COPPELL, Texas, May 5, 2014 (GLOBE NEWSWIRE) -- ALCO Stores, Inc. (Nasdaq:ALCS), which specializes in providing a superior selection of essential products for everyday life in small-town America, today announced operating results for its fourth quarter and fiscal year ended February 2, 2014.
Net sales from continuing operations during the fourth quarter of fiscal 2014 (13 weeks) decreased 8.9% to $130.9 million, compared to $143.6 million in the fourth quarter of fiscal 2013 (14 weeks). Excluding the 14th week of the fiscal 2013 quarter, net sales from continuing operations decreased 4.7%. Same-store sales, excluding fuel centers, decreased 11.7% to $124.8 million during the fourth quarter of fiscal 2014. Excluding the 14th week of the fiscal 2013 quarter, same-store sales, excluding fuel centers, decreased 7.6%.
Net loss for the fourth quarter of fiscal 2014 was $8.6 million, or $2.65 per diluted share, compared to a net income of $2.0 million, or $0.61 per diluted share, for the fourth quarter of fiscal 2013. Results in the fourth quarter of fiscal 2014 included impairment charges of $1.4 million associated with the planned closing of 14 stores during fiscal 2015, $0.5 million for costs associated with the relocation of the headquarters to Coppell, Texas, and, $0.1 million in expenses attributable to the failed merger.
Net sales from continuing operations during the 52 weeks of fiscal year 2014 decreased 1.6% to $474.1 million, compared to net sales during the 53 weeks of fiscal year 2013 of $481.8 million. Excluding the 53rd week of fiscal year 2013, net sales from continuing operations decreased 0.3%. Same-store sales, excluding fuel centers, during the 52 weeks of fiscal year 2014 decreased 4.5% to $452.5 million. Excluding the 53rd week of fiscal year 2013, same-store sales, excluding fuel centers, decreased 3.2%.
Net loss for fiscal 2014 was $26.4 million, or $8.11 per diluted share, compared to net income of $1.3 million, or $0.36 per diluted share. Results for fiscal 2014 included a previously disclosed non-cash charge of $9.8 million related to a valuation allowance on the Company's cumulative deferred tax assets, $1.9 million for discontinued operations and a total of $3.5 million of non-recurring expenses attributable to the relocation of the corporate office and the proposed merger that was rejected in a shareholder vote in October 2013.
Richard Wilson, President and CEO, commented, "Fiscal year 2014 operating results reflect the impact of significant change and disruption to our business. Most importantly we took steps to fix long-term problems that have hurt ALCO's profitability while dealing with the events associated with the proposed merger that was rejected. We recorded approximately $2.4 million in merger-related costs and approximately $1.1 million of headquarters relocation costs. During the year, ALCO decided to close 22 underperforming stores, and the last of those stores will be closed by the end of the first quarter of fiscal year 2015. We also experienced a net reduction in gross margin dollars of approximately $10 million, primarily due to increased promotional activity in an attempt to reduce inventory and to comparison with the 53-week year in fiscal 2013. Finally, we recognized a large non-cash charge relating to the accounting for deferred tax assets on the Company's balance sheet."
Mr. Wilson added, "Moving forward, ALCO is focused on executing five major initiatives to improve profitability and deliver value for shareholders. These actions include:
- Maximizing the benefit of our headquarters relocation to the Dallas area, which is enabling ALCO to recruit experienced managers, buyers and marketers from some of the nation's top retail organizations. Our new team is largely in place.
- Expanding gross margins by completing the price optimization initiative with Revionics, which benefits top-line sales and gross margin by adjusting prices store-by-store and item-by-item based on detailed demand data.
- Improving our real estate portfolio by closing unprofitable stores and opening more productive ones. At the end of fiscal year 2014, we had closed or were in the process of closing 22 underperforming stores, and we opened three high-performing locations in regions with growing energy-based economies.
- Upgrading our information technology (IT) with a new Enterprise Resource Planning system and a new supply chain service provider. These systems will increase efficiency, reduce costs and improve inventory management.
- Reducing inventory and associated debt levels by, in addition to the store rationalization and IT upgrades mentioned, making a number of targeted changes in store layout and merchandise mix to appeal to ALCO shoppers."
In summary, Mr. Wilson stated, "We look forward to delivering greater shareholder value by executing on these initiatives to substantially increase profitability for the ALCO enterprise. Across ALCO's 198 stores, our team is committed to providing personal, friendly service and great values to our ALCO shoppers during this holiday season – and beyond."
