Jennifer Convertibles Reports Revenue Decrease For Quarter

Furniture World Magazine

Jennifer Convertibles, Inc. announced its unaudited financial results for the third fiscal quarter ended May 24, 2008. For the third quarter, revenue from continuing operations decreased by 12.6% to $28.4 million from the $32.5 million reported for the same period last year. For the nine-month period, revenue from continuing operations decreased 7.2% to $90.1 million from the $97.1 reported in the same period last year. For the third quarter, the Company had a net loss of ($711,000) or ($0.10) per basic and diluted share, compared to net income of $1,609,000 or $0.20 and $0.18 per basic and diluted share, respectively, for the same period last year. For the nine-month period, the net loss was ($2,462,000) or ($0.35) per basic and diluted share, compared to net income of $2,230,000 or $0.28 and $0.25 per basic and diluted share, respectively, for the same period last year. Operating margins from continuing operations decreased during the current three-month period to 28.7% compared to 32.2% the same period last year. The decrease in operating margin is due to warehouse and occupancy costs being spread over a decreased revenue base. For the current nine-month period operating margins from continuing operations decreased to 28.8% compared to 30.6% for the nine-month period last year. For the third quarter, selling, general, and administrative expenses from continuing operations increased to 30.4% as a percentage of revenue from continuing operations compared to 26.8% for the same period last year. For the nine-month period, selling, general and administrative expenses from continuing operations increased to 30.9% compared to 28.0% for the same period last year. During the third quarter, we closed three stores in Ohio and one store in New York compared to no store closings the same period last year. The operating results of the closed store in New York were recorded in continuing operations based on management's judgment that there will be significant continuing sales to customers of the closed stores from other stores in the respective areas. The operating results of the three closed stores in Ohio were reported as discontinued operations. Loss from operations of discontinued operations was $67,000 and $66,000 in the third quarter of fiscal 2008 and 2007, respectively. For the nine-month periods for fiscal 2008 and 2007, loss from discontinued operations amounted to $230,000 and $131,000, respectively. During the quarter, the Company opened one store, combined two stores through an expansion and closed four stores as described above. Commenting on the results, Harley J. Greenfield, Chief Executive Officer of Jennifer said, "Although we are disappointed with the results for the quarter and fiscal year-to-date, we remain optimistic for the future. Sales have been dramatically impacted by the downturn in the economy and the housing market which has hit the furniture industry particularly hard. We are continuing to monitor our costs and to provide customers incredible values without sacrificing margins. We maintain cash balances in excess of $9 million and are extremely well positioned to take advantage of the future upturn in the economy." Mr. Greenfield added, "We are very excited about the progress we have made with our new Ashley Division. During the quarter we generated an operating profit of $129,000 from our Ashley Division. At the end of the quarter we opened our second Ashley Furniture HomeStore." Jennifer Convertibles is the owner and licensor of the largest group of sofabed specialty retail stores in the United States, with 158 Jennifer Convertibles(R) stores and is the largest specialty retailer of leather furniture with 14 Jennifer Leather stores. As of July 8, 2008, the Company owned 150 stores and licensed 22 stores (including 21 owned and operated by a related company on a royalty free basis) and operates two licensed Ashley Furniture HomeStores.