Skip navigation

Breaking News

Duckwall-ALCO Stores Reports Operating Results for Third Quarter and Year-to-Date Fiscal 2012

13:15 EST Thursday, December 08, 2011

ABILENE, Kan., Dec. 8, 2011 (GLOBE NEWSWIRE) -- Duckwall-ALCO Stores, Inc. (Nasdaq:DUCK), which specializes in providing a superior selection of essential consumer products for everyday life in the communities it serves, today announced operating results for its third quarter ended October 30, 2011.

Net sales from continuing operations for the third quarter of fiscal 2012 increased 3.6% to $109.8 million, compared to third quarter of fiscal 2011. Same-store sales, excluding fuel center sales, increased 2.7%. Net sales from continuing operations for the 39 weeks ended October 30, 2011, increased 5.8% to $346.0 million, compared to the same period of the prior year. Same-store sales, excluding fuel center sales, increased 4.4%.

Net earnings for the third quarter of fiscal 2012 were $0.1 million, or $0.02 per diluted share, compared to a net loss of $2.1 million, or $0.55 per diluted share, for the third quarter of fiscal 2011. During the third quarter, the Company received an insurance settlement for damage sustained during the second quarter of fiscal 2012, due to wind and hail. The settlement amount represented an appearance allowance for the roofs at the Company's corporate office and distribution center in Abilene, Kansas. As such, the Company recorded a one-time gain of approximately $2.3 million (approximately $1.4 million after-tax or, $0.37 per diluted share). Excluding this one-time gain, net loss for the third quarter of fiscal 2012 was $1.3 million, or $0.35 per diluted share, compared to a net loss of $2.1 million, or $0.55 per diluted share, for the third quarter of fiscal 2011.    

Net loss for the 39 weeks ended October 30, 2011, was $0.6 million, or $0.14 per diluted share, compared to a net loss of $5.4 million, or $1.42 per diluted share, for the same period of the prior year. Excluding the one-time gain described above and the charge of $0.3 million or $0.08 per diluted share recorded in the second quarter for the accelerated amortization of financing fees related to the Company's new bank agreement, net loss for the 39 weeks ended October 30, 2011, was $1.7 million, or $0.43 per diluted share, compared to a net loss of $5.4 million, or $1.42 per diluted share, for the same period of the prior year. 

Richard Wilson, President and CEO, commented, "We are pleased with the improvement of our third-quarter operating results. The continued improvement in top-line sales marks our fourth consecutive quarter of same-store sales increases. We continued to experience top line growth in the Commodities, Home, and Softlines divisions, with the top-performing departments for the quarter being Candy/Food, Personal Care, Shoes, Furniture, and Infants."

Mr. Wilson added, "While our gross margin rate was down from the third quarter of the prior year, primarily due to mix of business in lower-margin categories and increased transportation expense, we were able to improve operating results.  Our merchandising strategies delivered strong same-store sales growth, our cost-reduction initiatives reduced SG&A expenses, and our new credit agreement benefited us during the entire third quarter."

Mr. Wilson concluded, "We are looking forward to this holiday selling season and are riveted to our strategy of providing ALCO customers with top-quality merchandise and exceptional value.  Consumers are responding well to the ALCO value proposition: 'Shop Smart. Save Smart.' "

Investor Conference Call

The Company will host an investor conference call at 10:00 a.m. Central Time on Friday, December 9, 2011, to discuss operating results for the third quarter ended October 30, 2011. The dial-in number for the conference call is 888-219-1467 (international/local participants dial 913-312-0389), and the Conference Code is 4966266. Parties interested in participating in the conference call should dial in approximately five minutes prior to 10:00 a.m. Central Time. A replay of the call will be available after 1:30 p.m. Central Time December 9, 2011, through December 13, 2011, by dialing 888-203-1112 (international/local participants dial 719-457-0820), and the Replay Code is 4966266. A replay of the call will also be available four hours after completion of the call by visiting the Investors page on the Company's website, www.ALCOstores.com.

Supplemental Data

The Company has included certain tables in this press release that are set forth fully in the Company's 10-Q.

Certain Non-GAAP Financial Measures

The Company has included Adjusted Gross Margin and Adjusted EBITDA, non-GAAP performance measures, as part of its disclosure as a means to enhance its communications with stockholders. Certain stockholders have specifically requested this information to assist them in comparing the Company to other retailers that disclose similar non-GAAP performance measures. Further, management utilizes these measures in internal evaluation, review of performance and in comparing the Company's financial measures to those of its peers. Adjusted EBITDA differs from the most comparable GAAP financial measure (earnings [loss] from continuing operations) in that it does not include certain items, as does Adjusted Gross Margin. These items are excluded by management to better evaluate normalized operational cash flow and expenses excluding unusual, inconsistent and non-cash charges.  To compensate for the limitations of evaluating the Company's performance using Adjusted Gross Margin and Adjusted EBITDA, management also utilizes GAAP performance measures such as gross margin, return on investment, return on equity and cash flow from operating activities.  As a result, Adjusted Gross Margin and Adjusted EBITDA may not reflect important aspects of the results of the Company's operations.

