WOODBURY, N.Y., July 8 /PRNewswire-FirstCall/ -- Jennifer Convertibles, Inc. announced today 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.
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
