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Rex Reports Q3 Loss

12/09/2008 01:40:00 PM Eastern

Dayton, Ohio — Earnings from Rex Stores’ retail business helped offset losses at its ethanol production unit during the company’s fiscal third quarter.

Rex recorded a loss from continuing operations of $425,000 and a net loss of $650,000 for the three-month period, ended Oct. 31.

Conversely, sales gains in the synthetic fuels segment helped overcome steep revenue declines for the chain, driving Rex’s third-quarter sales up 19.2 percent to $63.7 million.

Separately, the company is considering two proposals to “restructure” its retail business, chairman/CEO Stuart Rose said.

Broken out by segment, retail sales tumbled 22.8 percent year over year to $41.2 million, while same-store sales, excluding sales of extended-service contracts, fell 13.6 percent for the three months, ended Oct. 31.

Revenue results were boosted by the sale of a warehouse in Cheyenne, Wyo., for $5.1 million.

Income from continuing operations for the multiregional CE and appliance chain rose 12.3 percent to $2.8 million.

The gain helped offset a nearly $5 million loss for continuing operations within the alternative energy segment, which recorded $22.4 million in sales.

In a conference call, Rose said the company is evaluating two separate proposals to restructure its retail business, which would ostensibly include a divestiture of its stores. The retail restructuring “may or may not happen,” he said, although a decision is expected to be reached by the end of Rex’s fiscal year on Jan. 31.

In the meantime, an oversupply of product stemming from the bankruptcies of Circuit City and Tweeter has created buying opportunities that the company will pursue if it decides to hold onto the retail segment, Rose said.

He added that while “retail is very tough,” Rex’s strong balance sheet will help it withstand the recession and leave it better positioned when the economy improves.

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