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Rex Sales Flat, Reports Q3 Loss

12/02/2003 10:40:00 AM Eastern

Dayton, Ohio - Specialty retailer Rex Stores reported relatively flat sales and negative earnings in its fiscal third quarter.

Sales edged upward 1 percent, reaching $96.6 million, from $95.7 million in the year-ago period. Comp-store sales increased 2 percent for the three months.

Rex net income for the third quarter hit $4.1 million, down from $4.3 million in the same quarter in 2002.

In a conference call, chairman/CEO Stuart Rose cited a late third quarter slowdown in same-store sales that was attributable to a cutback on TV advertising and to consumers’ decisions to defer purchases until Black Friday weekend.

Nonetheless, 'Large-screen, HDTV-ready televisions continued to be a strong category for us in the third quarter as consumers continue to upgrade their home entertainment systems,' he noted.

For the nine months, Rex sales also were essentially flat, coming in at $283.4 million, up from $282.3 million year over year. Comp-store sales increased 2 percent.

Net income for the nine months hit $10.4 million, down from $13.8 million in the same period a year ago.

Net income for the third quarter and nine months reflects about $3.7 million and $9.9 million, respectively, of pre-tax investment income from the sales of the retailer's entire partnership interest in a synthetic fuel limited partnership.

As previously disclosed, the Internal Revenue Service is auditing this limited partnership. Of the investment income, about $2.2 million and $6 million for the third quarter and first nine months, respectively, of the payments relating to sales of certain portions of the limited partnership interest, due Rex during the periods is being held in escrow, pending the results of the IRS audit.

Future payments due the retailer relating to certain of these sales also will be held in escrow pending the completion of the IRS audit.

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