Rex Income Plummets 61%

DAYTON, OH-Consumer-electronics retailer Rex Stores Corp. reported a 61% loss in fourth-quarter net income, which posted at $6.6 million, or 57 cents per diluted share, compared with net income of $16.8 million, or $1.30 per diluted share for the same period a year ago. Stuart Rose, Rex Stores’ chairman and CEO, noted during the company’s earnings call on Friday that audio sales were significantly down for the quarter, while televisions were up.

However, with the bulk of the same-store sales generating from televisions, Rose said there was a substantial production shortage in plasma television. With competition in television sales fierce, Rose admitted the company is “not Best Buy or Wal-Mart that throws their muscle around.” Rather, the specialty store focuses on smaller cities where there is less penetration of plasma televisions.

Net sales and revenue rose 7.5% to $130.6 million from $121.4 million during the prior year’s quarter. Comparable store sales during the period rose 7.9% compared with the same year-ago period. During the quarter, REX Stores purchased approximately 391,700 shares of its common stock. The company now has approximately 496,645 shares remaining available to purchase under its present stock buy-back authorization.

Rose told investors that results for the quarterly period ended Jan. 31, 2005 reflected an $8 million income tax benefit from the company’s investment in a synthetic fuel limited partnership. The investment, Rose said, was one of great concern moving forward because of upcoming legislation regarding synthetic fuel.

To make up for potentially lost profits in this catagory, Rose said the company has made investments in three ethanol plants. “The plants have a capacity of 200 million gallons a year, which would make us one of the largest public ethanol plants in the US if these agreements come to fruition,” he said.

For the year, Rex’s income increased to $28.3 million, or $2.31 per diluted share, compared to net income of $27.5 million, or $2.17 per diluted share in the prior year. Net sales and revenue during the year jumped 4.5% to $396 million from $379 million in 2004. Comparable store sales in fiscal 2005 spiked 5% compared to a year ago.

In the first quarter of 2006, the company closed seven stores; historically, the company has averaged 15 store closures per year. As of Jan. 31, 2006, Rex operated 218 retail stores in 37 states.