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Rex Q2 Income Up 39%, Sales Slide 7%

9/04/2002 01:11:00 PM Eastern

Dayton, Ohio - Specialty retailer Rex Stores enjoyed a healthy boost in net income, but a decline in overall and comparable store sales, during its fiscal second quarter.

Net income rose 39 percent during the second three months, hitting $5.4 million, up from $3.9 million in the year-ago period. Gains in net income reflected an increase in gross margin in the second quarter, to 31.5 percent, 210 basis points higher than the 29.4 percent registered in the same three months last year.

Net income for the second quarter includes about $4.6 million of pre-tax investment income from the sales of Rex's entire partnership interest in a synthetic fuel limited partnership, as well as $0.4 million from the settlement of a previously filed lawsuit

Net sales in the second three months, ended July 31, dropped 7 percent, to $93.1 million, down from $100.5 million in the same quarter in 2001. Comp-store sales for the same period declined 6 percent.

Riding high on strong air conditioner sales and continuing cost controls in the second quarter, Rex said it benefited both from the rise in gross margin and operating income gains. Income from operations increased 26 percent, to $3.3 million, up from $2.6 million in the same quarter the previous year.

In the first half of fiscal 2002, net income climbed 37 percent, reaching $9.6 million, up from $7 million in the same six months in 2001. Net income gains for the second half reflect about $9.3 million of pre-tax investment income from the sales of the company's entire partnership interest in the fuel limited partnership.

Sales in the first six months decreased 9 percent, to $186.6 million, down from $205.3 million year over year. Comp-store sales for the first half dropped 7 percent. Income from operations for the period hit $5.57 million, about flat with the $5.59 million generated in the same six months a year ago.

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