Investor Conference Call
The Company will host an investor conference call at 10:00 a.m. Central Time on Tuesday, May 6, 2014 to discuss operating results for the fourth quarter and fiscal year ended February 2, 2014. The dial-in number for the conference call is 888-455-2263 (international/local participants dial 719-325-2361), and the Conference Code is 9631280. 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 1:00 p.m. Central Time May 6, 2014 through May 9, 2014, by dialing 888-203-1112 (international/local participants dial 719-457-0820), and the Replay Code is 963128. 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-K.
Certain Non-GAAP Financial Measures
The Company has included 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. 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 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 EBITDA may not reflect important aspects of the results of the Company's operations.
ALCO Stores, Inc.
ALCO Stores, Inc. is a broad-line retailer, primarily located in small underserved communities across 23 states. The Company has 198 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 113 years. To learn more about the Company visit www.ALCOstores.com.
Forward-looking statements
All of the statements in this release, other than historical facts, are forward-looking statements made in reliance upon the safe harbor of the Private Securities Litigation Reform Act of 1995. 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. Further risks that could cause actual results to differ materially from those matters expressed in or implied by such forward-looking statements are set forth under "Risk Factors" in the Company's Form 10-K for the fiscal year ended February 2, 2014, and its subsequent quarterly reports on Form 10-Q. The Company does not undertake, and hereby disclaims, any duty to update these forward-looking statements, although its situation and circumstances may change in the future.
– Tables to follow –
| ALCO Stores, Inc. | ||||
| Statements of Operations | ||||
| Fiscal Years Ended February 2, 2014 and February 3, 2013 | ||||
| (dollars in thousands, except share and per share amounts) | ||||
|
(unaudited) Thirteen Week Period Ended |
Fourteen Week Period Ended |
(unaudited) Fifty-Two Week Period Ended |
Fifty-Three Week Period Ended |
|
| February 2, 2014 | February 3, 2013 | February 2, 2014 | February 3, 2013 | |
| Net sales | $ 130,880 | 143,600 | 474,052 | 481,788 |
| Cost of sales | 95,446 | 102,877 | 338,271 | 335,721 |
| Gross margin | 35,434 | 40,723 | 135,781 | 146,067 |
| Selling, general and administrative | 38,346 | 34,504 | 141,029 | 131,279 |
| Depreciation and amortization | 3,982 | 2,383 | 10,421 | 8,739 |
| Total operating expenses | 42,328 | 36,887 | 151,450 | 140,018 |
| Operating income (loss) from continuing operations | (6,894) | 3,836 | (15,669) | 6,049 |
| Interest expense | 972 | 1,083 | 3,834 | 3,477 |
| Earnings (loss) from continuing operations before income taxes | (7,866) | 2,753 | (19,503) | 2,572 |
| Income tax expense (benefit) | (363) | 756 | 5,033 | 667 |
| Net earnings (loss) from continuing operations | (7,503) | 1,997 | (24,536) | 1,905 |
| Loss from discontinued operations, net of income tax benefit | (1,117) | (17) | (1,889) | (598) |
| Net earnings (loss) | $ (8,620) | 1,980 | (26,425) | 1,307 |
| Earnings (loss) per share | ||||
| Basic | ||||
| Continuing operations | $ (2.30) | 0.61 | (7.53) | 0.52 |
| Discontinued operations | $ (0.35) | (0.01) | (0.58) | (0.16) |
| Net earnings per share | $ (2.65) | 0.61 | (8.11) | 0.36 |
| Earnings (loss) per share | ||||
| Diluted | ||||
| Continuing operations | $ (2.30) | 0.61 | (7.53) | 0.52 |
| Discontinued operations | $ (0.35) | (0.01) | (0.58) | (0.16) |
| Net earnings per share | $ (2.65) | 0.61 | (8.11) | 0.36 |
| Weighted-average shares outstanding: | ||||
| Basic | 3,258,162 | 3,258,152 | 3,258,162 | 3,634,235 |
| Diluted | 3,258,162 | 3,258,152 | 3,258,162 | 3,634,235 |
