Rex Stores' Earnings Plunge

Sales for the period ended July 31 were $82.1 million, a $400,000 drop from the year ago period when sale were $82.5 million. Company officials attributed the decline to a shift in buying as consumers transition from rear projection and tube televisions to higher priced flat panel screens. Sales of LCD televisions were up more than 100% while sales of plasma televisions increased by more than 50% during the quarter, the company said.

The Dayton, OH firm, which operates 211 Rex stores in 36 states, said it was also hurt by a steep drop in income from its synthetic fuel limited partnership investments, which declined from $10.4 million in the comparable year-ago period to $700,000 in this year's second quarter. The company said the decline was due to a decision by Progress Energy, which bought the firm's partnership interest in the Colona synthetic fuel investments, to cease production at its synthetic fuel facilities due to higher oil prices and the likelihood that tax credits would be reduced or phased out in 2006.

The quarter's lackluster results follow on the heels of a 75% drop in net income during the first quarter due to a halt in synthetic fuel production and the company's inability to get enough plasma televisions to meet customer demands.

Stuart Rose, the company's chairman and chief executive office, said in a conference call that despite the loss from its synthetic fuel investments, the firm remains committed to "farmer-owned" fuel producing projects.

"Over the long term, we're very optimistic about our ethanol investments," Rose said. "Our projects and our strategy is going to look very, very good three years from now."