Jennifer Convertibles Reports Revenue Decrease For Quarter

Furniture World Magazine

Jennifer Convertibles, Inc. announced its unaudited financial results for the first fiscal quarter ended November 25, 2006. For the first quarter, revenue from continuing operations decreased by 8.5% to $32.7 million from the $35.7 million reported for the same period last year. For the first quarter, the Company had a net loss of $637,000 or ($0.09) per basic and diluted share, compared to net income of $848,000, which includes a $195,000 gain from the early termination of a lease for a store which was closed in June 2005, or $0.12 and $0.11 per basic and diluted share, respectively, for the same period last year. Operating margins from continuing operations decreased in the first quarter to 29.9% from 32.4% during the same period last year. For the first quarter, selling, general and administrative expenses from continuing operations increased to 31.5% as a percentage of revenue from continuing operations compared to 29.9% for the same period last year. During the thirteen-week period ended November 25, 2006, the Company closed a store in Woodland Hills, California and its operating results are recorded in continuing operations based on management's judgment that there will be significant continuing sales to costumers of the closed store from other stores in the area. For the first quarter of fiscal 2006, income from discontinued operations was $134,000. During the quarter, the Company did not open any stores and closed one store as described above. Commenting on the results Harley J. Greenfield, Chief Executive Officer of Jennifer said, "The softness that has been experienced for some time in the retail furniture industry finally impacted our results. As I had indicated previously we noticed a softening in demand at the end of our fourth fiscal quarter. We have made a number of changes including adjustments to margins, merchandising strategies and advertising and believe that these changes will return the Company to profitability in the near future, even if the softness in the industry continues." Mr. Greenfield added, "On a brighter note our cash and investments increased to more than $15.5 million and at the end of the quarter our customer deposits (which result in future sales) increased by almost $3.5 million. Work is underway to complete our first Ashley Furniture HomeStore, which we expect to open by the end of April. This store will be more than 40,000 square and located on Glen Cove Road in Carle Place, New York. We are currently in the process of evaluating locations for our next two Ashley Furniture HomeStores. We believe based on our analysis of stores in similar metropolitan areas that these stores will add substantial growth to our solid Jennifer base as we expect each store to generate between $15 and $20 million in revenues with solid profits." Jennifer Convertibles is the owner and licensor of the largest group of sofabed specialty retail stores in the United States, with 171 Jennifer Convertibles(R) stores and is the largest specialty retailer of leather furniture with 16 Jennifer Leather stores. As of January 9, 2007, the Company owned 163 stores and licensed 24 stores. Of the 24 stores, 23 are owned and operated by a related private company and one is managed by the private company.