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Rex Q2 Sales Off, Net Rises

Dayton, Ohio — Rex Stores managed to post a 4 percent increase in net income during the same three months, despite fiscal second quarter sales dropping 2 percent at the specialty retailer of consumer electronics and major appliances.

Rex’s sales came in at $88.4 million for the quarter, ended July 31, down from a year-earlier $90.2 million. Comp-store sales in the second quarter were flat year-over-year, but would have jumped 4 percent in the three months, excluding air conditioners, which can represent a significant portion of the retailer’s second quarter sales, said Rex. Air conditioner movement has lagged significantly this summer across much of the nation, due to cooler weather.

Income from continuing operations increased to $3.5 million in the second quarter, up from $3.2 million in the same period in 2003. Rex posted a $198,000 loss from discontinued operations for the three months, compared with a loss from discontinued operations of $49,000 in the year-ago period.

Net income reached $3.3 million in the second quarter, up from $3.2 million the previous year. Net income in 2004 reflects an income tax benefit of $1.4 million, following successful completion of an Internal Revenue Service examination, as well as a $600,000 pre-tax loss for early termination of debt.

During the second quarter, Rex purchased about 420,400 shares of its common stock in open-market transactions. Subsequent to the end of the quarter, the retailer purchased about 103,000 additional shares. It has about 597,000 authorized shares remaining available to purchase under its previously announced stock buy-back authorization.

For the six months, Rexssales dropped to $175.6 million, down from $184.2 million year-over-year. Comp-store sales fell 4 percent.

The retailer reported $7.6 million in income from continuing operations for the first half, up from $6.4 million in the first six months of the previous fiscal year. First half net income rose to $7.4 million, compared with a year-over-year gain of $6.3 million.

As of the end of the second quarter, Rex reported it operated 239 stores in 37 states.