Liquidation World Inc.

Liquidation World Inc.

April 13, 2007 08:00 ET

Liquidation World Announces Q2 Revenue and Organizational Improvements

Second best Q2 sales performance in the Company's history

CALGARY, ALBERTA--(CCNMatthews - April 13, 2007) - Liquidation World Inc. (TSX:LQW) today announces that revenue for the thirteen week quarter ended April 1, 2007 decreased 2.9% to $47.5 million from a Q2 record $48.9 million during the quarter ended April 2, 2006. Same store sales for the quarter decreased 10.3% from the prior year.

In the first two quarters of fiscal 2007 revenue totaled $112.2 million, up 5.8% from $106.1 million during the same period last year.

Complete financial results for the second quarter will be announced in May.

Commenting on the quarter, President & CEO Jonathan Hill said:

We recorded the second highest Q2 revenue in the Company's history. However, in the second quarter of last year, we had some absolutely outstanding merchandise as a result of Hurricane Katrina, and it proved to be a tough quarter to beat on a same store basis.

These sales results are a reminder that our business will always have a certain degree of volatility. Sometimes this volatility works against us and sometimes it works in our favour; last year, our 18.4% same store sales increase in Q2 was significantly better than industry averages and was a positive reflection of this volatility. These sales results also remind us that we must be vigilant to ensure that our cost structure remains sufficiently flexible to withstand such volatility.

Over the past 18 months we have executed a plan to add structure to our business in order to support growth. We continue to monitor the impact of those changes, which have generally proven to be beneficial to the business. In some cases, however, we have impeded our organizational agility and effectiveness.

To that end, the Company has recently implemented certain changes intended to improve the overall effectiveness of the organization. These changes include the elimination of certain middle management positions in both the buying and store operations teams and the consolidation of some functions at the executive level. In conjunction with these changes, Darryl Chenoweth has been named Senior Vice President, Operations responsible for all of the Company's Canadian retail operations. This includes store operations, real estate and development, and training/human resources and Darryl's extensive retail experience and expertise makes him well qualified for the role. It is anticipated that all of these changes will allow more direct and effective contact with our customers, vendors and associates.

The Company will also consolidate its corporate offices to Brantford, Ontario prior to the end of the fiscal year. Since October 2005, the majority of buying and store operations functions have been managed from this location, while administrative and finance functions have been managed from our offices in Calgary, Alberta.

These changes will ensure that all of these important functions are working closely together as we continue to grow our business. In addition to the synergistic benefits that will result from having complementary functional teams in one location, we expect, on an ongoing basis, to reduce travel and communication expenses as well as turnover and payroll costs associated with the Alberta labour market.

We are pleased that Andrew Searby, the Company's Chief Financial Officer has chosen to relocate to Brantford. Since 2005, he has been the only member of the executive team based in Calgary. A number of other Calgary-based employees have also indicated their desire to relocate.

We do not expect the changes outlined above to interfere with our plans to add more new outlets, and we maintain our objective of having 125 stores in operation by the end of the fiscal year. Notwithstanding this objective, we will continue to monitor the performance of each store in our portfolio and will proactively move to close any underperforming outlets as required.

About Liquidation World

Liquidation World liquidates consumer merchandise through 114 retail outlets located throughout Canada and the northwest US. The Company solves asset recovery problems in a professional manner for the financial services industry, insurance companies, manufacturers, wholesalers and other organizations. Liquidation World opened its first retail outlet in Calgary, Alberta in 1986 and, today, with more than 2,000 employees, is one of the largest liquidators in North America.

Forward-Looking Statements

This release includes forward-looking statements and potential future circumstances and developments. Forward-looking statements regarding future performance are subject to risks and uncertainties, and actual results may differ materially. Due to fluctuations in gross margins and expenses, an increase in revenue does not directly correlate to an increase in net earnings.

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