Jennifer Convertibles Reports Third Quarter Results

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 inOhio and one store in New York compared to no store closings the same period last year. The operating results of the closed store inNew 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 inOhio 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 inthe 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.

Statements in this press release other than the statements of historical fact are "forward-looking statements." Such statements are subject to certain risks and uncertainties, including changes in retail demand, vendor performance and other risk factors identified from time to time in the Company's filings with the Securities and Exchange Commission that could cause actual results to differ materially from any forward-looking statements. These forward-looking statements represent the Company's judgment as of the date of the release. The Company disclaims, however, any interest or obligations to update these forward-looking statements.

    JENNIFER CONVERTIBLES, INC. & SUBSIDIARIES
    SUMMARY CONSOLIDATED BALANCE SHEETS
    (IN THOUSANDS)


                                                         05/24/08
                                                        (Unaudited)  08/25/07

    CASH AND CASH EQUIVALENTS                           $   9,210  $   8,375
    MARKETABLE AUCTION RATE SECURITIES                        125      8,300
    RESTRICTED CASH                                         1,108      1,076
    ACCOUNTS RECEIVABLE                                       974        855
    MERCHANDISE INVENTORIES, Net                           11,886     14,391
    DUE FROM RELATED COMPANY                                4,153      4,834
    PREPAID EXPENSES AND OTHER CURRENT ASSETS               1,479      1,235
                                                           28,935     39,066

    MARKETABLE AUCTION RATE SECURITIES                      1,400          -
    FIXTURES, EQUIPMENT & LEASEHOLD IMPROVEMENTS, Net       3,214      3,377
    GOODWILL                                                1,650      1,650
    OTHER ASSETS                                              695        706

                                                        $  35,894  $  44,799


    ACCOUNTS PAYABLE                                    $  14,053  $  19,718
    CUSTOMER DEPOSITS                                       6,550      6,543
    ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES          3,513      4,183
    DUE TO RELATED COMPANY                                    500        550
    DEFERRED RENT AND ALLOWANCES - Current Portion            660        713
      TOTAL CURRENT LIABILITIES                            25,276     31,707

    DEFERRED RENT AND ALLOWANCES - Net of Current
     Portion                                                2,889      2,948
    OBLIGATIONS UNDER CAPITAL LEASES - Net of Current
     Portion                                                  150        119
          TOTAL LIABILITIES                                28,315     34,774

    STOCKHOLDERS' EQUITY                                    7,579     10,025

                                                        $  35,894  $  44,799



    JENNIFER CONVERTIBLES, INC. & SUBSIDIARIES
    SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
    (IN THOUSANDS, EXCEPT SHARE DATA)
    (UNAUDITED)
                                          THREE MONTHS        NINE MONTHS
                                             ENDED              ENDED
                                       05/24/08  05/26/07   05/24/08  05/26/07
    REVENUE:
      NET SALES                        $26,755    $30,343    $84,784  $90,790
      REVENUE FROM SERVICE CONTRACTS     1,674      2,193      5,337    6,351
                                        28,429     32,536     90,121   97,141

    COST OF SALES AND OTHER CHARGES     20,280     22,057     64,172   67,385

    SELLING, GENERAL & ADMINISTRATIVE
     EXPENSES                            8,641      8,713     27,857   27,216

    DEPRECIATION AND AMORTIZATION          249        229        758      665
                                        29,170     30,999     92,787   95,266

    (LOSS) INCOME FROM OPERATIONS         (741)     1,537     (2,666)   1,875

    INTEREST INCOME                        102        187        451      541

    INTEREST EXPENSE                        (5)        (4)       (11)     (11)

    (LOSS) INCOME FROM CONTINUING
     OPERATIONS                           (644)     1,720     (2,226)   2,405
    BEFORE INCOME TAXES

    INCOME TAXES                             -         45          6       44

    (LOSS) INCOME FROM CONTINUING
     OPERATIONS                           (644)     1,675     (2,232)   2,361

    LOSS FROM OPERATIONS OF
     DISCONTINUED OPERATIONS (including
     loss on store closings of $19 and
     $89 for the for the periods ended
     in fiscal 2008, respectively)         (67)       (66)      (230)    (131)

    NET (LOSS) INCOME                    $(711)    $1,609    $(2,462)  $2,230


    BASIC (LOSS) INCOME PER COMMON
     SHARE:

       (LOSS) INCOME FROM CONTINUING
        OPERATIONS                      $(0.09)     $0.21     $(0.32)   $0.30
       LOSS FROM DISCONTINUED
        OPERATIONS                       (0.01)     (0.01)     (0.03)   (0.02)
       NET (LOSS) INCOME PER COMMON
        SHARE                           $(0.10)     $0.20     $(0.35)   $0.28


    DILUTED (LOSS) INCOME PER COMMON
     SHARE:

       (LOSS) INCOME FROM CONTINUING
        OPERATIONS                     $(0.09)     $0.19     $(0.32)    $0.27
       LOSS FROM DISCONTINUED
        OPERATIONS                      (0.01)     (0.01)     (0.03)    (0.02)
       NET (LOSS) INCOME PER COMMON
        SHARE                          $(0.10)     $0.18     $(0.35)    $0.25

    WEIGHTED AVERAGE COMMON SHARES
    OUTSTANDING                     7,073,466  6,925,320  7,073,466 6,856,009

    COMMON SHARES ISSUABLE ON
     CONVERSION OF SERIES A
     PARTICIPATING PREFERRED STOCK          -    924,500          -   924,500

    TOTAL WEIGHTED AVERAGE COMMON
     SHARES OUTSTANDING BASIC       7,073,466  7,849,820  7,073,466 7,780,509

    EFFECT OF POTENTIAL COMMON SHARE
     ISSUANCE:
        STOCK OPTIONS                       -    604,678          -   837,917
        WARRANTS                            -     73,384          -    83,352
        SERIES B CONVERTIBLE
         PREFERRED STOCK                    -          -          -         -

    WEIGHTED AVERAGE COMMON SHARES
    OUTSTANDING DILUTED             7,073,466  8,527,972  7,073,466 8,701,778

SOURCE Jennifer Convertibles, Inc.

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Copyright © 2008, NewsBlaze, Daily News

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