Jennifer Convertibles Reports Second Quarter Results

WOODBURY, N.Y., April 9, 2008 /PRNewswire-FirstCall/ -- Jennifer Convertibles, Inc. AMEX: JEN announced today its unaudited financial results for the second fiscal quarter ended February 23, 2008.

For the second quarter, revenue from continuing operations decreased by 15.3% to $27.9 million from the $33.0 million reported for the same period last year. For the six-month period, revenue from continuing operations decreased 4.5% to $62.2 million from the $65.1 reported in the same period last year.

For the second quarter, the Company had a net loss of ($1,246,000) or ($0.18) per basic and diluted share, compared to net income of $1,258,000 or $0.16 and $0.14 per basic and diluted share, respectively, for the same period last year. For the six-month period, the net loss was ($1,751,000) or ($0.25) per basic and diluted share, compared to net income of $621,000 or $0.08 and $0.07 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 27.4% compared to 29.8% the same period last year. For the current six-month period operating margins from continuing operations decreased to 28.8% compared to 29.8% for the six-month period last year.

For the second quarter, selling, general, and administrative expenses from continuing operations increased to 31.3% as a percentage of revenue from continuing operations compared to 26.0% for the same period last year. For the six-month period, selling, general and administrative expenses from continuing operations increased to 31.3% compared to 28.9% for the same period last year.

During the second quarter, we closed three stores in Ohio and one store in Georgia compared to four store closings in Illinois the same period last year. The operating results of the closed store in Georgia and the four stores in Illinois 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) income from operations of discontinued operations was ($86,000) and $21,000 in the second quarter of fiscal 2008 and 2007, respectively. For the six month periods for fiscal 2008 and 2007, (loss) income from discontinued operations amounted to ($18,000) and $98,000, respectively.

During the quarter, the Company did not open any stores, relocated one store and closed four stores as described above.

Commenting on the results, Harley J. Greenfield, Chief Executive Officer of Jennifer said, "During the quarter, our first Ashley Furniture HomeStore continued its growth in revenue and increased profitability to $318,000 from the $146,000 achieved in the previous quarter. We are extremely excited about the prospects of the Ashley segment and expect to continue to grow substantially with the addition of our second store early next month."

Mr. Greenfield added, "Our second fiscal quarter is seasonally our weakest quarter. In addition, the revenues in our Jennifer stores continue to be impacted by the overall weakness in the furniture industry. We are continuing to monitor costs and adjust our merchandising and advertising strategies."

Jennifer Convertibles is the owner and licensor of the largest group of sofabed specialty retail stores in the United States, with 161 Jennifer Convertibles(R) stores and is the largest specialty retailer of leather furniture with 15 Jennifer Leather stores. As of April 8, 2008, the Company owned 154 stores and licensed 22 stores (including 21 owned and operated by a related company on a royalty free basis) and operates one licensed Ashley Furniture HomeStore.

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)

                                                       02/23/08
                                                      (Unaudited)     08/25/07

    CASH AND CASH EQUIVALENTS                          $ 8,467        $ 8,375
    MARKETABLE AUCTION RATE SECURITIES                     525          8,300
    RESTRICTED CASH                                      1,100          1,076
    ACCOUNTS RECEIVABLE                                    766            855
    MERCHANDISE INVENTORIES, Net                        11,435         14,391
    DUE FROM RELATED COMPANY                             3,535          4,834
    PREPAID EXPENSES AND OTHER CURRENT ASSETS            1,532          1,235
                                                        27,360         39,066

    MARKETABLE AUCTION RATE SECURITIES                   2,950              -
    FIXTURES, EQUIPMENT & LEASEHOLD IMPROVEMENTS, Net    3,323          3,377
    GOODWILL                                             1,650          1,650
    OTHER ASSETS                                           696            706