About Duckwall-ALCO Stores, Inc.

Duckwall-ALCO Stores, Inc. is a regional broad line retailer that specializes in meeting the needs of smaller, underserved communities across 23 states, primarily in the central United States. The Company offers an exceptional selection of quality products and recognized brand names at reasonable prices. Its specialty is delivering those products with the friendly, personal service its customers have come to expect. With 217 ALCO stores, the Company is proud to have continually provided excellent products at good value prices to its customers for 110 years. To learn more about the Company visit www.ALCOstores.com.

The Duckwall-ALCO Stores, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5865

Forward-looking statements

This press release contains forward-looking statements, as referenced in the Private Securities Litigation Reform Act of 1995 ("the Act"). Forward-looking statements can be identified by the inclusion of "will," "believe," "intend," "expect," "plan," "project" and similar future-looking terms. You should not rely unduly on these forward-looking statements. These forward-looking statements reflect management's current views and projections regarding economic conditions, retail industry environments, and Company performance. Forward-looking statements inherently involve risks and uncertainties, and, accordingly, actual results may vary materially. Factors which could significantly change results include but are not limited to: sales performance, expense levels, competitive activity, interest rates, changes in the Company's financial condition, and factors affecting the retail category in general. Additional information regarding these and other factors may be included in the Company's 10-Q filings and other public documents, copies of which are available from the Company on request and are available from the United States Securities and Exchange Commission.

- Tables to follow -

Duckwall-ALCO Stores, Inc.
Statements of Operations
(dollars in thousands, except share and per share amounts)
(Unaudited)
         
         
  Thirteen Week Periods Ended
Thirty-Nine Week Periods
Ended
  October 30, October 31, October 30, October 31,
  2011 2010* 2011 2010*
Net sales  $ 109,826  $ 106,055  $ 346,039  $ 327,200
Cost of sales 76,053 72,625 241,247 224,593
         
Gross margin 33,773 33,430 104,792 102,607
         
Selling, general and administrative 33,105 33,899 98,066 101,783
Depreciation and amortization expenses 2,106 2,570 6,432 7,533
         
Total operating expenses 35,211 36,469 104,498 109,316
         
Other Operating Income 2,270 2,270
         
Operating income (loss) from continuing operations 832 (3,039) 2,564 (6,709)
         
Interest expense 619 1,015 3,336 2,410
         
Earnings (loss) from continuing operations before income taxes 213 (4,054) (772) (9,119)
         
Income tax expense (benefit) 76 (2,067) (292) (3,741)
         
Earnings (loss) from continuing operations 137 (1,987) (480) (5,378)
         
Earnings (loss) from discontinued operations, net of income tax (benefit) of ($35), ($74), ($43), and ($40), respectively (57) (122) (70) (65)
Net income (loss)  $ 80  $ (2,109)  $ (550)  $ (5,443)
         
Earnings (loss) per share        
Basic        
Continuing operations  $ 0.04  $ (0.52)  $ (0.12)  $ (1.40)
Discontinued operations (0.02) (0.03) (0.02) (0.02)
         
Net earnings (loss) per share  $ 0.02  $ (0.55)  $ (0.14)  $ (1.42)
         
Earnings (loss) per share        
Diluted        
Continuing operations  $ 0.04  $ (0.52)  $ (0.12)  $ (1.40)
Discontinued operations (0.02) (0.03) (0.02) (0.02)
         
Net earnings (loss) per share  $ 0.02  $ (0.55)  $ (0.14)  $ (1.42)
         
         
Weighted-average shares outstanding:        
         
Basic 3,843 3,841 3,843 3,829
Diluted 3,843 3,841 3,843 3,829
  Thirteen Week Periods
Ended
Thirty-Nine Week Periods
Ended
  October 30, October 31, October 30, October 31,
  2011 2010 2011 2010
Same-store adjusted gross margin dollar change 0.3% (2.7)% 0.9% (8.5)%
Same-store SG&A dollar change 0.1% 0.5% (1.0 0.7%
Same-store total customer count change (3.9)% (2.2)% (3.0)% (2.9)%
Same-store average sale per ticket change 6.9% 0.1% 7.7% (1.2)%
 
Duckwall-ALCO Stores, Inc.
Schedule of Adjusted EBITDA
(dollars in thousands, except share and per share amounts)
(Unaudited)
               
