ABILENE, Kan., April 14, 2006 (PRIMEZONE) -- Duckwall-ALCO Stores, Inc. (Nasdaq:DUCK), which operates 253 retail stores in 21 central states, today announced its operating results for the fourth quarter and year ending January 29, 2006.
Net earnings for the fourth quarter were $5.2 million, or $1.33 per diluted share, compared with net earnings of $2.1 million, or $0.47 per diluted share, in the fourth quarter of the prior fiscal year. Net income for the year ending January 29, 2006 was $1.9 million, or $0.47 per diluted share, compared with net earnings of $3.9 million, or $0.88 per diluted share, for the prior fiscal year ended January 30, 2005.
Net sales from continuing operations for the fourth quarter increased 8.3% to $127.2 million, while same-store sales increased 4.5% when compared with the prior-year quarter. Net sales for the year ending January 29, 2006 increased 6.3% to $435.0 million, while same-store sales increased 3.1% when compared with the prior fiscal year.
President and CEO Bruce Dale stated, "We are committed to improving every area of our business and are seeing some very positive results from our efforts. For the fourth quarter we saw a 9.4% same-store sales increase in our apparel departments. And we are particularly pleased with our margin and expense performance in the fourth quarter, combined with a 4.5% same-store sales increase for the quarter."
Gross margin for the fourth quarter improved 160 basis points to 33.4% of sales from 31.8% in the fourth quarter of the prior fiscal year. Reduction in shrinkage related to a warehouse inventory adjustment contributed 110 basis points of the improvement. Gross margin for the year ending January 29, 2006 declined 140 basis points to 31.8% of sales from 33.2% last year. Of this decline, approximately 150 basis points are related to higher markdowns taken in the second and third quarters to reduce distressed inventory, as previously disclosed.
Operating expenses for the fourth quarter decreased 150 basis points to 27.2% of sales from 28.7% in the prior-year quarter. Operating expenses for the year ended January 29, 2006 declined 90 basis points to 30.1% of sales this year from 31.0% last year.
Income tax expense on earnings from continuing operations for the fourth quarter was recorded at an effective tax rate of 30.5%. During the fourth quarter, the Company analyzed its income tax liability account and determined that it was over-accrued with respect to certain matters arising in prior years. The Company reversed such over-accrual of $371,000 during the fourth quarter of the current year, which reduced the effective rate by 5.0%. The effective tax rate for the fiscal year ended January 29, 2006 was 27.4%, compared to 34.3% in the prior fiscal year.
Stock Buyback Program Update
During the fourth quarter of FY2006, the Company purchased and retired 93,398 shares at an average share price of $25.14. For the year ended January 29, 2006, the Company purchased and retired 729,861 shares at an average share price of $20.54.
Store Operations Update
During the fourth quarter, the Company opened four new ALCO stores that were located in Kansas, Nebraska, and Texas. One Duckwall store was closed during the fourth quarter. It was replaced by an ALCO store that was opened in the same community. For the twelve months ended January 29, 2006, the Company opened one Duckwall and seven ALCO stores.
Investor Conference Call
The Company will host an investor conference call at 3:00 p.m. eastern daylight time on April 25, 2006, to discuss operating results in greater detail for the quarter and year ended January 29, 2006. The dial-in number for the conference call is 800-289-0507 (international/local participants dial 913-981-5540), and the Confirmation Code is 7512594. Parties interested in participating in the conference call should dial in approximately five minutes prior to 3:00 p.m. eastern time. A replay of the call will be available two hours after completion from April 25 through May 9 by dialing 888-203-1112 or for international/local callers by dialing 719-457-0820. The Replay Passcode is 7512594.
About Duckwall-ALCO Stores, Inc.
