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REX Says Earnings Up 104 Percent in Quarter

Posted on: Thursday, 1 December 2005, 21:00 CST

By Stephanie Irwin, Dayton Daily News, Ohio

Dec. 1--DAYTON -- Local electronics retail chain REX Stores Corp. reported Wednesday that its third-quarter earnings, buoyed by income from synthetic fuel investments, climbed 104 percent compared with the same period last year.

The company also said it will compete head-to-head with Wal-Mart Stores Inc. and other competitors this holiday season and retain its share of the high-definition television market.

REX said its net income in the three months ended Oct. 31 was $6.9 million, or 58 cents per diluted share, compared with net income of $3.4 million, or 27 cents per diluted share, during the same period last year.

Net sales rose 4.2 percent to $94.3 million from $90 million during the year-ago period. Same- store sales, considered the best indicator of a retail chain's success, rose 4.6 percent

Income from synthetic fuel investments boosted the company's earnings. Income from synthetic fuel was $8.4 million before taxes, including a $1.2 million one-time gain from the sale of the last of its synthetic fuel partnerships that have generated the company millions in tax credits since 1998.

But now that those tax credits have been sold, Stuart Rose, chief executive officer for REX, said the company will invest heavily into ethanol manufacturers to boost earnings.

On the retail side, Rose said REX is working to improve its image and will use its knowledge of products to attract customers away from the large discount chains. REX also will be sure to have popular products in stock, Rose said.

REX also renewed Rose's employment contract for another 25 months and tied his bonuses to the performance of the retail side and a newly-designated segment of earnings before taxes that come from future energy investments. His base pay will be $154,500.

Rose will get 3 percent of the earnings from synthetic fuel or other alternative fuel investment. The bonus, combined with retail-related bonuses, cannot exceed $1 million for the year.

Shares for REX Stores (NYSE:RSC) closed at $14.89, up 11 cents. REX operates 226 stores in 37 states.

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Copyright (c) 2005, Dayton Daily News, Ohio

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Source: Dayton Daily News

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