ABILENE, Kan., Sept. 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 underserved communities, today announced operating results for its second quarter ended July 31, 2011.
Net sales from continuing operations for the second quarter of fiscal 2012 increased 7.9% to $122.0 million, compared to second quarter of fiscal 2011.Same-store sales, excluding fuel center sales, increased 7.2%. Net sales from continuing operations for the first half of fiscal 2012 increased 6.8% to $236.2 million, compared to a year earlier. Same-store sales, excluding fuel center sales, increased 5.2%.
Net earnings for the second quarter of fiscal 2012 were $1.2 million, or $0.32 per diluted share, compared to a net loss of $1.1 million, or $0.28 per diluted share, for the second quarter of fiscal 2011. Net loss for the first half of fiscal 2012 was $0.6 million, or $0.16 per diluted share, compared to a net loss of $3.3 million, or $0.87 per diluted share, for the same period of the prior year.
Richard Wilson, President and CEO, commented, "The improved operating results in the first half of fiscal 2012 demonstrate the progressive benefit of changes we have implemented. Merchandising strategies and cost-reduction initiatives have enabled us to deliver strong same-store sales growth while achieving better operating results as we progress through the year. Gross margin has improved from first to second quarter as a result of the increased sales performance of departments such as Apparel, Housewares and Domestics. Top-line growth continues to be strong in other departments such as Consumables, Electronics, and Sporting Goods."
Wilson added, "While the Company maintains a primary focus on serving small-town America, we are excited to announce an addition to our growth strategy. We are launching a pilot project to add future store locations in selected urban markets where the ALCO value proposition and shopping experience can offer superior convenience to consumers. During the second half of fiscal 2012, the Company anticipates opening ALCO stores in Grand Prairie, Texas (a suburb of Dallas, Texas), and in Houston, Texas. We believe these stores in more densely populated areas will reach a higher volume of customers with merchandise that meets their basic daily shopping needs."
Wilson concluded, "We continue to build momentum across the Company and are focused on achieving further improvement of the business through future initiatives."
During the second quarter, the Company entered a five-year revolving credit agreement with Wells Fargo Bank, National Association and Wells Capital Finance, LLC. The $120 million revolving credit facility replaced the Company's previous $120 million credit facility and expires July 20, 2016. Benefits include a 150 basis point reduction in interest rates, access to more availability through an increase of advance rates on collateral, a streamlined treasury management process and an extended term. The Company recognized a one-time, non-cash after-tax charge of approximately $0.3 million, or $0.08 per share, in the second quarter ended July 31, 2011. This charge was the result of accelerated recognition of certain deferred financing fees from the Company's previous revolving credit agreement.
The Company disclosed an anticipated insurance settlement that will benefit third-quarter earnings. On June 1, 2011, the Company's corporate office and distribution center in Abilene, Kansas, sustained cosmetic roof damage as the result of wind and hail. On August 29, 2011, the Company received notification from the insurer of a tentative settlement for an appearance allowance for the property damage. The insurer noted that no repair is needed or advised. The Company anticipates it will finalize the settlement with the insurer and receive proceeds during the third quarter of fiscal 2012. At that time, the Company intends to record estimated pre-tax income of approximately $2.0 million related to the settlement.
Investor Conference Call
The Company will host an investor conference call at 10:00 a.m. Central Time on Friday, September 9, 2011, to discuss operating results for the second quarter ended July 31, 2011. The dial-in number for the conference call is 877-704-5378 (international/local participants dial 913-312-0416), and the Confirmation Code is 4473968. 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 September 9, 2011, through September 13, 2011, by dialing 888-203-1112 (international/local participants dial 719-457-0820), and the Confirmation Code is 4473968. 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 213 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.
