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Rex Sales Off 1% In Fis. Q3, Comps Rise 1%

12/02/2004 09:58:00 AM Eastern

Dayton, Ohio — Consumer electronics and major appliances specialty retailer Rex Stores reported a 1 percent dip in fiscal third-quarter sales, to $93.6 million from a year-ago $94.5 million. Comp-store sales, however, edged upward 1 percent in the same three months.

Income from continuing operations for the third quarter, ended Oct. 31, was recorded at $3.5 million, down from a year-ago $4.2 million. Net income for the three months also moved downward, reaching $3.4 million, compared with $4.1 million in the same period in 2003.

In a conference call, chairman Stuart Rose said the comp store results reflect a “huge increase” in plasma and LCD sales, which were offset by a decrease in the company’s analog TV business, and that margins and earnings were hurt by the Florida hurricanes and continued declines in commodity product pricing.

To address the shortfalls, Rose is repositioning the company from a commodity-driven business to one that emphasizes higher-end, assisted-sale products, particularly better HDTVs, he said. That business “became a huge category out of nowhere” for Rex, now that HD signals are finally reaching its smaller-market base, and lower prices are putting advanced TVs within reach of its customers, he said.

“We went from selling virtually no plasmas last year, to plasma and LCD now representing about a third of our TV sales,” Rose said. TV, in turn, accounted for about 57 percent of Rex’s total sales last quarter.

For the nine months, Rex sales hit $267.6 million, down from $277.1 million in the same three months a year earlier. Comp-store sales for the period fell 2 percent.

Income from continuing operations for the nine months increased to $11.2 million from $10.6 million in the same period last year. Net income for the nine months moved upward to $10.8 million from a year-on-year $10.4 million.

During the third quarter, Rex purchased about 177,000 shares of its common stock in open-market transactions. The retailer has about 523,000 shares remaining for purchase under a previously authorized stock buyback plan. — Additional reporting by Alan Wolf