ABILENE, Kan., April 16, 2009 (GLOBE NEWSWIRE) -- Duckwall-ALCO Stores, Inc. (Nasdaq:DUCK), which offers an outstanding selection of everyday essential merchandise at value prices to small-town America, today announced operating results for its fourth quarter and fiscal year ending February 1, 2009.
Net loss for the thirteen week fourth quarter was $715,000, or ($0.19) per basic share, compared to net earnings of $1.0 million, or $0.27 per diluted share, in the fourteen week fourth quarter of the prior fiscal year. Earnings were impacted by a one time charge of $1.3 million for the Company's Store Transformation Project which will be completed in June 2009. Net sales from continuing operations, excluding the Company's two fuel centers, for the fourth quarter increased 2.0% to $138.5 million, on an adjusted thirteen week period for the fourth quarter of the prior fiscal year.
Adjusted same-store sales decreased 3.3%, excluding the Company's two fuel centers, improving from the 6.3% decrease in the third quarter. Improvements in our new merchandising and operational programs drove favorable results in a weakening macro environment. Both margin and expense investments were required in fiscal 2009 as the Company pursued its turnaround program. That program achieved significant expense reductions which positively impacted the quarter's results.
Gross margin for the fourth quarter was 29.7%, down from 30.3% in the fourth quarter of the prior year. Contributing to the decline were accelerated markdowns which resulted in a cleaner inventory position than the previous year and lower new store allowances as the Company opened fewer stores in the quarter compared to the previous year, offset by continued shrink improvement and increased vendor rebates.
Net loss for fiscal 2009 was $5.0 million, or ($1.30) per basic share, compared with net loss of $224,000, or ($0.05) per basic share, for the prior fiscal year. Negatively impacting the performance of the Company in fiscal 2009 were $2.2 million in Store Transformation Project expenses, $1.9 million in executive and staff severance and a $1.3 million inventory review initiative charge offset by reduced asset impairment expenses of $800,000. These were offset by $7.5 million in savings initiatives, included but not limited to, ALCO same-store level $3.5 million in hourly wages, advertising expenses, net of coop offset, of $669,000, floor care services of $616,000 along with reduced total Company travel expenses of $625,000 and insurance expenses of $619,000.
Net sales from continuing operations, excluding the Company's two fuel centers, year-to-date increased 3.9% to $478.4 million, adjusted for the fifty-third week in the prior year. Adjusted same-store sales decreased 5.1%, excluding the Company's two fuel centers. Gross margin for fiscal 2009 was 31.4% compared with 31.6% in the prior year. Excluding the $1.3 million inventory review initiative charge, fiscal 2009 gross margin is 31.7%. Fiscal 2009 gross margin was positively impacted by continued shrink improvement and increased vendor considerations.
Larry Zigerelli, President and CEO, commented, "Fiscal 2009 was a year of transition as we initiated efforts to transform all aspects of our operations laying the foundation for significantly improved performance in fiscal 2010 and increased long-term shareholder value. This has resulted in a strong start this fiscal year despite the economic environment. Accelerated same-store sales growth continued through the first nine weeks, up 6.3% versus prior year behind the on-going effort to overhaul our merchandising and operational programs. Additionally, we have also continued to dramatically reduce our cost and improve shrink performance, primarily through our Store Transformation Project. We have also completed a significant upgrade of our organizational talent. We expect fiscal 2010 to be a strong year."
