ABILENE, Kan., Dec. 8, 2006 (PRIME NEWSWIRE) -- Duckwall-ALCO Stores, Inc. (Nasdaq:DUCK), which operates 256 retail stores in 21 states, today announced its operating results for the third quarter ending October 29, 2006.
Net loss for the third quarter was ($648,000), or ($0.18) per diluted share, compared with a net loss of ($187,000), or ($0.05) per diluted share, in the third quarter of the prior fiscal year. Net income year- to-date was $1.3 million, or $0.34 per diluted share, compared with a net loss of ($3.2) million or ($0.77) per diluted share, in the prior fiscal year.
Net sales from continuing operations for the third quarter increased 9.3% to $110.1 million, while same-store sales increased 5.9% when compared to 4.3% in the third quarter in the prior-year quarter. Year-to-date sales from continuing operations increased 10.6% to $339.1 million, while same-store sales increased 6.6% compared to 2.5% in the prior year. The majority of same store sales increase for the quarter and year-to-date has resulted from the Company's initiatives in soft lines and electronics. Fuel sales also contributed to same store sales increases for both periods.
Gross margin for the third quarter was 31.2% compared to 32.3% in the third quarter of the prior year. Year-to-date, gross margin decreased 80 basis points to 30.4% from 31.2% in the prior-year. The decrease in gross margin, as a percentage of sales, for both periods was primarily due to higher freight costs and lower margin on increased sales at the fuel centers. The gross margin percentage for the third quarter was further affected by the clearance of horticulture and patio merchandise. According to CEO, Bruce Dale, "Seasonal clearance markdowns are a normal part of running a retail business, but the degree of markdown we experienced to clear these two categories was not satisfactory. As a result, we are changing our method of managing this business in an effort to avoid the same problem next year."
Operating expenses, as a percent of sales, decreased 90 basis points in the third quarter to 31.4% of sales from 32.3% in the prior-year quarter and year-to-date the decrease is 200 basis points to 29.2% from 31.2% for the same period last year. The year over year increase of $2.1 million for the quarter and $3.3 million year-to date is primarily due to normal inflation, new stores, and expected expenses associated with the IT initiative. Additionally, expenses associated with the Company's adoption of FAS 123(R) impacted the quarter and year-to-date results.
Stock Buyback Program Update
The Company previously announced that the Board of Directors had approved the repurchase of up to 200,000 additional shares of common stock. During the third quarter ended October 29, 2006, the Company repurchased 3,337 shares at an average price of $30.46. There are 196,663 shares still authorized to be repurchased.
Sale-Leaseback Update
The Company has completed a sale-leaseback agreement for 11 of its locations. The proceeds from these agreements of approximately $11.2 million were used to reduce long-term debt. One location is currently still under construction and will be sold upon completion.
Store Operations Update
Since January 29, 2006, the Company has opened seven new ALCO stores located in Kansas, Texas, Iowa and Nebraska, and closed one location in Ohio. The location in Nebraska replaces a Duckwall store that was closed.
Investor Conference Call
The Company will host an investor conference call at 2:00 p.m. eastern daylight time on December 8, 2006, to discuss operating results in greater detail for the quarter ended October 29, 2006. The dial-in number for the conference call is 800-811-0667 (international/local participants dial 913-981-4901), and the Confirmation Code is 8294741. Parties interested in participating in the conference call should dial in approximately five minutes prior to 2:00 p.m. eastern time. A replay of the call will be available two hours after completion from December 8 through December 22 by dialing 888-203-1112 or for international/local callers by dialing 719-457-0820. The Replay Passcode is 8294741.
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 256 stores across 21 states, we are proud to have continually provided high quality products at good value prices to our customers for 105 years. For more information regarding the Company visit our website at www.ALCOstores.com.
