Jennifer Convertibles Reports First Quarter Results

Jennifer Convertibles Reports First Quarter Results

- Revenue from continuing operations increased 6.5% for quarter

WOODBURY, N.Y., Jan. 8 /PRNewswire-FirstCall/ -- Jennifer Convertibles, Inc. (AMEX:JEN) announced today its financial results for the first fiscal quarter ended November 24, 2007.

For the first quarter, revenue from continuing operations increased by approximately 6.5% to $34.7 million from the $32.6 million reported for the same period last year. This revenue increase is attributable to $2,623,000 in revenue generated at its Ashley Furniture HomeStore with a slight decrease in revenue from Jennifer stores.

For the first quarter, the Company had a net loss of $505,000, or ($0.07) per basic and diluted share, compared to net loss of $637,000, or ($0.09) per basic and diluted share for the same period last year. This decrease in net loss is primarily attributable to $146,000 net income related to our Ashley segment.

Operating margins from continuing operations increased in the first quarter to 30.0% from 29.9% during the same period last year.

For the first quarter, selling, general and administrative expenses from continuing operations decreased to 31.1% as a percentage of revenue from continuing operations compared to 31.5% for the same period last year.

During each of the thirteen-week periods ended November 24, 2007 and November 25, 2006, the Company closed one store in Miami, Florida and one store in Woodland Hills, California, respectively. The operating results of such stores are recorded in continuing operations based on management's judgment that there will be significant continuing sales to customers of closed stores in other stores in the area. In the thirteen-week periods ended November 24, 2007 and November 25, 2006, revenue from the closed stores reported as discontinued operations amounted to $8,000 and $122,000, respectively. Income (loss) from operations of the closed stores amounted to $7,000 and ($10,000) for the thirteen-week period ended November 24, 2007 and November 25, 2006, respectively.

Harley J Greenfield, Chief Executive Officer of Jennifer said, "I am extremely pleased with the results achieved at our first Ashley store during the quarter, showing increased revenues and generating a profit. Although revenues in our Jennifer stores were impacted by the decline in overall demand within the furniture industry, we continue to monitor costs and adjust merchandising and advertising strategies and expect to regain overall profitability in the second half of our fiscal year."

Mr. Greenfield added, "We continue to have a strong balance sheet with cash and marketable securities in excess of $16 million. We expect to announce shortly the location of our next Ashley store."

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 16 Jennifer Leather stores. As of January 8, 2008, the Company owned 155 stores and licensed 22 (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) 11/24/07 08/25/07

CASH AND CASH EQUIVALENTS $9,145 $8,375 MARKETABLE SECURITIES 6,100 8,300 RESTRICTED CASH 1,089 1,076 ACCOUNTS RECEIVABLE 1,276 855 MERCHANDISE INVENTORIES, Net 12,499 14,391 DUE FROM RELATED COMPANY 4,395 4,834 PREPAID EXPENSES AND OTHER CURRENT ASSETS 1,018 1,235 35,522 39,066

FIXTURES, EQUIPMENT & LEASEHOLD IMPROVEMENTS, Net 3,316 3,377 GOODWILL 1,650 1,650 OTHER ASSETS 701 706 $41,189 $44,799

ACCOUNTS PAYABLE $15,818 $ 19,718 CUSTOMER DEPOSITS 7,086 6,543 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES 4,370 4,183 DUE TO RELATED COMPANY 600 550 DEFERRED RENT AND ALLOWANCES - Current Portion 741 713 TOTAL CURRENT LIABILITIES 28,615 31,707

DEFERRED RENT AND ALLOWANCES - Net of Current Portion 2,937 2,948 OBLIGATIONS UNDER CAPITAL LEASES - Net of Current Portion 112 119 TOTAL LIABILITIES 31,664 34,774

STOCKHOLDERS' EQUITY 9,525 10,025 $41,189 $44,799

JENNIFER CONVERTIBLES, INC. & SUBSIDIARIES SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE DATA) THIRTEEN WEEKS ENDED 11/24/07 11/25/06 REVENUE: NET SALES $ 32,663 $30,485 REVENUE FROM SERVICE CONTRACTS 2,069 2,092 34,702 32,577

COST OF SALES AND OTHER CHARGES 24,301 22,831

SELLING, GENERAL & ADMINISTRATIVE EXPENSES 10,794 10,269

DEPRECIATION AND AMORTIZATION 262 225

35,357 33,325

LOSS FROM OPERATIONS (655) (748)

INTEREST INCOME 199 155

INTEREST EXPENSE (3) (4)

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (459) (597)

INCOME TAXES 53 30

LOSS FROM CONTINUING OPERATIONS (512) (627)

INCOME (LOSS) FROM DISCONTINUED OPERATIONS 7 (10)

NET LOSS $(505) $(637)