ABILENE, Kan., Dec. 9, 2010 (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 ended October 31, 2010.
Net sales from continuing operations for the third quarter of fiscal 2011 decreased 0.6% to $110.5 million and same-store sales decreased 2.3%. Net sales from continuing operations year-to-date decreased 2.8% to $341.5 million and same-store sales decreased 4.2%.
Net loss for the third quarter was $2.0 million, or $0.53 per diluted share, compared to net loss of $1.4 million, or $0.38 per diluted share, for the third quarter of fiscal 2010. Year-to-date net loss for fiscal 2011 was $5.3 million, or $1.37 per diluted share, compared to net earnings of $1.5 million, or $0.40 per diluted share, for the same period of the prior fiscal year.
Richard Wilson, President and CEO, commented, "In the third quarter we completed the implementation of a number of strategic and operational initiatives that began after my arrival at the Company in February. The 2.3% decline in same-store sales result for the quarter, while still negative, showed improvement over second-quarter results of negative 7.2%. I am encouraged by the tireless dedication of our associates to accomplish the actions aimed at improving performance, and by our recently reported November same-store sales increase of 6.2% for ALCO stores."
"Earnings for the quarter were impacted by a number of charges, including $484,000 related to our store reset initiative, $210,000 related to the integration of Associated Wholesale Grocers' 'Best Choice' and 'Always Save' brands across our ALCO stores, and $60,000 in severance expense due to a reduction of force in our corporate office."
In the past eight months the Company has completed several key initiatives. Through the third quarter, the Company has:
- Remerchandised and reset all 214 ALCO stores to expand space devoted to key trip-driving departments such as food, paper and cleaning products.
- Updated ALCO stores with new graphic signage featuring our improved merchandise and brand selection.
- Improved our value proposition in the consumables businesses with the introduction of the "Best Choice" and "Always Save" brands.
- Integrated new space management tools designed to improve shelf productivity and return on investment.
- Expanded our "Everyday Value" and "Dollar" merchandise selections to position ALCO as the consumer's destination for exceptional value for everyday needs.
"As previously announced, we have decided to close the Duckwall stores, which are smaller stores that contributed less than 4.0% of overall sales. After thorough analysis, the Board decided to redeploy assets to support the core ALCO stores based on sales and profitability," Mr. Wilson added.
"In summary, today ALCO is a better place to shop, with more value, a stronger merchandise offering, in a more customer-friendly store layout. We look forward to building upon these improvements to deliver the sales and profitability results our shareholders deserve."
Investor Conference Call
The Company will host an investor conference call at 10:00 a.m. Central Time on December 10, 2010, to discuss operating results for the third quarter ended October 31, 2010. The dial-in number for the conference call is 888-601-3873 (international/local participants dial 913-981-5537), and the Confirmation Code is 6535943. 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 10, 2010 through December 15, 2010 by dialing 888-203-1112 or for international/local callers by dialing 719-457-0820. The Replay Passcode is 6535943. 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, http://www.alcostores.com/">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 214 ALCO stores, the Company is proud to have continually provided excellent products at good value prices to its customers for 109 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. | ||||
| Consolidated Statements of Operations | ||||
| (dollars in thousands, except share and per share amounts) | ||||
| (Unaudited) | ||||
| For the Thirteen Week Periods Ended | For the Thirty-Nine Week Periods Ended | |||
| October 31, 2010 | November 1, 2009 | October 31, 2010 | November 1, 2009 | |
| Net sales | $ 110,488 | 111,194 | 341,497 | 351,173 |
| Cost of sales | 75,530 | 75,635 | 233,850 | 234,921 |
| Gross margin | 34,958 | 35,559 | 107,647 | 116,252 |
| Selling, general and administrative | 35,428 | 34,709 | 106,373 | 104,740 |
| Depreciation and amortization | 2,588 | 2,328 | 7,571 | 6,972 |
| Total operating expenses | 38,016 | 37,037 | 113,944 | 111,712 |
|
Operating income (loss) from continuing operations |
(3,058) | (1,478) | (6,297) | 4,540 |
| Interest expense, net | 1,015 | 531 | 2,410 | 1,589 |
|
Earnings (loss) from continuing operations before income taxes |
(4,073) | (2,009) | (8,707) | 2,951 |
| Income tax expense (benefit) | (2,105) | (606) | (3,656) | 1,346 |
| Earnings (loss) from continuing operations | (1,968) | (1,403) | (5,051) | 1,605 |
|
Loss from discontinued operations, net of income tax benefit |
(59) | (34) | (204) | (61) |
| Net earnings (loss) | $ (2,027) | $ (1,437) | $ (5,255) | $ 1,544 |
| Earnings (loss) per diluted share | ||||
| Continuing operations | $ (0.51) | (0.37) | $ (1.32) | 0.41 |
| Net earnings (loss) per share | $ (0.53) | (0.38) | $ (1.37) | 0.40 |
