Liquidation World Inc.
TSX : LQW

Liquidation World Inc.

November 24, 2006 17:00 ET

Liquidation World Announces Q4 Guidance

CALGARY, ALBERTA--(CCNMatthews - Nov. 24, 2006) - Liquidation World Inc. (TSX:LQW) today announced that it now expects lower than anticipated Q4 gross margin on sales which will result in an estimated preliminary, unaudited fourth quarter loss in the $0.15 - $0.18 cents/share range and an estimated full year net income in the $0.14 - $0.17 cents/share range. Fourth quarter and audited year end results are scheduled to be released on December 12, 2006.

The Company said that the fourth quarter gross margin reduction to approximately 34%, or 5% below plan, on record revenues of $52.9 million, is a direct result of transitional issues associated with the final stages of implementation of the Company's new Merchandising Management System ("MMS").

Jonathan Hill, President and CEO, said, "As part of our previously stated strategy, we have been concentrating on delivering increasingly great value to our customers through improved merchandise and increased inventory turns. An important tool in our day-to-day decision making has been the information generated by our new MMS. At this time last year our merchandise was almost entirely based on a retail lot system. Today, the new MMS has allowed us to have fully 50% of our merchandise on a more accurate, SKU based system. We anticipate this moving up to 80%. During the fourth quarter, the information generated by the system led to erroneous conclusions regarding gross margin. The errors were discovered during the course of the Company's normal year end procedures.

While the nature of our business is such that a portion of our merchandise will always be accounted for using the retail method of accounting, having 80% of our merchandise purchased and sold on an SKU basis will allow us to greatly improve the management of our business.

While these issues resulted in a gross margin deficiency from plan, we believe we have taken corrective measures required to address them. These measures include improvements to our processes associated with the MMS as well as a number of redundant safeguards which should ensure targeted gross margins are being achieved.

These issues may have a modest effect on margins during the first quarter of 2007. We have made substantial efforts to mitigate this impact.

We are providing this guidance in order to ensure that our shareholders and the investing public have the best information available and so that we can ensure that all of our managers and associates who can impact on the performance of the Company are fully aware and involved in the necessary solutions.

We remain confident that our investments in systems are necessary and appropriate for the future of the Company. Unfortunately, as many other retailers have experienced, such system implementation projects sometimes include difficult learning curves. While these results are a disappointing end to our year they should not undermine the fundamentals of our strategy or detract from the dramatic turnaround we have experienced during the year. We also expect that with these issues largely resolved, we can both meet our customers' expectations and achieve targeted margins. We will continue to work diligently to effectively manage merchandise, deliver great deals to our customers and grow our business."

About Liquidation World

Liquidation World liquidates consumer merchandise through 110 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 1,800 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.


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