ABILENE, Kan., Dec. 10, 2009 (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 third quarter ending November 1, 2009.
Net sales from continuing operations for the third quarter of fiscal 2010 decreased 2.9% to $111.5 million and same-store sales decreased 1.7%. Net sales from continuing operations year-to-date increased 0.7% to $352.2 million and same-store sales increased 0.2%.
Net loss for the third quarter was $1.4 million, or ($0.38) per basic share, compared to a net loss of $1.7 million, or ($0.44) per basic share, for the third quarter of the fiscal 2009. Results in the current quarter benefited from an 80 basis point reduction in Adjusted Selling, General and Administrative (SG&A) expenses as a percentage of net sales offset by a 30 basis point reduction in gross margin as a percentage of net sales amid a very competitive pricing environment.
Despite a difficult economy, net earnings for the first nine periods of fiscal 2010 were $1.5 million, or $0.40 per diluted share. This compares to a net loss of $4.3 million, or ($1.12) per basic share, in the prior year period. This $5.8 million improvement in net earnings is primarily attributable to an increase of $3.1 million, or 2.7%, in Adjusted Gross Margin dollars. Adjusted Gross Margin as a percentage of sales has increased 65 basis points for the fiscal year-to-date compared to the prior fiscal year-to-date. Year-to-date earnings from continuing operations, before income taxes, have increased $7.6 million, compared to the prior fiscal year-to-date. This improvement is attributable to a total gross margin dollar improvement of $4.4 million, or 4.0%, and reduced SG&A expenses of $4.7 million, or 4.3%, somewhat offset by increases in net interest expense, depreciation and amortization.
Larry Zigerelli, President and CEO, commented, "Positive year-to-date same-store sales results and customer counts, combined with a significant increase in gross margin dollars and a major reduction in SG&A expenses, are encouraging. We have made substantial progress in upgrading our merchandising, marketing and store operations programs, and are changing our culture in the continued face of a very tough economy. The holiday season is off to a good start, and we remain cautiously optimistic. Our turnaround is not complete by any means, but we continue to track with plans for store transformation and improving performance."
Investor Conference Call
The Company will host an investor conference call at 10:00 a.m. Central Standard Time on December 11, 2009, to discuss operating results for the third quarter ended November 1, 2009. The dial-in number for the conference call is 888-797-2983 (international/local participants dial 913-227-1352), and the Confirmation Code is 2341952. Parties interested in participating in the conference call should dial in approximately five minutes prior to 10:00 a.m. Central Standard Time. A replay of the call will be available from two hours after completion on December 11, 2009 through December 16, 2009 by dialing 888-203-1112 or for international/local callers by dialing 719-457-0820. The Replay Passcode is 2341952. 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 comparison with 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 free cash flow. 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 257 stores, Duckwall-ALCO Stores is proud to have continually provided excellent products at good value prices to its customers for 108 years. To learn more about Duckwall-ALCO Stores, Inc. 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"). Any forward-looking statements are made by the Company in good faith, pursuant to the safe-harbor provisions of the Act. These forward-looking statements reflect management's current views and projections regarding economic conditions, retail industry environments, and Company performance. 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. and Subsidiaries
Consolidated Statements of Operations
(dollars in thousands, except share and per share amounts)
(Unaudited)
For the
For the Thirteen Thirty-Nine Week
Week Periods Ended Periods Ended
------------------ -----------------
Nov. 1, Nov. 2, Nov. 1, Nov. 2,
2009 2008 2009 2008
-------- ------- ------- -------
Net sales $111,495 114,880 352,191 349,692
Cost of sales 75,835 77,756 235,583 237,527
-------- ------- ------- -------
Gross margin 35,660 37,124 116,608 112,165
Selling, general
and administrative 34,862 38,097 105,187 109,918
Depreciation and amortization 2,327 2,118 6,973 5,794
-------- ------- ------- -------
Total operating expenses 37,189 40,215 112,160 115,712
Operating income (loss)
from continuing operations (1,529) (3,091) 4,448 (3,547)
Interest expense, net 532 63 1,589 1,218
-------- ------- ------- -------
Earnings (loss) from
continuing operations
before income taxes (2,061) (3,154) 2,859 (4,765)
Income tax expense
(benefit) (626) (1,644) 1,310 (2,329)
-------- ------- ------- -------
Earnings (loss) from
continuing operations (1,435) (1,510) 1,549 (2,436)
Loss from discontinued
operations, net of
income tax benefit (2) (155) (5) (1,825)
-------- ------- ------- -------
Net earnings (loss) $ (1,437) (1,665) 1,544 (4,261)
======== ======= ======= =======
Earnings (loss) per
diluted share
Continuing operations $ (0.38) (0.40) 0.40 (0.64)
-------- ------- ------- -------
Net earnings (loss) $ (0.38) (0.44) 0.40 (1.12)
-------- ------- ------- -------
Weighted-average
shares outstanding:
Basic 3,798 3,812 3,798 3,812
Diluted 3,798 3,812 3,877 3,812
Supplemental Data:
Nov. 1, Nov. 2, Nov. 1, Nov. 2,
2009 2008 2009 2008
-------- ------- ------- -------