Investor Conference Call
The Company will host an investor conference call at 10:00 a.m. Central Daylight Time on April 17, 2009, to discuss operating results for the quarter and year ended February 1, 2009. The dial-in number for the conference call is 888-271-8583 (international/local participants dial 913-981-5589), and the Confirmation Code is 6910428. Parties interested in participating in the conference call should dial in approximately five minutes prior to 10:00 a.m. Central Daylight Time. A replay of the call will be available from two hours after completion on April 17 through April 22 by dialing 888-203-1112 or for international/local callers by dialing 719-457-0820. The Replay Passcode is 6910428. 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, a non-GAAP performance measure, as part of its disclosure as a means to enhance its communications with stockholders. Certain stockholders have specifically requested this information as a means of comparing the Company to other retailers that disclose similar non-GAAP performance measures. Further, management utilizes this measure in internal evaluation; review of performance and comparison with the Company's financial measure to that of its peers. Adjusted EBITDA differs from the most comparable GAAP financial measure (earnings from continuing operations before discontinued 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 free cash flow. As a result, 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 multi-regional retailer that specializes in meeting the needs of smaller, underserved communities throughout the central United States. The Company offers an exceptional selection of fashionable merchandise, 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 258 stores across 23 states, 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 per share amounts)
For the For the
Thirteen Fourteen 52 Weeks 53 Weeks
Weeks Weeks Fiscal Fiscal
Ended Ended 2009 2008
--------- --------- --------- ---------
Feb. 1, Feb. 3, Feb. 1, Feb. 3,
2009 2008 2009 2008
--------- --------- --------- ---------
Net sales $ 140,132 $ 147,137 $ 490,021 $ 481,770
Cost of sales 98,456 102,601 336,117 329,405
--------- --------- --------- ---------
Gross margin 41,676 44,536 153,904 152,365
Selling, general
and administrative 37,846 37,904 147,846 138,349
Depreciation and
amortization 3,509 4,112 9,302 9,464
--------- --------- --------- ---------
Total operating
expenses 41,355 42,016 157,148 147,813
Operating earnings
(loss) from
continuing
operations 321 2,520 (3,244) 4,552
Interest expense 648 856 1,867 3,382
--------- --------- --------- ---------
Earnings (loss)
from continuing
operations before
income taxes (327) 1,664 (5,111) 1,170
Income tax expense
(benefit) 315 659 (2,090) 388
--------- --------- --------- ---------
Earnings (loss)
from continuing
operations (642) 1,005 (3,021) 782
Earnings (loss)
from discontinued
operations, net of
income expense
(benefit) (73) 44 (1,955) (1,006)
--------- --------- --------- ---------
Net earnings (loss) $ (715) $ 1,049 $ (4,976) $ (224)
========= ========= ========= =========
Earnings (loss) per
diluted share
continuing
operations $ (0.17) $ 0.26 $ (0.79) $ 0.21
--------- --------- --------- ---------
Net earnings
(loss) $ (0.19) $ 0.27 $ (1.30) $ (0.05)
--------- --------- --------- ---------
Weighted-average
shares
outstanding:
Basic 3,800 3,810 3,809 3,807
Diluted 3,800 3,834 3,809 3,807
Supplemental Data:
(1)
Same-store gross
margin dollar
change (12.9)% 3.8 % (8.4)% 7.8 %
Same-store SG&A
dollar change (7.0)% (2.7)% (6.1)% 5.6 %
Same-store total
customer count
change (13.7)% 0.7 % (10.4)% (3.1)%
Same-store average
sale per ticket
change 4.4 % 5.1 % 4.0 % 8.1 %
(1) Same-store information has not been adjusted to 52 weeks for
comparability
Adjusted EBITDA from net earnings continuing operations:
For the Thirty-
Nine Week
Periods Ended 53 Weeks
-------------------------------
53 Weeks Nov. 2, Oct. 27, Nov. 2,
-------------------------------------------
Fiscal
2008 2008 2007 2008
-------------------------------------------
Net earnings (loss) from
continuing operations
(1)(5)(6) $ 782 (2,379) (223) (1,374)
Plus:
Interest 3,382 1,219 2,526 2,075
Taxes (1)(6) 388 (2,405) (271) (1,746)
Depreciation and
amortization (1)(6) 9,464 5,793 5,352 9,905
Share-based compensation 1,130 34 893 271
Preopening store costs
(2) 2,783 1,837 1,521 3,099
Inventory review
initiative -- 1,345 -- 1,345
Executive and staff
severance -- 1,942 -- 1,942
Store Transformation
Project -- 937 -- 937
-------------------------------------------
Adjusted EBITDA (1)(3)(4)
(5)(6) 17,929 8,323 9,798 16,454
===========================================
Adjusted EBITDA
---------------
Same-stores (6) 47,722 31,147 32,865 46,004
Non same-stores (3) 1,650 1,615 641 2,624
Store support center (5) (22,116) (17,066) (16,761) (22,421)