| ALCO Stores, Inc. | |||||||
| Schedule of Adjusted EBITDA | |||||||
| (dollars in thousands) | |||||||
| (unaudited) | |||||||
| 53 Weeks |
For the Thirty-Nine Week Periods Ended |
Trailing Twelve Period Ended |
Thirteen Week Period Ended |
Fourteen Week Period Ended |
52 Weeks | ||
| Fiscal 2013 |
November 3, 2013 |
October 28, 2012 |
November 3, 2013 |
February 2, 2014 |
February 3, 2013 |
Fiscal 2014 | |
| Net earnings (loss) | $ 1,307 | (17,806) | (673) | (15,826) | (8,619) | 1,980 | (26,425) |
| Plus: | |||||||
| Interest | 3,477 | 2,862 | 2,394 | 3,945 | 972 | 1,083 | 3,834 |
| Taxes | 311 | 4,924 | (443) | 5,678 | 108 | 754 | 5,032 |
| Depreciation and amortization | 8,902 | 6,539 | 6,479 | 8,962 | 4,006 | 2,423 | 10,545 |
| EBITDA | 13,997 | (3,481) | 7,757 | 2,759 | (3,533) | 6,240 | (7,014) |
| Plus: | |||||||
| Share-based compensation | 381 | 335 | 327 | 389 | 69 | 54 | 404 |
| (Gain) loss asset disposals | 141 | -- | (4) | 145 | 337 | 145 | 337 |
| Adjusted EBITDA (1) | $ 14,519 | (3,146) | 8,080 | 3,293 | (3,127) | 6,439 | (6,273) |
| Cash | $ 3,160 | 2,972 | 1,179 | 2,972 | 2,230 | 3,160 | 2,230 |
| Debt | 79,962 | 94,029 | 74,745 | 94,029 | 108,407 | 79,962 | 108,407 |
| Debt, net of cash | $ 76,802 | 91,057 | 73,566 | 91,057 | 106,177 | 76,802 | 106,177 |
| (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. | |||||||
| ALCO Stores, Inc. | ||
| Balance Sheets | ||
| (dollars in thousands, except share and per share amounts) | ||
|
(unaudited) February 2, 2014 |
February 3, 2013 | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 2,230 | $ 3,160 |
| Receivables | 12,305 | 13,187 |
| Prepaid income taxes | -- | -- |
| Inventories | 162,670 | 166,671 |
| Prepaid expenses | 3,824 | 3,767 |
| Deferred income taxes | -- | 3,081 |
| Property held for sale | 568 | 568 |
| Total current assets | 181,597 | 190,434 |
| Property and equipment, at cost: | ||
| Land and land improvements | 5,543 | 5,648 |
| Buildings and building improvements | 15,245 | 10,499 |
| Furniture, fixtures and equipment | 78,776 | 74,066 |
| Transportation equipment | 1,009 | 988 |
| Leasehold improvements | 19,715 | 21,138 |
| Construction work in progress | 1,445 | 5,083 |
| Total property and equipment | 121,733 | 117,422 |
| Less accumulated depreciation and amortization | 84,805 | 81,794 |
| Net property and equipment | 36,928 | 35,628 |
| Property under capital leases | 24,957 | 26,972 |
| Less accumulated amortization | 10,424 | 11,476 |
| Net property under capital leases | 14,533 | 15,496 |
| Deferred income tax - non current | 41 | 1,693 |
| Other non-current assets | 1,994 | 624 |
| Total assets | $ 235,093 | $ 243,875 |
| ALCO Stores, Inc. | ||
| Balance Sheets | ||
| (dollars in thousands, except share and per share amounts) | ||
|
(unaudited) February 2, 2014 |
February 3, 2013 | |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Current maturities of capital lease obligations | $ 523 | $ 580 |
| Accounts payable | 28,817 | 39,220 |
| Accrued income tax | 108 | -- |
| Accrued salaries and commissions | 3,361 | 3,111 |
| Accrued taxes other than income | 4,741 | 5,046 |
| Self-insurance claim reserves | 4,493 | 4,429 |
| Deferred income tax | 41 | -- |
| Other current liabilities | 3,935 | 4,429 |
| Total current liabilities | 46,019 | 56,815 |
| Notes payable under revolving loan | 92,540 | 63,446 |
| Capital lease obligations - less current maturities | 15,345 | 15,936 |
| Deferred gain on leases | 2,666 | 3,053 |
| Deferred income taxes | -- | -- |
| Other noncurrent liabilities | 2,381 | 2,462 |
| Total liabilities | 158,951 | 141,712 |
| Stockholders' equity: | ||
| Common stock, $.0001 par value, authorized 20,000,000 shares; 3,258,162 shares issued and outstanding, both fiscal years | 1 | 1 |
| Additional paid-in capital | 36,937 | 36,533 |
| Retained earnings | 39,204 | 65,629 |
| Total stockholders' equity | 76,142 | 102,163 |
| Total liabilities and stockholders' equity | $ 235,093 | $ 243,875 |