Jennifer Posts 5 Million-Plus 4Q Loss

December 14, 2009  by in UnCategorized   

By Home Furnishings Business in Financial Reports on December 15, 2009

Furniture retailer Jennifer Convertibles (AMEX: JEN), Woodbury, N.Y., reported fiscal fourth-quarter 2009 revenue of $22.8 million, a 25.6 percent decrease from the same period a year ago.

For the quarter, which ended August 29, Jennifer recorded a loss of $5.3 million, compared with a loss of $777,000 in 2008's fourth fiscal quarter.

For the 2009 fiscal year, Jennifer Convertibles sales were off 21.6 percent to $94.2 million; and the loss from continuing operations increased to $10.8 million from almost $3 million a year ago.

During fiscal 2009, the company closed seven stores--none in the fourth quarter--of which the operating results of three stores were reported in discontinued operations.

"Fiscal 2009 was a challenging year for the company as the difficulties in the economy impacted the home furniture industry particularly hard," said CEO Harley J. Greenfield. "As a result during the fourth fiscal quarter we incurred several events, which significantly impacted our results. Due to the decline in the operating performance of stores in the Chicago and Florida markets we recognized an impairment of goodwill of $1,167,000 during the period."

Of more significance long term is the termination of the purchasing agreement with a related company due to its failure to make payments to Jennifer.

"We have established a reserve of $947,000 as of August 29, 2009 against potential losses on amounts due from the related company as of August 29, 2009," Greenfied said. "We also expect to establish substantial reserves for the first quarter of fiscal 2010 relating to amounts, which become due from the related company subsequent to August 29, 2009, and prior to the termination of the purchasing agreement in late November. We have taken steps as of November 27, 2009, which we believe will ensure that we will incur minimal further losses on any additional products shipped to customers of the related company. We are in negotiations with the related company to resolve these issues. I believe the results of these negotiations should have a positive long-term benefit to Jennifer and should create an opportunity to generate additional revenue. Additionally during the fourth quarter we established a reserve of $1,300,000 for a class action lawsuit for alleged violations of California Labor Law. We are vigorously defending this matter."

Greenfield remained pleased with the progress of Jennifer's Ashley Furniture Homestores division.

"During the year it generated $12.8 million or more than 13 percent of our revenue and generated income before income taxes of about $1.3 million, a 42.6 percent increase from the prior fiscal year," he said. "Since year-end we have opened two additional Ashley Furniture Homestores, have announced the opening of a fifth location in January and our currently negotiating for additional stores to be opened before the end of the fiscal year. Recently we have seen an increase in revenues in our existing Ashley Furniture Homestores locations and our new stores have opened and are performing as projected. We are also beginning to see some stabilization in our Jennifer stores. Capitalizing on our new line of extreme value merchandise, we expect to see improvement in our Jennifer division as well in 2010."

Jennifer Convertibles owns and licenses of the largest group of sofabed specialty retail stores in the United States, with 148 Jennifer Convertibles stores; and is the largest specialty retailer of leather furniture with 14 Jennifer Leather stores. As of Dec. 14, the company owned 141 stores and licensed 21 stores (including 19 owned and operated by a related company on a royalty free basis) and operates four licensed Ashley Furniture HomeStores.