Jennifer Convertibles Reports First Quarter Revenues & Margins Decline

Furniture World Magazine

Jennifer Convertibles, Inc. announced its financial results for the first fiscal quarter ended November 29, 2008. For the first quarter, revenue from continuing operations decreased by 21.5% to $26.7 million from the $34.0 million reported for the same period last year. For the first quarter, the Company had a net loss of $1,869,000, or ($0.26) per basic and diluted share, compared to net loss of $505,000, or ($0.07) per basic and diluted share for the same period last year. For the first quarter, operating margins from continuing operations decreased to 29.0% as a percentage of revenue from continuing operations compared to 30.0% for the same period last year. For the first quarter, selling, general and administrative expenses from continuing operations increased to 35.2% as a percentage of revenue from continuing operations compared to 31.1% for the same period last year. During each of the thirteen-week periods ended November 29, 2008 and November 24, 2007, the Company closed one store in Lansing, Illinois and one store in Miami, Florida, respectively. The operating results of such stores are recorded in continuing operations based on management's judgment that there will be significant continuing sales to customers of closed stores in other stores in the area. In the thirteen-week periods ended November 29, 2008 and November 24, 2007, revenue from closed stores reported as discontinued operations amounted to $0 and $740,000, respectively. Loss from operations of the closed stores amounted to $19,000 and $29,000 for the thirteen-week periods ended November 29, 2008 and November 24, 2007, respectively. Harley J. Greenfield Chief Executive Officer of Jennifer commenting on the results of the quarter said, "Although our first fiscal quarter continued to produce disappointing results, we still believe that we have the right model in place that will allow us to quickly show substantial improvement in our results when the economy begins to improve. The modifications that we made to the warehousing and management agreements with the Related Company should result in more than $100,000 per month in savings beginning in January 2009. We continue to provide incredible values for customers producing good margins even under this extremely difficult retail environment." Mr. Greenfield added, "Our Ashley division continues to produce over 10% of our revenues and generated operating profits during our first fiscal quarter. At the end of the quarter we had $9.4 million in cash and investments and a vendor line of credit of no less than $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 stores and is the largest specialty retailer of leather furniture with 14 Jennifer Leather stores. As of January 13, 2009 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 HomeStores.