Rex pulls plug in Tampa Bay
The TV retailer, a victim of price wars, is closing its five area stores.
By MARK ALBRIGHT
Published May 22, 2007
Rex Stores Corp. is pulling out of the Tampa Bay market after a 23-year run, another victim of brutal pricing that has ripped through the TV retail business since the Christmas holidays.
The Dayton, Ohio, retailer revved up going-out-of-business sales to clear remaining inventory by the end of the week at all five area locations in Largo, Palm Harbor, St. Petersburg, Hudson and Spring Hill.
The consumer electronics chain, which gets 55 percent of its business selling TV equipment, has plenty of company in what's described as another case study of the "Wal-Mart Effect." Wholesale clubs and retailers such as Best Buy Inc. and Circuit City Stores Inc. dramatically bulked up their inventories of flat panel, high-definition and other new TV technologies last fall in anticipation of prices dropping quickly.
Then Wal-Mart Stores Inc. took advantage of the flooded market of Sony, Samsung, Panasonic and store-brand sets by dropping prices even more, which dramatically undermined rival retailers' profits. At one point, Wal-Mart cut the price of a 42-inch Sony by $500 to $1, 294 and sold out of a 42-inch LCD Viorre priced below $1, 000. Best Buy and others met the price competition, but the fallout has come home to roost at consumer electronics stores.
CompUSA is closing 129 of its 229 stores, but none locally. Circuit City closed 70 stores in other domestic markets, put its Canadian division up for sale and laid off 3, 400 of its best-paid sales people. Tweeter Home Entertainment Corp., which operates Sound Advice in Florida, is closing 49 of its 113 stores none of them in the Tampa Bay area and canceled its naming rights deal for three Live Nation amphitheaters, including one in Fort Lauderdale. The chain said it may seek Chapter 11 bankruptcy this summer if it runs short of cash buying out all the leases and settling up with 650 employees who will lose their jobs.
While sales of plasma and LCD screens are way up, retailers have to sell more of them to break even.
At Rex, sales in stores open more than a year plummeted 14 percent in the most recent quarter because of TV pricing. The company's net income for fiscal 2007 nose-dived to $11-million, down sharply from $28-million in 2006.
"We expected a dropoff, but nothing like what happened, " said Stuart Rose, chairman and chief executive of Rex. "Tube and big screen TV sales just went off a cliff."
Rex has closed 29 of its 143 stores so far this year and recently set the stage to close more by selling 86 locations elsewhere to a real estate investment group for $75-million. Rex will lease back 40 of them.
Rex employs fewer than three dozen people to run its Tampa Bay stores.
The sales people are commissioned and delivery is done by a contractor.
The chain ranked 10th in customer traffic behind Sound Advice among consumer electronics chains in the Tampa Bay area. According to the 2005 Scarborough Report, about 3 percent of electronics buyers visited a Rex outlet.
Mark Albright can be reached at firstname.lastname@example.org">href="mailto:email@example.com" mce_href="mailto:firstname.lastname@example.org">email@example.com or (727) 893-8252.
Rex Stores' pullout from the area is part of a shakeout among electronics retailers:
- CompUSA: Closing 129 of 229 stores.
- Circuit City: Closed 70 stores nationwide and put its Canadian division up for sale.
- Tweeter Home Entertainment Corp. (operates Sound Advice in Florida): Closing 49 of 113 stores.