Duckwall-ALCO Stores Reports Operating Results for the First Quarter of Fiscal 2013


ABILENE, Kan., June 7, 2012 (GLOBE NEWSWIRE) -- Duckwall-ALCO Stores, Inc. (Nasdaq:DUCK), which specializes in providing a superior selection of essential products for everyday life in small-town America, today announced operating results for its first quarter ended April 29, 2012.

Net sales from continuing operations for the first quarter of fiscal 2013 increased 3.6% to $117.2 million, compared to the first quarter of fiscal 2012. Same-store sales, excluding fuel center sales, increased 1.7% to $113.0 million for the first quarter of fiscal 2013, compared to a year earlier.

Net loss for the first quarter of fiscal 2013 was $1.3 million, or $0.34 per diluted share, an improvement from a loss of $1.5 million, or $0.40 per diluted share, for the first quarter of fiscal 2012. First quarter results were impacted by store closing expenses of approximately $0.04 cents a share. Adjusting for store closing expenses, loss from continuing operations was $0.30 per diluted share compared to $0.40 per diluted share for the first quarter of fiscal 2012.

Richard Wilson, President and CEO, commented, "Initiatives to build top line sales and profitability continue to improve results. Sales grew by 1.7% on a same store basis, Adjusted SG&A decreased by approximately 20 basis points to 28.4% of sales, gross margin dollars grew by 3.5% and margin rate was flat to last year at 29.5%. We remain focused on four key initiatives designed to improve sales and profitability for fiscal 2013: Improving gross margin rate by executing regional pricing strategies; rationalizing our real estate portfolio by closing unprofitable locations while modestly growing our store base with more productive locations; reducing debt by driving unproductive inventory out of the system; and growing top line sales with powerful marketing, strong value and improved customer service."

Wilson continued; "We are also excited about the initial success of our recently opened stores in Conifer, Colorado and Pinedale, Wyoming. In addition, our expanded ecommerce initiative will launch at the end of June and will include more than 13,000 new products. The team in Ecommerce, headed up by Brent Streit, VP Marketing and Ecommerce, represents an outstanding example of the dedication and strategic execution the entire management team at ALCO is committed to providing ALCO's customers and shareholders."

Investor Conference Call

The Company will host an investor conference call at 10:00 a.m. Central Time on Friday, June 8, 2012, to discuss operating results for the first quarter of fiscal year ended April 29, 2012. The dial-in number for the conference call is 888-254-2831 (international/local participants dial 913-312-0981), and the Conference Code is 1442841. 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 June 8, 2012 through June 13, 2012, by dialing 888-203-1112 (international/local participants dial 719-457-0820), and the Replay Code is 1442841. 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 SG&A 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 SG&A. 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 SG&A 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 SG&A 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 broad-line retailer, primarily located in small underserved communities across 23 states. The Company currently has 216 ALCO stores that offer both name brand and private label products of exceptional quality at reasonable prices. We are proud to have continually provided friendly, personal service to our customers for the past 111 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.
Balance Sheets
(dollars in thousands, except share and per share amounts) 
     
  April 29,
2012
(Unaudited)
January 29,
2012
Assets    
Current assets:    
Cash  $ 612  $ 2,491
Receivables 9,166 10,334
Inventories 166,357 156,215
Prepaid expenses 3,039 3,603
Deferred income tax assets 6,617 5,607
Property held for sale 568 568
Total current assets 186,359 178,818
     
Property and equipment, at cost:    
Land and land improvements 1,508 1,508
Buildings and building improvements 10,421 10,488
Furniture, fixtures and equipment 71,942 71,518
Transportation equipment 846 861
Leasehold improvements 19,254 19,289
Construction work in progress 1,680 1,177
Total property and equipment 105,651 104,841
Less accumulated depreciation and amortization 78,280 76,563
Net property and equipment 27,371 28,278
     
Property under capital leases 24,054 24,054
Less accumulated amortization 11,711 11,498
Net property under capital leases 12,343 12,556
     
Other non-current assets 742 754
Total assets  $ 226,815  $ 220,405
     
Liabilities and Stockholders' Equity    
Current liabilities:    
Current maturities of capital lease obligations  $ 596  $ 570
Accounts payable 46,866 26,695
Accrued salaries and commissions 4,338 3,984
Accrued taxes other than income 4,939 4,845
Self-insurance claim reserves 3,931 4,112
Income taxes payable 259
Other current liabilities 3,915 4,327
Total current liabilities 64,844 44,533
     
Notes payable under revolving loan 40,000 52,063
Capital lease obligations - less current maturities 12,612 12,804
Deferred gain on leases 3,343 3,439
Deferred income taxes 537 643
Other non-current liabilities 2,493 2,483
Total liabilities 123,829 115,965
     
