Rex Posts Fiscal 4th-Quarter Loss, Lower Sales

By Steve Smith -- TWICE, 4/20/2009

DAYTON, OHIO — Rex Stores, which plans to exit its retail business in fiscal 2009, reported lower net sales in its retail operation for its fourth quarter and fiscal year, ended Jan. 31, and a loss at retail for the fourth quarter.

Rex reported net retail sales of $47.6 million for the quarter, ended Jan. 31, compared with the previous fourth quarter’s unaudited retail sales of $61.9 million. For the year net sales were down to $162.4 million from the prior year’s retail sales of $194.8 million.

Rex recorded a retail loss of $3.9 million for its fiscal fourth quarter, compared with a $3.5 million profit in the prior year. Retail income for the year was $1.12 million, down from the prior year’s $10.4 million.

In a conference call, chairman/CEO Stuart Rose said most of the loss was related to the wind-down of Rex’s retail operations, which cost the company $4.2 million in store closing and related expenses. The costs will be offset by income from extended service plans and deferred income from previous real estate sales, he said.

As of Jan. 31, Rex owned 37 storefronts outright and leased 44. In February, it leased all 37 company-owned locations to Appliance Direct, the 20-store white-goods chain in central Florida, for a period of six years. Appliance Direct has already converted at least four of the stores and has also agreed to purchase Rex’s Whirlpool inventory and store fixtures.

Rose expects Appliance Direct will be “very successful” in Rex’s smaller-market locations. “They have a lot of energy and enthusiasm,” he said, and the chain represents “an opportunity for our employees that stay with them to get in on the ground floor of a company that will be very big some day.”

Rose also expressed regret for the retail staffers he is letting go. “I loved the employees,” he said. “It’s making it very hard for me, but [the retail business is] something that had run its course in very difficult retail times.”

Of Rex’s remaining 44 leased stores, two are in negotiation between Appliance Direct and the landlord; four are sub-leased; three are vacant or about to be; and the remaining 35 include Rex stores in various stages of shut-down. Rex will continue to pay rent on its remaining leases, the terms of which generally run about one to two years.

The company also leases two distribution centers, now empty, with a combined total of 650,000 square feet of space.

Corporately, which includes Rex’s alternative energy business, net sales for its fiscal fourth quarter were $67.4 million, up approximately $5.5 million from the prior year. Annual sales for the year were $230.6 million, up around $36 million from the prior fiscal year.

In the fourth quarter Rex reported a $5 million corporate loss from continuing operations vs. a profit of $5.3 million in the prior year’s final quarter. For the fiscal year Rex reported a loss of $2.3 million vs. a profit of $26.4 million in the prior year.

Going forward, Rex plans to make opportunistic investments in commercial real estate and ethanol production, funded by its sizeable cash reserves. “With difficult times comes opportunities, and we have a lot of cash to take advantage of them,” Rose said. — Additional reporting by Alan Wolf