Warehouse (9,327) (7,373) (6,947) (9,753)
-------------------------------------------
Reconciled Adjusted
EBITDA (1)(3)(4)(5)(6) 17,929 8,323 9,798 16,454
===========================================
Cash 5,501 5,320 4,525 5,320
Debt 33,013 58,303 55,759 58,303
-------------------------------------------
Debt, net of cash $ 27,512 52,983 51,234 52,983
===========================================
Thirteen Fourteen
Weeks Weeks
--------------------------
February 1, February 3, 52 Weeks
-------------------------------------
Fiscal
2009 2008 2009
-------------------------------------
Net earnings (loss) from
continuing operations
(1)(5)(6) $ (642) 1,005 (3,021)
Plus:
Interest 648 856 1,867
Taxes (1)(6) 315 659 (2,090)
Depreciation and
amortization (1)(6) 3,509 4,112 9,302
Share-based compensation 152 237 186
Preopening store costs (2) 9 1,262 1,846
Inventory review
initiative -- -- 1,345
Executive and staff
severance -- -- 1,942
Store Transformation Project 1,283 -- 2,220
-------------------------------------
Adjusted EBITDA
(1)(3)(4)(5)(6) 5,274 8,131 13,597
=====================================
Adjusted EBITDA
Same-stores (6) 12,814 14,728 44,090
Non same-stores (3) 672 1,080 2,216
Store support center (5) (5,930) (5,297) (23,054)
Warehouse (2,282) (2,380) (9,655)
-------------------------------------
Reconciled Adjusted
EBITDA (1)(3)(4)(5)(6) 5,274 8,131 13,597
=====================================
Cash 4,744 5,501 4,744
Debt 49,841 33,013 49,841
-------------------------------------
Debt, net of cash
$ 45,097 27,512 45,097
=====================================
(1) These amounts will not agree with the 2008 fiscal 2008 10-K
filing due to the 14 stores the Company closed in the first quarter
of fiscal 2009. 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 or will be opened and are incurred prior to the
grand opening of each store.
(3) For fiscal 2009, the average open weeks for the Company's 33 non
same-stores is 54 weeks.
(4) During fiscal 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 fiscal 2009, these
initiatives resulted in $7.5 million reduced SG&A expenses when
compared to the prior fiscal year. The initiatives include, but 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 travel and insurance
expenses.
(5) Since the first quarter of fiscal 2009, the Company has incurred
approximately $1.3 million in charges related to staff and executive
management changes, relocations and professional fees related to tax
planning strategies, including tax method changes, which have reduced
these reported amounts. This $1.3 million is also inclusive of
charges incurred during the first quarter related to Board of
Directors changes.
(6) These amounts will not agree to the first, second and third
quarter 10-Q amounts due to the Company closing an ALCO store during
the fourth quarter of fiscal 2009. This store is shown in
discontinued operations.
Duckwall-ALCO Stores, Inc. and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands, except share amounts)
February 1, February 3,
2009 2008
---------- ----------
Assets
Current assets:
Cash and cash equivalents $ 4,744 $ 5,501
Receivables 5,142 4,905
Prepaid income taxes 5,753 768
Inventories 146,620 128,545
Prepaid expenses 4,143 3,101
Deferred income taxes 5,348 7,094
Assets held for sale 1,505 --
---------- ----------
Total current assets 173,255 149,914
---------- ----------
Property and equipment, at cost 97,849 91,058
Less accumulated depreciation 65,591 64,019
---------- ----------
Net property and equipment 32,258 27,039
---------- ----------
Property under capital leases, net of
accumulated amortization 3,057 4,917
Other non-current assets 205 262
Deferred income taxes -- 3,254
---------- ----------
Total assets $ 208,775 $ 185,386
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 1,362 $ 1,278
Current maturities of capital lease
obligations 1,853 1,860
Accounts payable 30,233 19,134
Accrued salaries and commissions 5,375 3,711
Accrued taxes other than income 4,941 4,301
Self-insurance claim reserves 5,309 4,571
Other current liabilities 4,676 7,360
---------- ----------
Total current liabilities 53,749 42,215
Long-term debt, less current maturities 2,865 4,227
Notes payable under revolving loan 40,714 20,715
Capital lease obligations - less current
maturities 3,047 4,933
Deferred gain on leases 4,598 4,985
Deferred income taxes 138 --
Other noncurrent liabilities 1,624 1,139
---------- ----------
Total liabilities 106,735 78,214
---------- ----------
Stockholders' equity:
Common stock, $.0001 par value,
authorized 20,000,000 shares; issued and
outstanding 3,797,947 shares and
3,810,591 shares, respectively 1 1
Additional paid-in capital 38,615 38,765
Retained earnings 63,424 68,406
---------- ----------
Total stockholders' equity 102,040 107,172
---------- ----------
Total liabilities and stockholders'
equity $ 208,775 $ 185,386
========== ==========