Jennifer Convertibles, Inc. announced its financial results for the first fiscal quarter ended November 28, 2009.
For the first quarter, revenue from continuing operations decreased by 12.4% to $23.2 million from the $26.5 million reported for the same period last year.
For the first quarter, the Company had a net loss of $6,870,000, or ($0.97) per basic and diluted share, compared to net loss of $1,869,000, or ($0.26) per basic and diluted share for the same period last year. The net loss for the period includes a provision for loss on amounts due from the related company of $3,167,000 or ($0.45) per basic and diluted share.
For the first quarter, operating margins from continuing operations decreased to 26.7% as a percentage of revenue from continuing operations compared to 29.1% for the same period last year.
For the first quarter, selling, general and administrative expenses from continuing operations increased by 3.7% to $9,649,000 from $9,308,000 reported for the same period last year.
During each of the thirteen-week periods ended November 28, 2009 and November 29, 2008, the Company closed one store in Peoria, Arizona and one store in Lansing, Illinois, respectively. The operating results of the closed store in Arizona were reported as discontinued operations. The operating results of the closed store in Illinois is recorded in continuing operations based on management's judgment that there will be significant continuing sales to customers of the closed store in other stores in the area. During the thirteen-week periods ended November 28, 2009 and November 29, 2008, revenue from the closed stores reported as discontinued operations amounted to $20,000 and $223,000, respectively. Loss from operations of the closed stores amounted to $18,000 and $54,000 for the thirteen-week periods ended November 28, 2009 and November 29, 2008, respectively.
Harley J. Greenfield Chief Executive Officer of Jennifer commenting on the results of the quarter said, "Obviously we are not pleased with the write-offs of amounts due from the related company, which impacted our results for the fourth and first fiscal quarters and will impact our results to a lesser extent in our second fiscal quarter. However, as I indicated following year-end I believe this will result in a substantial opportunity and be positive in the long-term for Jennifer. The impact of the agreement with the related company is as follows:
- As of January 1, 2010 the related company ceased operations and we began operating their stores for our benefit.
- We are in the process of evaluating the potential for each of their 20 stores and will begin negotiations with the landlords of those we wish to keep.
- We have assumed all administrative functions within our existing operation.
- Maybe most important, we will now be operating as one company free of any appearance of potential conflict.
We continue to be pleased with the progress of our Ashley Furniture HomeStores division. During the quarter, sales increased by 31.5% to $3,815,000 from $2,901,000 in the same period last year. Operating income increased by 51.4% to $168,000 from $111,000 last year. Same stores sales increased by 19.7 % during the period. We opened two new stores during the quarter and are opening a new store in Brooklyn before the end of January."
Mr. Greenfield added, "I am very positive about the future of Jennifer based on the following:
- Our new extreme value merchandise in the Jennifer division gives us a competitive advantage in this economy and seems to be stabilizing sales.
- New stores from the related company will add to revenue.
- Ashley Furniture HomeStores division is growing rapidly."
Jennifer Convertibles is the owner and licensor of the largest group of sofabed specialty retail stores in the United States, with 145 Jennifer Convertibles® stores and is the largest specialty retailer of leather furniture with 14 Jennifer Leather stores. Following the transaction with the related company, as of January 12, 2010 the Company owned 159 stores and operated four licensed Ashley Furniture HomeStores.