Duckwall-ALCO Stores, Inc. is a regional retailer that specializes in offering an exceptional product selection at reasonable prices to smaller communities throughout the central United States. Our specialty is delivering those products with the friendly, personal service found in the stores of yesteryear, but with the modern convenience our customers have come to expect. With 253 stores across 21 states, we are proud to have continually provided high quality products at good value prices to our customers for 105 years.
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 quarterly 10-Q filings and other public documents, copies of which are available from the Company on request.
DUCKWALL-ALCO STORES, INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
Unaudited
Three Months Ended Twelve Months Ended
------------------ -------------------
Jan. 29, Jan. 30, Jan. 29, Jan. 30,
2006 2005 2006 2005
-------- -------- -------- --------
Net sales $127,193 $117,423 $435,015 $409,345
Cost of sales 84,701 80,122 296,503 273,644
-------- -------- -------- --------
Gross profit 42,492 37,301 138,512 135,701
Selling, general and
administrative 33,067 32,125 124,974 120,355
Depreciation and
amortization 1,574 1,593 5,946 6,428
-------- -------- -------- --------
Total operating expenses 34,641 33,718 130,920 126,783
Operating income from
continuing operations 7,851 3,583 7,592 8,918
Interest expense 464 301 1,273 1,230
-------- -------- -------- --------
Earnings from continuing
operations before
income taxes 7,387 3,282 6,319 7,688
Income tax expense 2,255 1,010 1,729 2,640
-------- -------- -------- --------
Earnings from continuing
operations 5,132 2,272 4,590 5,048
Earnings/(loss) from
discontinued operations,
net of income tax 28 (178) (2,641) (1,125)
-------- -------- -------- --------
Net earnings $ 5,160 $ 2,094 $ 1,949 $ 3,923
======== ======== ======== ========
Per share data (diluted):
Earnings from continuing
operations $ 1.32 $ 0.51 $ 1.11 $ 1.13
Net earnings $ 1.33 $ 0.47 $ 0.47 $ 0.88
Weighted-average shares
outstanding:
Basic 3,861 4,463 4,084 4,392
Diluted 3,893 4,495 4,118 4,464
DUCKWALL-ALCO STORES, INC.
Consolidated Balance Sheet
(In thousands)
Unaudited
January 29, January 30,
2006 2005
-------- --------
Assets
Current assets:
Cash and cash equivalents $ 1,565 $ 1,200
Receivables 1,781 1,734
Inventories 135,077 129,486
Prepaid expenses 2,621 2,225
Property held for sale 585 --
-------- --------
Total current assets 141,629 134,645
-------- --------
Property and equipment 92,615 88,008
Less accumulated amortization 63,591 63,520
-------- --------
Net property and equipment 29,024 24,488
-------- --------
Property under capital leases,
net of accum. amortization 6,861 2,546
Other non-current assets 55 89
Deferred income taxes 1,353 1,350
-------- --------
Total assets $178,922 $163,118
======== ========
Liabilities and Stockholders' Equity
Current Liabilities
Current maturities of capital
lease obligations $ 1,879 $ 856
Accounts payable 28,300 22,234
Accrued salaries and commissions 6,001 4,728
Accrued taxes other than income 4,743 4,367
Income taxes payable 1,163 351
Other current liabilities 8,823 5,764
Deferred income taxes 86 914
-------- --------
Total current liabilities 50,995 39,214
Notes payable under revolving loan
credit facility 17,062 4,023
Capital lease obligations, less
current maturities 7,299 3,726
Other noncurrent liabilities 1,419 1,479
-------- --------
Total liabilities 76,775 48,442
-------- --------
Stockholders' equity
Common Stock, $.0001 par value, authorized
20,000,000 shares in 2006 and 2005; issued
and outstanding 3,786,953 and
4,475,079 shares in 2005 and 2004,
respectively 1 1
Additional paid-in capital 36,411 50,889
Retained earnings 65,735 63,786
-------- --------
Total stockholders' equity 102,147 114,676
-------- --------
Total liabilities and
stockholders' equity $178,922 $163,118