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Non-Tech : REX Stores (RSC): The next BEST BUY?
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To: Kevin Michael who wrote ()5/26/1999 11:36:00 PM
From: Kevin Michael  Read Replies (1) of 24
 
FINAL WORD: To answer my own question question: Is RSC the next Best Buy (BBY)? Probably not, but you just never know. BBY has come a long way fast and is now the dominant electronics retailer with Circuit City in a close second place. Things have been going perfect for Best Buy stores since 1998-- strong consumer spending, continuing technological advances, selling cheap import products into a strong US economy, and faster inventory turnovers (result of new technology and better management) This improved the profitability of Best Buy stores and gave them the necessaray funds to begin rapid expansion. As a result Best Buy shares have soared! My point: REX Stores shares have underperformed during this same two year period! Revenues were 427.4 million in 1997 with 222 stores, 411 million in 1998 with 222 stores, and 416.7 million in 1999 with 228 stores. Not much of a growth story here; thus the low PE ratio. Management seems to have been cautious in expanding but their business has been very profitable. What I like now is that management is becoming more aggressive! Establishing an e-commerce site, a relationship with Amazon.com, and more effective advertising and marketing programs convey this. Management seems to be coming around, but will the growth be there? Will consumers keep spending tons of money? Only time will tell, but for now things are looking better for REX shareholders. One thing for sure: I have wasted a nights evening talking about this. Oh, well. By the way, I am not in any way affiliated with REX. I live in St. Charles, MO and have never even visited a REX store (not one near this area). I would love to hear input from others though that have visited these stores. I own 25 shares at 19-- that's it. Kevin Michael
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