                                                      $ 35,979       $ 44,799


    ACCOUNTS PAYABLE                                  $ 12,033       $ 19,718
    CUSTOMER DEPOSITS                                    7,752          6,543
    ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES       3,632          4,183
    DUE TO RELATED COMPANY                                 550            550
    DEFERRED RENT AND ALLOWANCES - Current Portion         734            713
    TOTAL CURRENT LIABILITIES                           24,701         31,707

    DEFERRED RENT AND ALLOWANCES -
     Net of Current Portion                              2,832          2,948
    OBLIGATIONS UNDER CAPITAL LEASES -
     Net of Current Portion                                161            119
    TOTAL LIABILITIES                                   27,694         34,774

    STOCKHOLDERS' EQUITY                                 8,285         10,025

                                                      $ 35,979       $ 44,799



    JENNIFER CONVERTIBLES, INC. & SUBSIDIARIES
    SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
    (IN THOUSANDS, EXCEPT SHARE DATA)
    (UNAUDITED)

                                    THREE MONTHS ENDED      SIX MONTHS ENDED
                                   02/23/08    02/24/07   02/23/08   02/24/07

    REVENUE:
    NET SALES                      $ 26,281    $ 30,825   $ 58,520   $ 60,927
    REVENUE FROM SERVICE
     CONTRACTS                        1,663       2,149      3,709      4,211
                                     27,944      32,974     62,229     65,138

    COST OF SALES AND OTHER
     CHARGES                         20,297      23,155     44,285     45,710

    SELLING, GENERAL &
     ADMINISTRATIVE EXPENSES          8,740       8,584     19,492     18,804

    DEPRECIATION AND AMORTIZATION       261         225        522        448
                                     29,298      31,964     64,299     64,692

    (LOSS) INCOME FROM OPERATIONS    (1,354)      1,010     (2,070)       176

    INTEREST INCOME                     150         199        349        353

    INTEREST EXPENSE                     (3)         (3)        (6)        (7)

    (LOSS) INCOME FROM CONTINUING
     OPERATIONS BEFORE INCOME TAXES  (1,207)      1,206     (1,727)       522

    INCOME TAXES                        (47)        (31)         6         (1)

    (LOSS) INCOME FROM CONTINUING
     OPERATIONS                      (1,160)      1,237     (1,733)       523

    (LOSS) INCOME FROM OPERATIONS
     OF DISCONTINUED OPERATIONS
     (including loss on store
      closings of $70 for the
      periods ended in fiscal 2008)     (86)         21        (18)        98

    NET (LOSS) INCOME              $ (1,246)    $ 1,258   $ (1,751)     $ 621

    BASIC (LOSS) INCOME PER
     COMMON SHARE:

    (LOSS) INCOME FROM CONTINUING
     OPERATIONS                     $ (0.17)     $ 0.16    $ (0.25)    $ 0.07
    (LOSS) INCOME FROM DISCONTINUED
     OPERATIONS                       (0.01)          -          -       0.01
    NET (LOSS) INCOME PER
     COMMON SHARE                   $ (0.18)     $ 0.16    $ (0.25)    $ 0.08

    DILUTED (LOSS) INCOME PER
     COMMON SHARE:

    (LOSS) INCOME FROM CONTINUING
     OPERATIONS                     $ (0.17)     $ 0.14    $ (0.25)    $ 0.06
    (LOSS) INCOME FROM DISCONTINUED
     OPERATIONS                       (0.01)          -          -       0.01
    NET (LOSS) INCOME PER
     COMMON SHARE                   $ (0.18)     $ 0.14    $ (0.25)    $ 0.07

    WEIGHTED AVERAGE COMMON
     SHARES OUTSTANDING           7,073,466   6,838,162  7,073,466  6,821,013

    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   7,762,662  7,073,466  7,745,513

    EFFECT OF POTENTIAL COMMON
     SHARE ISSUANCE:
    STOCK OPTIONS                         -     829,330          -  1,040,234
    WARRANTS                              -      78,182          -     86,808
    SERIES B CONVERTIBLE
     PREFERRED STOCK                      -      62,216          -          -

    WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING DILUTED          7,073,466   8,732,390  7,073,466  8,872,555