiscal 2004. The Amendment also eliminates the royalty payment of $400,000 commencing January 2005 running until court approval of the Settlement Agreement between the Private Company and us. The combined amount was equivalent to half of our operating loss in this fiscal year. We have a clear marketing strategy that will capitalize on our supply chain shift. We feel we are on the correct path to return to profitability." Jennifer Convertibles is the owner and licensor of the largest group of sofabed specialty retail stores in the United States, with 199 Jennifer Convertibles(R) stores and 16 Jennifer Leather stores. As of November 22, 2004, the Company owned 137 stores and licensed 78 (including 27 owned and operating stores by a private company on a royalty free basis.)