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 |