| Weighted-average shares outstanding: | ||||
| Basic | 3,841 | 3,798 | 3,829 | 3,798 |
| Diluted | 3,841 | 3,798 | 3,829 | 3,877 |
| Supplemental Data: | ||||
| For the Thirteen Week Periods Ended | For the Thirty-Nine Week Periods Ended | |||
| October 31, 2010 | November 1, 2009 | October 31, 2010 | November 1, 2009 | |
| Same-store gross margin dollar change | (0.3)% | 0.8% | (1.3)% | 1.1% |
| Same-store SG&A dollar change | 0.5% | (0.6)% | 0.7% | (0.5)% |
| Same-store total customer count change | (2.8)% | (0.6)% | (3.5)% | 1.4% |
| Same-store average sale per ticket change | 0.4% | (2.4)% | (0.5)% | (0.6)% |
|
For the Twenty-Six Week Periods Ended |
Trailing Twelve Periods Ended |
For the Thirteen Week Periods Ended |
Trailing Twelve Periods Ended | ||||
| Fiscal 2010 | August 1, 2010 | August 2, 2009 |
August 1, 2010 |
October 31, 2010 | November 1, 2009 |
October 31, 2010 |
|
| Net earnings (loss) from continuing operations (1) | $ 3,111 | (3,083) | 3,008 | (2,980) | (1,968) | (1,403) | (3,545) |
| Plus: | |||||||
| Interest | 2,149 | 1,395 | 1,058 | 2,486 | 1,015 | 531 | 2,970 |
| Taxes (1) | 2,181 | (1,551) | 1,952 | (1,322) | (2,105) | (606) | (2,821) |
| Depreciation and amortization (1) | 9,982 | 4,983 | 4,645 | 10,320 | 2,588 | 2,328 | 10,580 |
| Share-based compensation | 757 | 200 | 447 | 510 | 68 | 155 | 423 |
| Preopening store costs (2) | 128 | 382 | -- | 510 | 110 | 2 | 618 |
| Store re-set costs | -- | 401 | -- | 401 | 494 | -- | 895 |
| Private label implementation costs | -- | -- | -- | -- | 210 | -- | 210 |
| Executive and staff severance | -- | 481 | -- | 481 | 59 | -- | 540 |
| Store transformation project costs | 2,096 | -- | 2,096 | -- | -- | -- | -- |
| =Adjusted EBITDA (1)(3)(4)(5) | 20,404 | 3,208 | 13,206 | 10,406 | 471 | 1,007 | 9,870 |
| Cash | 5,164 | 3,690 | 5,446 | 3,690 | 5,356 | 5,703 | 5,356 |
| Debt | 40,992 | 34,018 | 48,802 | 34,018 | 64,834 | 54,180 | 64,834 |
| Debt, net of cash | $ 35,828 | 30,328 | 43,356 | 30,328 | 59,478 | 48,477 | 59,478 |
| (1) These amounts will not agree with the fiscal year end 2010 or fiscal 2010 second quarter 10-Q filing due to the five stores the Company closed since 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 October 31, 2010 the average open weeks for the Company's five non same-stores was 22 weeks. | |||||||
| (4) The Company implemented new initiatives for fiscal year 2010. The fiscal 2010 initiatives are designed to better control costs and include, but are not limited to, programs to reduce point-of-sale hardware lease and energy expense, as well as accident reduction programs. These initiatives achieved approximately $2.0 million in SG&A savings for the thirty-nine weeks of fiscal 2010 when compared to the prior year same period. | |||||||
| (5) The store transformation project completed in fiscal 2010 continues to provide SG&A savings in fiscal 2011. This initiative achieved approximately $458 in SG&A savings for the thirty-nine weeks of fiscal 2011 when compared to the prior year same period. | |||||||
| Duckwall-ALCO Stores, Inc. | ||
| Consolidated Balance Sheets | ||
| (dollars in thousands, except share and per share amounts) | ||
| (Unaudited) | ||
| October 31, 2010 | November 1, 2009 | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 5,356 | $ 5,703 |
| Receivables | 5,376 | 5,998 |
| Prepaid income taxes | 3,996 | 1,527 |
| Inventories | 177,335 | 165,131 |
| Prepaid expenses | 3,727 | 3,688 |
| Deferred income taxes | 4,073 | 2,835 |
| Assets held for sale | 935 | 1,531 |
| Total current assets | 200,798 | 186,413 |
| Property and equipment, at cost | 103,885 | 102,318 |
| Less accumulated depreciation | 73,916 | 71,228 |
| Net property and equipment | 29,969 | 31,090 |
| Property under capital leases, net of accumulated amortization | 7,395 | 1,931 |
| Other non-current assets | 1,096 | 2,198 |
| Total assets | $ 239,258 | $ 221,632 |
| Duckwall-ALCO Stores, Inc. | ||
| Consolidated Balance Sheets | ||
| (dollars in thousands, except share and per share amounts) | ||
| (Unaudited) | ||
| October 31, 2010 | November 1, 2009 | |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Current maturities of long-term debt | $ 1,522 | $ 1,428 |
| Current maturities of capital lease obligations | 706 | 1,929 |
| Accounts payable | 46,011 | 37,290 |
| Accrued salaries and commissions | 4,942 | 5,107 |
| Accrued taxes other than income | 6,414 | 5,410 |
| Self-insurance claim reserves | 4,236 | 5,087 |
| Other current liabilities | 5,130 | 4,280 |
| Total current liabilities | 68,961 | 60,531 |
| Long-term debt, less current maturities | 263 | 1,786 |
| Notes payable under revolving loan agreement | 54,865 | 47,510 |
| Capital lease obligations - less current maturities | 7,478 | 1,527 |
| Deferred gain on leases | 3,922 | 4,309 |
| Deferred income taxes | 858 | 160 |
| Other noncurrent liabilities | 1,791 | 1,682 |
| Total liabilities | 138,138 | 117,505 |
| Stockholders' equity: | ||
|
Common stock, $.0001 par value, authorized 20,000,000 shares; issued and outstanding 3,841,895 shares and 3,797,947 shares, respectively |
1 | 1 |
| Additional paid-in capital | 39,955 | 39,158 |
| Retained earnings | 61,164 | 64,968 |
| Total stockholders' equity | 101,120 | 104,127 |
| Total liabilities and stockholders' equity | $ 239,258 | $ 221,632 |