Rex Net Income Plunges

The locally based chain posted income for the quarter ending April 30 of Rex's $1.5 million, or 13 cents per share, down sharply from the $6.1 million, or 48 cents a share, it earned for the same period just a year earlier. Income from its synthetic-fuels partnerships dropped to $2.1 million, down from $6 million in last year's first quarter, the company said.

Stuart Rose, the company's chairman and chief executive office, said that the primary cause of the earnings drop was a decline in synthetic fuels income caused by a rise in oil prices which prompted synthetic fuel plants to shut down operations. In a conference call announcing the first-quarter results, Rose said Rex stores isn't expecting income from those investments anytime soon but the company is hoping begin investing in ethanol fuel development to make up for that lost revenue. Details of those ethanol investment deals should be announced at Rex's next earnings conference in three months, Rose said.

The company said its inability to get enough plasma televisions to meet customer demands also caused net sales for the company to decline by just under $1 million, a drop from last year's $87.9 million to $86.1 million in sales. That supply issue should be rectified by the start of the fall sales season, however, Rose said.

Meanwhile, appliance and LCD tv sales remained strong even though smaller electronics sales were sluggish, he noted.

Sales at stores open at least six full fiscal quarters were up slightly, increasing 0.5% from the first quarter of 2005. The company, which closed 16 stores last year, said it will likely close two or three underperforming stores during the 2006 fiscal year. The electronics retailer currently operates 211 retail stores in 36 states.