The company said that second quarter earnings included $10.4 million of pre-tax income from synthetic fuel investments, including a one-time $3.5 million payment related to a synthetic fuel facility resuming commercial operations, compared to $3.3 million of comparable investment income in the year-ago period. Net sales fell 1% to $84.7 million from $85.8 million last year, while comparable store sales during the period fell 1% compared to the same year-ago period.
During the company's Q2 earnings conference call, Stuart Rose, Rex Stores' chairman and chief executive officer, attributed the positive quarter to the company's increase in synthetic fuel investments, and higher sales in air conditioning units, light-engine and plasma television sets. Adversely, sales of tube and regular high-definition televisions were down.
Rose said that August comps were running up in the low-single digits despite 12 stores currently closed as a result of hurricane Katrina. "The company hopes to get these stores open because we have products like refrigerators that people need replacing," Rose said. "It's not just a from the profitability standpoint, but for a general need for our product."
In the quarter, the company purchased nearly one million shares of its common stock. Subsequent to the close of the quarter, Rex purchased an additional 87,700 shares, and on Tuesday the company's board of directors expanded the previous share repurchase authorization by an additional one million shares.
During the first half of the year, income spiked 101% to $14.8 million, or $1.18 per diluted share, compared to net income of $7.4 million, or 57 cents per diluted share from one year ago. Sales during the six-month period were $174.3 million compared to $170.2 million last year, and comparable store sales climbed 3%.
Looking into next year, Rose said the company's biggest worry is the price of oil and synthetic fuel-tax credits tied to the price of oil. During its Q2, the retailer operated 228 stores in 37 states.
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