[LOGO OF REX]

News Announcement                               For Immediate Release

For further information contact:

Douglas Bruggeman                                Joseph N. Jaffoni
Chief Financial Officer                          Jaffoni & Collins Incorporated
937/276-3931                                     212/835-8500 or rsc@jcir.com


                REX TO PROCEED WITH FIRST OF SEVERAL ANTICIPATED
                     ETHANOL PRODUCTION FACILITY INVESTMENTS

           - Action Advances REX's Strategy to Diversify its Earnings
                        Base Through Energy Investments -

Dayton, Ohio (July 31, 2006) -- REX Stores Corporation (NYSE:RSC) announced
today that it has entered into a contingent agreement to invest an additional
$11.5 million to $18.0 million in Levelland/Hockley County Ethanol, LLC
("Levelland/Hockley") which intends to construct an ethanol production facility
in Levelland, Texas. The additional investment, along with Rex's prior
previously announced $5 million convertible secured promissory note commitment
enables REX to secure a majority ownership interest in Levelland/Hockley.

Stuart Rose, REX's Chairman and Chief Executive Officer, commented, "Over the
past eight years, REX has derived significant long-term financial benefits from
its synthetic fuel investments and we are delighted to be moving forward with
investments in ethanol production facilities.

"In addition to Levelland/Hockley, we have entered into contingent agreements to
invest in three other ethanol plants with annual production capacity of 100
million gallons each. The four investment commitments to date could lead to REX
investing over $80 million in ethanol production facilities. In addition to
these four commitments, REX is in the process of evaluating other proposed
ethanol investments, and we believe we are well suited to extend our presence in
the energy sector."

Levelland/Hockley has signed a design/build agreement with ICM, Inc., an
engineering firm focused on ethanol, and intends to commence construction of the
Levelland, Texas facility by November 1, 2006. The plant will have a design
capacity of 40 million gallons of ethanol annually.

                                     -more-








REX To Proceed With Investment In Ethanol Producing Facility, 7/31/06    page 2


This news announcement contains or may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements can be identified by use of forward-looking terminology such as
"may," "expect," "believe," "estimate," "anticipate" or "continue" or the
negative thereof or other variations thereon or comparable terminology. Readers
are cautioned that there are risks and uncertainties that could cause actual
events or results to differ materially from those referred to in such
forward-looking statements. These risks and uncertainties include the risk
factors set forth from time to time in the Company's filings with the Securities
and Exchange Commission and among other things: the highly competitive nature of
the consumer electronics retailing industry, changes in the national or regional
economies, weather, the effects of terrorism or acts of war on consumer spending
patterns, the availability of certain products, technological changes, new
regulatory restrictions or tax law changes relating to the Company's synthetic
fuel investments, the fluctuating amount of quarterly payments received by the
Company with respect to sales of its partnership interest in a synthetic fuel
investment, the potential for Section 29/45K tax credits to phase out based on
the price of crude oil adjusted for inflation, and the uncertain amount of
synthetic fuel production and resulting income received from time to time from
the Company's synthetic fuel investments. As it relates to ethanol investments,
risks and uncertainties include among other things: the uncertainty of
constructing plants on time and on budget and the volatility of corn, dried
distiller grains, ethanol, gasoline and natural gas prices.


                                     # # #