Rex Stores 1st-Qtr. Profits Plunge 80%

By Alan Wolf On Jun 16 2008 - 6:00am

Rex Stores reported an 80 percent drop in fiscal first-quarter net income to $1.5 million, which it attributed in part to the consolidation of two of its ethanol-production investments.

Net sales and revenue slipped 3.7 percent to $47.1 million for the four months, ended April 30, and same-store sales were essentially flat, falling 0.3 percent.

During a conference call, Rex chairman/CEO Stuart Rose said earnings from retail operations, excluding sales of extended warranties, fell nearly 53 percent year over year to $900,000, as the company cut margins on premium products to maintain traffic amid the soft economy.

Rose said business also suffered from a dearth of opportunistic buys on manufacturer closeout items and flat-panel overstock, as vendors improved their inventory management.

On the product front, comp sales of major appliances fell 0.4 percent during the quarter; audio declined 1.2 percent; video increased 0.8 percent; and TV grew 2.2 percent.

Within the latter, plasma was up 15 percent in comps and rear-projection TV fell 54.5 percent, Rose said. Comp sales of LCD panels 48 inches and larger grew 128 percent while comps of 43- to 47-inch panels grew 64 percent. Declines in sales of smaller screen sizes were attributable to a flood of low-priced product and competition from national discount chains, he said.

In contrast, comp-store sales in May were up 2 percent (excluding room air), Rose said, thanks in part to stimulus-check spending.

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