Stockholders' equity:    
Common stock, $.0001 par value, authorized 20,000,000 shares; 3,808,338 and 3,842,745 shares issued and outstanding, respectively 1 1
Additional paid-in capital 39,945 40,115
Retained earnings 63,040 64,324
Total stockholders' equity 102,986 104,440
Total liabilities and stockholders' equity  $ 226,815  $ 220,405
 
Duckwall-ALCO Stores, Inc.
Statements of Operations
(dollars in thousands, except share and per share amounts)
(Unaudited)
     
  Thirteen Week Periods Ended
  April 29,
2012
May 1,
2011*
Net sales  $ 117,205  $ 113,187
Cost of sales 82,627 79,790
     
Gross margin 34,578 33,397
     
Selling, general and administrative 33,645 32,495
Depreciation and amortization expenses 2,111 2,171
     
Total operating expenses 35,756 34,666
     
Operating loss from continuing operations (1,178) (1,269)
     
Interest expense 744 1,069
     
Loss from continuing operations before income taxes (1,922) (2,338)
     
Income tax benefit (788) (805)
     
Loss from continuing operations (1,134) (1,533)
     
Earnings (loss) from discontinued operations, net of income tax expense (benefit) of $(92) in 2013 and $7 in 2012 (150) 11
Net loss  $ (1,284)  $ (1,522)
     
Earnings (loss) per share    
Basic    
Continuing operations  $ (0.30)  $ (0.40)
Discontinued operations (0.04) 0.00
     
Net loss per share  $ (0.34)  $ (0.40)
     
Earnings (loss) per share    
Diluted    
Continuing operations  $ (0.30)  $ (0.40)
Discontinued operations (0.04) 0.00
     
Net loss per share  $ (0.34)  $ (0.40)
*Fiscal year 2012 amounts have been revised to reflect the change in accounting for inventory.    
     
Weighted-average shares outstanding:    
     
Basic 3,822,006 3,841,895
     
Diluted 3,822,006 3,841,895
 
Duckwall-ALCO Stores, Inc.
Schedule of Adjusted SG&A
(dollars in thousands)
(unaudited)
     
  Thirteen Week Periods Ended
 (dollars in thousands, except square footage ratios)  April 29,
2012
May 1,
2011
SG&A Expenses Breakout    
Store support center (1) $ 5,284 $ 5,363
Distribution center 1,788 1,915
Same-store SG&A (2) 25,442 25,117
Non same-store SG&A (3) 1,001
Share-based compensation 130 100
SG&A as reported 33,645 32,495
Less:    
Share-based compensation (130) (100)
Preopening store costs (3) (74)
Executive and staff severance (1) (222) (76)
Gain on sale of assets 92 23
Adjusted SG&A $ 33,311 $ 32,342
     
Adjusted SG&A % of sales 28.4% 28.6%
     
     
(1) Store support center includes severance    
(2) These amounts may not agree with 10-Qs and 10-Ks of previous quarters due to stores that had reached their fourteenth period of operation. In addition, these amounts may not agree with 10-Qs and 10-Ks of previous quarters due to subsequent store closures. These closed stores are now included in discontinued operations. 
(3) Non same-stores are those stores which have not reached their fourteenth period of operation  
 
Duckwall-ALCO Stores, Inc.
Schedule of Adjusted EBITDA
(dollars in thousands)
(unaudited)
         
  52 Weeks Thirteen
Week Periods Ended
Trailing 52
Weeks Ended
(dollars in thousands)  Fiscal 2012 April 29,
2012
May 1,
2011
April 29,
2012
Net earnings (loss) from continuing operations (1)  $ 1,680 (1,134) (1,533) 2,079
Plus:        
Interest 4,207 744 1,069 3,882
Tax expense (benefit) (1) 924 (788) (805) 941
Depreciation and amortization (1) 8,585 2,111 2,171 8,525
Share-based compensation 257 130 100 287
Preopening store costs (2) 557 74 631
Executive and staff severance (3) 143 222 76 289
Gain (loss) on sale of assets  252 (92) (23) 183
Insurance proceeds (4) (2,270) (2,270)
=Adjusted EBITDA 14,335 1,267 1,055 14,547
         
Cash 2,491 612 5,720 612
Debt 65,437 53,208 64,815 53,208
Debt, net of cash  $ 62,946 52,596 59,095 52,596
         
         
(1) These amounts may not agree with 10-Qs and 10-Ks 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 years 2013 and 2012, the Company made departmental restructuring changes resulting in severance for various individuals.
(4) On September 9, 2011, the Company received a $2.3 million settlement from Factory Mutual Insurance Company for damage sustained during the second quarter of fiscal 2012, due to wind and hail.


            

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