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Rex Sales Off 1%, Income Rises

Dayton, Ohio — Specialty retailer Rex Stores reported virtually flat sales in its fiscal second quarter, with the number edging downward 1 percent, to $84.7 million, compared with $85.8 million in the year-ago period. Comp-store sales in the second quarter, ended July 31, also were off 1 percent.

Excluding sales of air conditioners in the second quarter, Rex comp-store sales would have declined 5 percent, compared with the same three months in the prior year. Comps don’t include sales of extended service contracts.

Chairman/CEO Stuart Rose attributed the slump to declines in sales of tube and rear-projection CRT TVs.

Net income, however, stayed on the brighter side of the ledger in the second three months, coming in at $8.7 million, a 166 percent gain over the $3.3 million reported in the same quarter a year ago. Net income in the period does include $10.4 million on pretax income from synthetic fuel investments, including a one-time $3.5 million payment related to a synthetic fuel facility resuming commercial operations, compared with $3.3 million of comparable investment income in the second quarter of the previous year. Net income in the fiscal 2004 second quarter reflects an income tax benefit of $1.4 million.

For the first half, Rex sales moved higher, reaching $174.3 million, up from $170.2 million year-on-year. Comp-store sales for the six months rose 3 percent.

Net income in the first half climbed 101 percent, reaching $14.8 million, up from $7.4 million in the first six months last year.

In a conference call, Rose expressed confidence that sales of plasma and microdisplay TVs, which increased 50 percent in the second quarter, will offset continued declines in CRT-based sets through the holiday season. He added that Mitsubishi will join Rex’s light engine roster this fall.

Looking ahead, Rose promised to be “aggressive on pricing because that’s what it takes to be successful.”