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. Actual events or results may differ materially from those described in this press release due to a number of risks and uncertainties. Factors that 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 industry in general. Additional information regarding these and other factors that could cause actual results to differ materially from those contained in the forward-looking statements set forth in this press release are included in the Company's 10-K and 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
Thirteen Weeks Ended Thirty-nine Weeks Ended
-------------------- -----------------------
October 29, October 30, October 29, October 30,
2006 2005 2006 2005
-------- -------- -------- --------
Net sales $110,109 $100,740 $339,124 $306,609
Cost of sales 75,815 68,184 236,214 210,947
-------- -------- -------- --------
Gross margin 34,294 32,556 102,910 95,662
Selling,
general and
administrative 32,953 31,077 94,059 91,312
Depreciation and
amortization 1,647 1,427 4,919 4,363
-------- -------- -------- --------
Total operating
expenses 34,600 32,504 98,978 95,675
Operating income
from continuing
operations (306) 52 3,932 (13)
Interest expense 809 354 2,010 809
-------- -------- -------- --------
Earnings from
continuing
operations before
income taxes (1,115) (302) 1,922 (822)
Income tax
expense (564) (412) 684 (186)
-------- -------- -------- --------
Earnings from
continuing
operations (551) 110 1,238 (636)
Earnings / (loss)
from discontinued
operations, net
of income tax (97) (297) 72 (2,575)
-------- -------- -------- --------
Net earnings $ (648) $ (187) $ 1,310 $ (3,211)
======== ======== ======== ========
Per share data
(diluted):
Earnings from
continuing
operations ($0.15) $0.03 $0.32 ($0.15)
Net earnings ($0.18) ($0.05) $0.34 ($0.77)
Weighted-average
shares
outstanding:
Basic 3,793 3,970 3,792 4,158
Diluted 3,793 3,970 3,832 4,158
Supplemental Data: Thirteen Weeks Ended Thirty-nine Weeks Ended
October 29, October 30, October 29, October 30,
2006 2005 2006 2005
-----------------------------------------------
Same Store Sales
change 5.9% 4.3% 6.6% 2.5%
Total customer
count change 1.4% 2.0% 3.3% 1.8%
Average sale per
ticket change 7.1% 4.9% 7.0% 3.5%
EBITDA:
Income from
continuing
operations ($551) $ 110 $1,238 ($636)
Plus interest 809 354 2,010 809
Plus taxes (564) (412) 684 (186)
Plus depreciation 1,647 1,427 4,919 4,363
Plus 123R stock
option expense 268 -- 541 --
EBITDA from
continuing
operations $1,609 $1,479 $9,392 $4,350
Average Annualized
New Store Sale
performance on
prototype stores $2,227
Incremental
expenses related
to IT
initiative(a) $ 274 $ 694
(a) (excludes incremental depreciation and additional costs related
to performing SKU level inventories)
DUCKWALL-ALCO STORES, INC.
Consolidated Balance Sheet
(In thousands)
Unaudited
October 29, January 29,
2006 2006
------------------------
Assets
Current assets:
Cash and cash equivalents $ 4,847 $ 472
Receivables 3,745 2,874
Refundable income tax 2,973 --
Inventories 164,621 135,077
Prepaid expenses 2,880 2,621
Property held for sale -- 585
-------- --------
Total current assets 179,066 141,629
-------- --------
Property and equipment 89,261 92,615
Less accumulated amortization 66,432 63,591
-------- --------
Net property and equipment 22,829 29,024
-------- --------
Property under capital leases, net of
accum. amortization 7,482 6,861
Other non-current assets 53 55
Deferred income taxes 2,413 1,353
-------- --------
Total assets $211,843 $178,922
======== ========
Liabilities and Stockholders' Equity
Current Liabilities
Current maturities of capital lease
obligations $ 2,192 $ 1,879
Accounts payable 43,493 28,300
Income Taxes Payable -- 1,163
Accrued salaries and commissions 3,990 6,001
Accrued taxes other than income 5,084 4,743
Other current liabilities 3,036 2,998
Stock purchase payable -- 1,910
Self-insurance claim reserve 4,413 3,915
Deferred income taxes 283 86
-------- --------
Total current liabilities 62,491 50,995
Notes payable under revolving loan credit
facility 32,664 17,062
Capital lease obligations, less current
maturities 7,363 7,299
Other noncurrent liabilities 5,254 1,419
-------- --------
Total liabilities 107,772 76,775
-------- --------
Stockholders' equity
Common Stock, $.0001 par value,
authorized 20,000,000 shares in 2006 and
2005; issued and outstanding 3,793,528
and 3,875,853 shares in 2006 and 2005,
respectively 1 1
Additional paid-in capital 37,024 36,411
Retained earnings 67,046 65,735
-------- --------
Total stockholders' equity 104,071 102,147
-------- --------
Total liabilities and stockholders'
equity $211,843 $178,922
======== ========