Jennifer Convertibles Reports Second Quarter Results
- Revenue from continuing operations decreased 19.6% for quarter, 12.6%
year-to-date
WOODBURY, N.Y., April 12 /PRNewswire-FirstCall/ -- Jennifer Convertibles, Inc. (AMEX:JEN) announced today its unaudited financial results for the second
fiscal quarter ended February 26, 2005.
For the second quarter, revenue from continuing operations decreased by 19.6%
to $24.9 million from the $30.9 million reported for the same period last year. For the six-month period, revenue from continuing operations decreased 12.6%
to $56.5 million from the $64.7 reported in the same period last year. Such
decreases during the second quarter of fiscal 2005, were impacted by the
deflationary pressure in the furniture industry caused by a change in the
source of supply to China, which reduced unit prices to customers. In
addition, the reduction in merchandise sales was affected by an overall decline
in demand within the furniture industry sector. The decrease in merchandise
sales directly impacted revenues from home delivery and service contracts.
Harley J Greenfield Chief Executive Officer of Jennifer said, "Although the
results for the second fiscal quarter were disappointing, I believe that the
future for Jennifer is positive. Written sales began to increase near the end
of the quarter and have continued to date, as a result of our new supply chain
being in place and implementation of our new marketing and merchandising
initiatives. We expect to return to profitability for the second half of our
fiscal year." For the second quarter, the Company sustained a net loss of $5,363,000 or
($0.93) per basic and diluted share compared to a net loss of $1,127,000 or
($0.20) per basic and diluted share for the same period last year. This loss
included a write-down of a deferred tax asset of $1.8 million, which represents
estimated future tax benefits, which may be realized when the Company returns
to profitability. For the six-month period, the net loss was $7,828,000 or
($1.36) per basic and diluted share compared to a net loss of $2,818,000 or
($0.50) per basic and diluted share for the same period last year.
Operating margins from continuing operations decreased during the current three
and six month periods to 23.0% and 25.8%, respectively, compared to operating
margins from continuing operations of 27.5% and 28.6%, respectively, during the
three and six month periods last year. The decrease is primarily attributable
to an increase in store occupancy costs, including rent, combined with the
decrease in revenues.
For the second quarter, selling, general, and administrative expenses from
continuing operations increased to 34.0% as a percentage of revenue from
continuing operations compared to 28.2% for the same period last year. For the
six-month period, selling, general and administrative expenses from continuing
operations increased to 33.9% compared to 31.0% for the same period last year. These increases are primarily due to the reductions in revenues.
During the second quarter, the Company closed nine stores; four stores in
Pittsburgh, one store in the metropolitan New York City area, two stores in
Hartford, one store in Cerritos and one store in West Roxbury. Revenues from
these stores, exclusive of West Roxbury, amounted to $1,072,000 and $1,510,000
in the second quarter of fiscal years 2005 and 2004, respectively. The loss
from operations of these stores were $549,000, including loss on store closings
of $197,000, for the second quarter, compared to loss from operations of these
stores in the amount of $532,000, for the same period last year.
Commenting on the results Mr. Greenfield added, "The second quarter is our
seasonally worst quarter and was impacted by our change in supply chain and
reduction in advertising in anticipation of this change. During the quarter we
closed 9 additional stores and further reduced our overhead expenses. We were
also somewhat impacted by the going out of business sales of one of our
competitors in our major markets. A large component of the loss for the quarter
was a write-down of deferred tax asset, which may be realized as we return to
profitability. We believe that we are now positioned to take advantage of the
steps we have taken. We should see the benefits of the cost reductions,
improvement in our revenues and increase in margins beginning in the third
quarter." Jennifer Convertibles is the owner and licensor of the largest group of sofabed
specialty retail stores in the United States, with 189 Jennifer Convertibles(R)
stores and 16 Jennifer Leather stores. As of February 26, 2005, the Company
owned 132 stores and licensed 73 (including 24 owned and operating stores by a
private company on a royalty free basis.) 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)
02/26/05 08/28/04 CASH AND CASH EQUIVALENTS $7,757 $3,294
RESTRICTED CASH 112 110
ACCOUNTS RECEIVABLE 1,011 935
MERCHANDISE INVENTORIES, Net 13,392 14,044
DUE FROM AFFILIATED COMPANY, Net 3,359 3,288
FEDERAL INCOME TAX REFUND RECEIVABLE 314 314
DEFERRED TAX ASSET - 1,172
PREPAID EXPENSES AND OTHER CURRENT ASSETS 1,543 1,195
27,488 24,352 FIXTURES, EQUIPMENT & LEASEHOLD IMPROVEMENTS, Net 2,500 3,032
ANNUITY CONTRACTS 997 1,088
DEFERRED LEASE COSTS AND OTHER INTANGIBLES, Net 35 42
GOODWILL, Net 1,650 1,796
OTHER ASSETS 600 607
DEFERRED TAX ASSET - 605
$33,270 $31,522 ACCOUNTS PAYABLE $15,715 $12,812
CUSTOMER DEPOSITS 10,415 7,878
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES 7,734 3,709
DUE TO AFFILIATED COMPANY 500 500
DEFERRED RENT AND ALLOWANCES - Current Portion 491 489
TOTAL CURRENT LIABILITIES 34,855 25,388 DEFERRED RENT AND ALLOWANCES - Net of Current Portion 3,289 3,320 STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY) (4,874) 2,814 $33,270 $31,522 JENNIFER CONVERTIBLES, INC. & SUBSIDIARIES
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA) THREE MONTHS ENDED SIX MONTHS ENDED
02/26/05 02/28/04 02/26/05 02/28/04
REVENUE:
NET SALES $23,280 $28,881 $52,919 $60,383
REVENUE FROM
SERVICE CONTRACTS 1,590 2,045 3,611 4,267
24,870 30,926 56,530 64,650 COST OF SALES AND
OTHER CHARGES 19,145 22,414 41,932 46,153 SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 8,458 8,721 19,187 20,027 IMPAIRMENT OF GOODWILL 146 0 146 0 DEPRECIATION AND
AMORTIZATION 178 377 578 825
27,927 31,512 61,843 67,005 LOSS FROM OPERATIONS (3,057) (586) (5,313) (2,355) INTEREST INCOME 27 23 50 50 INTEREST EXPENSE 1 2 1 2 LOSS FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES (3,031) (565) (5,264) (2,307) INCOME TAXES 1,783 30 1,838 62 LOSS FROM CONTINUING
OPERATIONS (4,814) (595) (7,102) (2,369) LOSS FROM OPERATIONS OF
DISCONTINUED OPERATIONS
(including loss on store
closings of $197 for
the thirteen weeks and
$331 for the twenty-six
weeks ended in 2005) (549) (532) (726) (449) NET LOSS $(5,363) $(1,127) $(7,828) $(2,818) BASIC AND DILUTED LOSS
PER SHARE DATA: LOSS FROM CONTINUING
OPERATIONS $(0.83) $(0.11) $(1.23) $(0.42)
LOSS FROM DISCONTINUED
OPERATIONS (0.10) (0.09) (0.13) (0.08)
NET LOSS PER COMMON SHARE $(0.93) $(0.20) $(1.36) $(0.50) WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
BASIC AND DILUTED LOSS 5,775,947 5,713,058 5,760,351 5,713,058
DATASOURCE: Jennifer Convertibles, Inc.
CONTACT: Donald Radcliffe of Radcliffe & Associates, Inc., +1-212-605-0534, for Jennifer Convertibles, Inc.
Web site: http://www.jenniferfurniture.com/
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