| Duckwall-ALCO Stores, Inc. | ||||||
| Statements of Operations | ||||||
| (dollars in thousands, except share and per share amounts) | ||||||
| (Unaudited) | ||||||
| Thirteen Week Periods Ended | Twenty-Six Week Periods Ended | |||||
|
July 31, 2011 |
August 1, 2010 |
July 31, 2011 |
August 1, 2010 |
|||
| Net sales | $ 121,991 | $ 113,051 | $ 236,214 | $ 221,145 | ||
| Cost of sales | 84,072 | 76,990 | 165,195 | 151,968 | ||
| Gross margin | 37,919 | 36,061 | 71,019 | 69,177 | ||
| Selling, general and administrative | 32,095 | 34,628 | 64,961 | 67,883 | ||
| Depreciation and amortization expenses | 2,138 | 2,489 | 4,327 | 4,963 | ||
| Total operating expenses | 34,233 | 37,117 | 69,288 | 72,846 | ||
| Operating income (loss) from continuing operations | 3,686 | (1,056) | 1,731 | (3,669) | ||
| Interest expense | 1,649 | 721 | 2,718 | 1,395 | ||
|
Earnings (loss) from continuing operations before income taxes |
2,037 | (1,777) | (987) | (5,064) | ||
| Income tax expense (benefit) | 755 | (609) | (369) | (1,674) | ||
| Earnings (loss) from continuing operations | 1,282 | (1,168) | (618) | (3,390) | ||
|
Earnings (loss) from discontinued operations, net of income tax expense (benefit)of $32, ($67), $8, and ($35), respectively |
(52) | 109 | (12) | 57 | ||
| Net income (loss) | $ 1,230 | $ (1,059) | $ (630) | $ (3,334) | ||
| Earnings (loss) per share | ||||||
| Basic | ||||||
| Continuing operations | $ 0.33 | $ (0.31) | $ (0.16) | $ (0.89) | ||
| Discontinued operations | (0.01) | 0.03 | 0 | 0.02 | ||
| Net earnings (loss) per share | $ 0.32 | $ (0.28) | $ (0.16) | $ (0.87) | ||
| Earnings (loss) per share | ||||||
| Diluted | ||||||
| Continuing operations | $ 0.33 | $ (0.31) | $ (0.16) | $ (0.89) | ||
| Discontinued operations | (0.01) | 0.03 | 0.00 | 0.02 | ||
| Net earnings (loss) per share | $ 0.32 | $ (0.28) | $ (0.16) | $ (0.87) | ||
| Weighted-average shares outstanding: | ||||||
| Basic | 3,842 | 3,836 | 3,842 | 3,823 | ||
| Diluted | 3,842 | 3,836 | 3,842 | 3,823 | ||
| Thirteen Week Periods Ended | Twenty-Six Week Periods Ended | |||||
|
July 31, 2011 |
August 1, 2010 |
July 31, 2011 |
August 1, 2010 |
|||
| Same-store adjusted gross margin dollar change | 7.3% | (1.5%) | 5.1% | (1.8%) | ||
| Same-store SG&A dollar change | (3.6%) | 2.5% | (2.1%) | 0.8% | ||
| Same-store total customer count change | (1.9%) | (4.7%) | (3.0%) | 3.9% | ||
| Same-store average sale per ticket change | 6.8% | 0.7% | 8.5% | (0.9%) | ||
| Duckwall-ALCO Stores, Inc. | |||||||
| Schedule of Adjusted EBITDA | |||||||
| (dollars in thousands, except share and per share amounts) | |||||||
| (Unaudited) | |||||||
|
Thirteen Week Periods Ended |
Trailing 52 Weeks Ended |
Thirteen Week Periods Ended |
Trailing 52 Weeks Ended |
||||
| (dollars in thousands) | Fiscal 2011 |
May 1, 2011 |
May 2, 2010 |
May 1, 2011 |
July 31, 2011 |
August 1, 2010 |
July 31, 2011 |
|
Net earnings (loss) from continuing operations (1) |
$ (3,471) | (1,900) | (2,221) | (3,150) | 1,282 | (1,168) | (700) |
| Plus: | |||||||
| Interest | 3,502 | 1,069 | 674 | 3,897 | 1,649 | 721 | 4,825 |
| Tax expense (benefit) (1) | (2,414) | (1,124) | (1,065) | (2,473) | 755 | (609) | (1,109) |
| Depreciation and amortization (1) | 10,001 | 2,189 | 2,474 | 9,716 | 2,138 | 2,489 | 9,365 |
| Share-based compensation | 333 | 100 | 81 | 352 | 82 | 119 | 315 |
| Preopening store costs (2) | 543 | — | 199 | 344 | 3 | 183 | 164 |
| Executive and staff severance | 540 | 76 | — | 616 | 55 | — | 671 |