Gross margin as reported $ 35,660 37,124 116,608 112,165
Inventory review initiative -- -- -- 1,345
-------- ------- ------- -------
Adjusted Gross Margin $ 35,660 37,124 116,608 113,510
======== ======= ======= =======
Same-store adjusted
gross margin dollar change 0.0% (1.8)% 1.3% (1.4)%
Same-store SG&A dollar change (4.7)% (0.9)% (2.2)% 2.5%
Same-store total
customer count change (1.2)% (5.4)% (0.7)% (4.0)%
Same-store average
sale per ticket change (2.0)% 4.0% (0.6)% 4.4%
Trailing
For the Twelve
Twenty-Six Week Periods
Periods Ended Ended
--------------------------
Fiscal Aug. 2, Aug. 3, Aug. 2,
2009 2009 2008 2009
------------------------------------
Net earnings (loss)
from continuing operations (1) $ (2,996) 2,988 (923) 915
Plus:
Interest 1,867 1,058 1,156 1,769
Taxes (1) (2,090) 1,932 (690) 532
Depreciation and amortization (1) 9,302 4,645 3,677 10,270
Share-based compensation 186 446 (135) 767
Preopening store costs (2) 1,846 -- 1,495 351
Inventory review initiative 1,345 -- 1,345 --
Executive and staff severance 1,942 -- 1,942 --
Store transformation
project costs 2,220 2,096 -- 4,316
------------------------------------
=Adjusted EBITDA (1)(3)(4)(5) 13,622 13,165 7,867 18,920
====================================
Cash 4,744 5,446 4,653 5,446
Debt 49,841 48,802 36,964 48,802
-------- -------- ------- -------
Debt, net of cash $ 45,097 43,356 32,311 43,356
======== ======== ======= =======
Trailing
For the Thirteen Twelve
Week Periods Periods
Ended Ended
---------------------------
Nov. 1, Nov. 2, Nov. 1,
2009 2008 2009
---------------------------
Net earnings (loss)
from continuing operations (1) (1,435) (1,510) 990
Plus:
Interest 532 63 2,238
Taxes (1) (626) (1,644) 1,550
Depreciation and amortization (1) 2,327 2,118 10,479
Share-based compensation 155 169 753
Preopening store costs (2) 2 342 11
Inventory review initiative -- -- --
Executive and staff severance -- -- --
Store transformation
project costs -- 937 3,379
---------------------------
=Adjusted EBITDA (1)(3)(4)(5) 955 475 19,400
===========================
Cash 5,703 5,320 5,703
Debt 54,180 58,303 54,180
---------------------------
Debt, net of cash 48,477 52,983 48,477
===========================
(1) These amounts will not agree with the fiscal 2009 first quarter
10-Q filing due to the one store the Company closed in the third
quarter of fiscal 2009. These amounts will not agree with the
fiscal year end 2009 or fiscal 2010 first quarter 10-Q filing due
to the one store the Company closed in the second quarter of
fiscal 2010. These stores are now shown 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 November 1, 2009 the
average open weeks for the Company's one non same-store is 59
weeks.
(4) During fiscal year 2009, the Company made a change in its
Executive Management team and Board of Directors resulting in
several initiatives to reduce certain SG&A expenses. For the
trailing twelve periods ended November 1, 2009, these initiatives
resulted in approximately $5.7 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, reduced ALCO same-store hourly wages, advertising
expenses, net of coop offset and floor care services along with
reduced total Company insurance and travel expenses.
(5) In addition to continued efforts regarding the fiscal 2009 cost
reduction initiatives, the Company has also implemented new
initiatives for fiscal year 2010. The fiscal 2010 initiatives
include, but are not limited to, reduced point-of-sale hardware
lease expense, energy expense and accident reduction programs.
These initiatives achieved approximately $2.0 million in reduced
SG&A savings for the thirty-nine weeks of fiscal 2010 when
compared to the prior year same period.
Duckwall-ALCO Stores, Inc. and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands, except share amounts)
(Unaudited)
Nov. 1, Nov. 2,
2009 2008
-------- --------
Assets
Current assets:
Cash and cash equivalents $ 5,703 $ 5,320
Receivables 5,998 3,520
Prepaid income taxes 1,527 4,731
Inventories 165,131 166,404
Prepaid expenses 3,688 3,871
Deferred income taxes 2,835 5,430
Assets held for sale 1,531 --
-------- --------
Total current assets 186,413 189,276
-------- --------
Property and equipment, at cost 102,318 93,607
Less accumulated depreciation 71,228 63,605
-------- --------
Net property and equipment 31,090 30,002
-------- --------
Property under capital leases,
net of accumulated amortization 1,931 3,513
Other non-current assets 143 227
Deferred income taxes 2,055 1,181
-------- --------
Total assets $221,632 $224,199
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 1,428 $ 1,340
Current maturities of
capital lease obligations 1,929 1,833
Accounts payable 37,290 37,513
Accrued salaries and commissions 5,107 5,589
Accrued taxes other than income 5,410 4,844
Self-insurance claim reserves 5,087 4,318
Other current liabilities 4,280 4,618
-------- --------
Total current liabilities 60,531 60,055
Long-term debt, less current maturities 1,786 3,214
Notes payable under revolving loan 47,510 48,388
Capital lease obligations
- less current maturities 1,527 3,528
Deferred gain on leases 4,309 4,695
Deferred income taxes 160 --
Other noncurrent liabilities 1,682 1,617
-------- --------
Total liabilities 117,505 121,497
-------- --------
Stockholders' equity:
Common stock, $.0001 par value,
authorized 20,000,000 shares; issued
and outstanding 3,797,947 shares and
3,806,113 shares, respectively 1 1
Additional paid-in capital 39,158 38,557
Retained earnings 64,968 64,144
-------- --------
Total stockholders' equity 104,127 102,702
-------- --------
Total liabilities and
stockholders' equity $221,632 $224,199
======== ========