    Twenty-Six
Week Periods Ended
Trailing 52
Weeks Ended
Thirteen Week 
Periods Ended
Trailing 52
Weeks Ended
    July 31, August 1, July 31, October 30, October 31, October 30,
 (dollars in thousands) Fiscal 2011 2011 2010 2011 2011 2010 2011
Net earnings (loss) from continuing operations (1)  $ (3,471) (617) (3,391) (697) 137 (1,987) 1,427
Plus:              
Interest 3,502 2,717 1,395 4,824 619 1,015 4,428
Tax expense (benefit) (1) (2,414) (368) (1,673) (1,109) 76 (2,067) 1,034
Depreciation and amortization (1) 10,001 4,327 4,963 9,365 2,106 2,570 8,901
Share-based compensation 333 182 200 315 92 68 339
Insurance settlement (4) (2,270) (2,270)
Preopening store costs (2) 543 3 382 164 233 110 287
Executive and staff severance 540 131 480 191 60 131
Store reset costs 895 895 895
AWG transition costs 210 210 210
=Adjusted EBITDA (1) (3) 10,139 6,375 2,356 14,158 993 664 14,487
               
Cash 4,189 6,431 3,690 6,431 3,125 5,356 3,125
Debt 59,072 65,380 40,090 65,380 80,211 64,571 80,211
Debt, net of cash  $ 54,883 58,949 36,400 58,949 77,086 59,215 77,086
               
(1) These amounts may not agree with 10-Qs of previous quarters due to subsequent store closures. These closed stores are now included in discontinued operations.
(2) These costs are not consistent quarter to quarter as the Company does not open the same number of stores in each quarter of each fiscal year.  These costs are directly associated with the number of stores that have been or will be opened and are incurred prior to the grand opening of each store.
(3) During fiscal year 2011, the Company made changes in its executive management team and warehouse operations.  For the trailing 52 weeks ended October 30, 2011, these initiatives resulted in approximately $1.6 million reduced SG&A expenses when compared to the same prior year trailing 52 weeks.  The initiatives include, but are not limited to, executive and staff reduction.
(4) On September 9, 2011, the Company received a $2.3 million settlement from Factory Mutual Insurance Company (the "Insurer") for damage sustained during the second quarter of fiscal 2012, due to wind and hail. The settlement amount represented an appearance allowance for the roofs at the Company's corporate office and distribution center in Abilene, Kansas. The Insurer determined the roofs continue to be functional as is without making repairs, that the life expectancy of the standing seam roofs were not compromised, and advised the Company that the damage and subsequent settlement would not affect the future insurability of the roofs, nor would it affect any future property claims should these roofs sustain future damage from an insured peril. 
 
Duckwall-ALCO Stores, Inc.
Balance Sheets
(dollars in thousands, except share and per share amounts) 
  October 30, January 30,
  2011 2011
  (Unaudited)
Assets    
Current assets:    
Cash and cash equivalents  $ 3,125  $ 4,189
Receivables 8,693 6,847
Prepaid income taxes 72 168
Inventories 195,368 151,079
Prepaid expenses 3,789 3,720
Deferred income taxes 3,965 2,563
Property held for sale 664 884
Total current assets 215,676 169,450
     
Property and equipment, at cost:    
Land and land improvements 1,834 1,496
Buildings and building improvements 11,847 11,828
Furniture, fixtures and equipment 70,319 69,924
Transportation equipment 803 1,305
Leasehold improvements 16,899 16,449
Construction work in progress 3,495 350
Total property and equipment 105,197 101,352
Less accumulated depreciation and amortization 77,460 72,788
Net property and equipment 27,737 28,564
     
Property under capital leases 22,254 22,254
Less accumulated amortization 11,300 10,727
Net property under capital leases 10,954 11,527
     
Deferred income taxes — non current 1,025 2,180
Other non-current assets 823 990
Total assets 256,215 212,711
     
Liabilities and Stockholders' Equity    
Current liabilities:    
Current maturities of long-term debt  $ 263  $ 1,414
Current maturities of capital lease obligations 553 703
Accounts payable 48,463 25,968
Accrued salaries and commissions 4,188 4,133
Accrued taxes other than income 4,991 4,822
Self-insurance claim reserves 3,933 4,139
Other current liabilities 4,556 4,608
Total current liabilities 66,947 45,787
     
Notes payable under revolving loan 68,217 45,282
Capital lease obligations - less current maturities 11,178 11,673
Deferred gain on leases 3,536 3,826
Other non-current liabilities 2,454 1,850
Total liabilities 152,332 108,418
     
Stockholders' equity:    
Common stock, $.0001 par value, 20,000,000 authorized shares; 3,842,745 and 3,841,895 shares issued and outstanding at October 30, 2011 and January 30, 2011, respectively 1 1
Additional paid-in capital 40,143 40,003
Retained earnings 63,739 64,289
Total stockholders' equity 103,883 104,293
Total liabilities and stockholders' equity  $ 256,215  $ 212,711
CONTACT:  Wayne S. Peterson
          Senior Vice President - Chief Financial Officer
          785-263-3350 X164
          email: wpeterson@alcostores.com
          or
          Debbie Hagen
          Hagen and Partners
          913-642-6363
          email: dhagen@hagenandpartners.com

company logo




Back to top