| Store reset costs | 895 | — | — | 895 | — | — | 895 |
| AWG transition costs | 210 | — | — | 210 | — | — | 210 |
| =Adjusted EBITDA (1) (3)(4)(5) | 10,139 | 410 | 142 | 10,407 | 5,964 | 1,735 | 14,636 |
| Cash | 4,189 | 5,720 | 5,186 | 5,720 | 6,431 | 3,690 | 6,431 |
| Debt | 59,072 | 64,815 | 34,569 | 64,815 | 65,380 | 40,090 | 65,380 |
| Debt, net of cash | $ 54,883 | 59,095 | 29,383 | 59,095 | 58,949 | 36,400 | 58,949 |
| (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) For the trailing twelve periods ended July 31, 2011 the average open weeks for the Company's two, non-samestores was 40 weeks. | |||||||
| (4) During fiscal year 2011, the Company made changes in its executive management team and warehouse operations. For the trailing twelve periods ended July 31, 2011, these initiatives resulted in approximately $1.6 million reduced SG&A expenses when compared to the same prior year trailing twelve periods. The initiatives include, but are not limited to, executive and staff reduction. | |||||||
| Duckwall-ALCO Stores, Inc. | ||
| Balance Sheets | ||
| (dollars in thousands, except share and per share amounts) | ||
|
July 31, 2011 |
January 30, 2011 |
|
| (Unaudited) | ||
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 6,431 | $ 4,189 |
| Receivables | 8,665 | 6,847 |
| Prepaid income taxes | 158 | 168 |
| Inventories | 160,133 | 151,079 |
| Prepaid expenses | 3,992 | 3,720 |
| Deferred income taxes | 2,940 | 2,563 |
| Property held for sale | 856 | 884 |
| Total current assets | 183,175 | 169,450 |
| Property and equipment, at cost: | ||
| Land and land improvements | 1,496 | 1,496 |
| Buildings and building improvements | 11,847 | 11,828 |
| Furniture, fixtures and equipment | 69,851 | 69,924 |
| Transportation equipment | 803 | 1,305 |
| Leasehold improvements | 16,559 | 16,449 |
| Construction work in progress | 1,688 | 350 |
| Total property and equipment | 102,244 | 101,352 |
| Less accumulated depreciation and amortization | 75,768 | 72,788 |
| Net property and equipment | 26,476 | 28,564 |
| Property under capital leases | 22,254 | 22,254 |
| Less accumulated amortization | 11,109 | 10,727 |
| Net property under capital leases | 11,145 | 11,527 |
| Deferred income taxes — non current | 2,082 | 2,180 |
| Other non-current assets | 886 | 990 |
| Total assets | 223,764 | 212,711 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Current maturities of long-term debt | $ 653 | $ 1,414 |
| Current maturities of capital lease obligations | 559 | 703 |
| Accounts payable | 32,017 | 25,968 |
| Accrued salaries and commissions | 3,725 | 4,133 |
| Accrued taxes other than income | 5,003 | 4,822 |
| Self-insurance claim reserves | 4,008 | 4,139 |
| Other current liabilities | 4,372 | 4,608 |
| Total current liabilities | 50,337 | 45,787 |
| Notes payable under revolving loan | 52,798 | 45,282 |
| Capital lease obligations - less current maturities | 11,370 | 11,673 |
| Deferred gain on leases | 3,632 | 3,826 |
| Other non-current liabilities | 1,916 | 1,850 |
| Total liabilities | 120,053 | 108,418 |
| Stockholders' equity: | ||
|
Common stock, $.0001 par value, 20,000,000 authorized shares; 3,872,745 and 3,841,895 shares issued and outstanding at July 31, 2011 and January 30, 2011 respectively |
1 | 1 |
| Additional paid-in capital | 40,051 | 40,003 |
| Retained earnings | 63,659 | 64,289 |
| Total stockholders' equity | 103,711 | 104,293 |
| Total liabilities and stockholders' equity | $ 223,764 | $ 212,711 |