Jennifer Convertibles Reports Results for Fourth Quarter and Fiscal Year End

Furniture World Magazine

- Revenue from continuing operations decreased 16.3% for quarter, 9.7% year-to-date - Comparable store sales decreased by 19.5% for quarter, 16.8% year-to-date - (Loss) income from continuing operations ($828,000) versus $1,790,000 for quarter, ($3,060,000) versus $4,151,000 year-to-date - Basic EPS ($0.12) versus $0.22 for quarter, ($0.47) versus $0.51 year-to-date - Diluted EPS ($0.12) versus $0.20 for quarter, ($0.47) versus $0.45 year-to-date Jennifer Convertibles, Inc. announced its financial results for the fourth quarter and fiscal year ended August 30, 2008. For the fourth quarter, revenue from continuing operations decreased by 16.3% to $30.8 million from the $36.8 million reported for the same period last year. For the fiscal year 2008, revenue from continuing operations decreased 9.7% to $120.9 million from the $133.9 reported in the same period last year. For the fourth quarter, the Company had a net loss of ($867,000), or ($0.12) per basic and diluted share, compared to net income of $1,741,000, or $0.22 and $0.20 per basic and diluted share, respectively, for the same period last year. For the fiscal year 2008, the net loss was ($3,329,000) or ($0.47) per basic and diluted share, compared to net income of $3,971,000 or $0.51 and $0.45 per basic and diluted share, respectively, for the same period last year. For the fourth quarter, operating margins from continuing operations decreased to 30.8% as a percentage of revenue from continuing operations compared to 33.0% for the same period last year. For the twelve-month period, operating margins from continuing operations decreased to 29.3% compared to 31.3% for the same period last year. For the fourth quarter, selling, general and administrative expenses from continuing operations increased to 32.9% as a percentage of revenue from continuing operations compared to 27.8% for the same period last year. For the twelve-month period, selling, general and administrative expenses from continuing operations increased to 31.4% compared to 28.0% for the same period last year. During the fourth quarter, the Company closed one store. During fiscal 2008, the Company closed ten stores, of which the operating results of six stores were reported as discontinued operations. Loss from discontinued operations amounted to $39,000 and $49,000 in the fourth quarter of 2008 and 2007, respectively. For the twelve-month periods for fiscal 2008 and 2007, loss from discontinued operations amounted to $269,000 and $180,000, respectively. Commenting on the results of the year, Harley J. Greenfield Chief Executive of Jennifer said," Although I am certainly not pleased with the results achieved during fiscal 2008, I believe we have the right strategy in place, even in this unprecedented economy to provide customers merchandise at incredible values while maintaining good margins. We continue to implement strategies to reduce costs. We have also modified our warehousing and management agreements with the Related Company, beginning January 2009. These changes, based on last year's level of activity, would have resulted in approximately $1,400,000 in annual expense reductions. We believe we are excellently positioned to take advantage of any upturn in the economy." Mr. Greenfield added, "We are pleased with the progress of our Ashley division which is now generating approximately 10% of our revenues. We are pursuing the opening of a third store in 2009. We are also pleased that in this time of credit concern we had approximately $11.5 million in cash and investments at year-end and a vendor line of credit for $10 million which is committed into 2010." Jennifer Convertibles is the owner and licensor of the largest group of sofabed specialty retail stores in the United States, with 156 Jennifer Convertibles(R) stores and is the largest specialty retailer of leather furniture with 14 Jennifer Leather stores. As of November 26, 2008, the Company owned 148 stores and licensed 22 (including 21 owned and operated by a related company on a royalty free basis) and operates two licensed Ashley Furniture HomeStore.