Rex Stores 2Q Profit Falls 30% As Revenue Tumbles

Rex Stores Corp. (RSC) fiscal second-quarter earnings fell 30% amid lower demand as the home entertainment and appliances retailer and ethanol company closed its remaining retail locations.

The company, which now derives most of its revenue from its ethanol segment, in April said it planned to exit the retail business by the fiscal year's end. Rex stores said it continued to recognize deferred income from retail service contracts.

Rex as of July has lease or sublease agreements tied to 24 properties, including 18 subleased to another appliance retailer. Rex owns 25 properties, including two vacant distribution centers, that it plans to lease or sell.

Some regional appliance and electronics retailers - such as HHgregg Inc. (HGG), Conn's Inc.(CONN) and P.C. Richard & Son - largely have been faring well during the recession and have expansion plans amid depressed rental rates and increased vacancies as other retailers retrench. However, major appliance sales weighed on HHgregg's results in its most recent quarter and Conn's last month cut it fiscal-year profit view.

For the quarter ended July 31, Rex stores reported a profit of $837,000, or 9 cents a share, down from $1.2 million, or 11 cents a share, a year earlier. Shares outstanding fell 15%.

Revenue tumbled 50% to $21.5 million amid the retail pullback.

Gross margin rose to 16.6% from 15.9%.

Rex's ethanol-ownership interest includes 56% in Levelland Hockley County Ethanol LLC, 23% in Patriot Renewable Fuels LLC, and 74% in One Earth Energy LLC.

Rex shares closed at $10.11 on Tuesday and didn't trade premarket.

Source:online.wsj