Duckwall-ALCO Stores Reports Operating Results for First Quarter Fiscal 2007 Ending April 30, 2006

Abilene, Kansas, UNITED STATES

ABILENE, Kan., June 6, 2006 (PRIMEZONE) -- Duckwall-ALCO Stores, Inc. (Nasdaq:DUCK), which operates 254 retail stores in 21 central states, today announced its operating results for the first quarter ending April 30, 2006.

Net earnings for the fist quarter were $541,000, or $0.14 per diluted share, compared with a net loss of $2.7 million, or $0.62 per diluted share, in the first quarter of the prior fiscal year.

Net sales from continuing operations for the first quarter increased 11.3% to $109.1 million, while same-store sales increased 6.6% when compared with the prior-year quarter.

President and CEO Bruce Dale stated, "We are pleased with the first quarter earnings. The results we have achieved in sales and earnings this quarter continue to reflect our focus on achieving our plan. The initiatives we have undertaken are positioning us well for future growth."

Gross margin for the first quarter decreased 130 basis points to 29.9% of sales from 31.2% in the first quarter of the prior fiscal year. Increased freight costs and promotional markdowns offset by a reduction in shrinkage related to a warehouse inventory adjustment of 46 basis points contributed to this reduction.

Operating expenses for the first quarter decreased 390 basis points to 28.9% of sales from 32.8% in the prior-year quarter.

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. No purchases were made during the first quarter ended April 30, 2006.

Sale-Leaseback Update

The Company previously announced that it had entered into a sale-leaseback agreement for 11 of its locations. On May 25, 2006, the Company closed on the sale-leaseback on nine of these locations. The proceeds from this portion of the agreement of approximately $9.1 million were used to reduce long-term debt. One location is currently still under construction and will be sold upon completion. The sale-leaseback on the final location is expected to be completed in mid-June.

Store Operations Update

Since January 29, 2006, the Company has opened four new ALCO stores located in Yoakum, TX, Junction City, KS, Orange City, IA and Imperial, NE. The location in Imperial, NE replaces a Duckwall store that was closed.

Investor Conference Call

The Company will host an investor conference call at 4:00 p.m. eastern daylight time on June 16, 2006, to discuss operating results in greater detail for the quarter ended April 30, 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 4246216. Parties interested in participating in the conference call should dial in approximately five minutes prior to 4:00 p.m. eastern time. A replay of the call will be available two hours after completion from June 16 through June 30 by dialing 888-203-1112 or for international/local callers by dialing 719-457-0820. The Replay Passcode is 4246216

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 254 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. 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)
                                                Three Months Ended
                                              April 30,       May 1,
                                                2006           2005
                                              --------       --------
 Net sales                                    $109,071       $ 98,026
 Cost of sales                                  76,496         67,466
                                              --------       --------
 Gross profit                                   32,575         30,560

 Selling, general and administrative            29,901         30,592
 Depreciation and amortization                   1,606          1,547
                                              --------       --------

 Total operating expenses                       31,507         32,139

 Operating income from continuing
  operations                                     1,068         (1,579)
   Interest expense                                571            210
                                              --------       --------

 Earnings from continuing operations
  before income taxes                              497         (1,789)

   Income tax expense                              188           (633)
                                              --------       --------
 Earnings from continuing operations               309         (1,156)

 Earnings / (loss) from discontinued
   operations, net of income tax                   232         (1,574)
                                              --------       --------
 Net earnings                                 $    541       $ (2,730)
                                              ========       ========

 Per share data (diluted):

 Earnings from continuing operations          $   0.08         ($0.26)

 Net earnings                                 $   0.14         ($0.62)

 Weighted-average shares outstanding:
   Basic                                         3,788          4,438
   Diluted                                       3,810          4,438

                      DUCKWALL-ALCO STORES, INC.
                      Consolidated Balance Sheet
                            (In thousands)
                                                 April 30,     May 1,
                                                   2006         2005
                                                 --------     --------
 Current assets:
  Cash and cash equivalents                      $  4,658     $  3,294
  Receivables                                       2,209        2,052
  Refundable income tax                                --        1,637
  Inventories                                     143,136      127,655
  Prepaid expenses                                  2,312        2,154
  Property held for sale                              350          589
                                                 --------     --------
   Total current assets                           152,665      137,381
                                                 --------     --------

 Property and equipment                            95,478       86,657
 Less accumulated amortization                     64,817       63,296
                                                 --------     --------
   Net property and equipment                      30,661       23,361
                                                 --------     --------

 Property under capital leases,
  net of accum. amortization                        6,482        2,417
 Other non-current assets                              29           71
 Deferred income taxes                              1,363        1,350
                                                 --------     --------
   Total assets                                  $191,200     $164,580
                                                 ========     ========

 Liabilities and Stockholders' Equity

 Current Liabilities
  Current maturities of capital
   lease obligations                             $  1,878     $    856
  Notes payable under revolving loan
   credit facility                                     --        6,081
  Accounts payable                                 31,542       28,854
  Accrued salaries and commissions                  4,057        5,718
  Accrued taxes other than income                   5,153        5,359
  Income taxes payable                                348           --
  Other current liabilities                         2,740        3,384
  Self-insurance claim reserve                      4,137        3,612
  Deferred income taxes                                37          888
                                                 --------     --------
    Total current liabilities                      49,892       54,752

 Notes payable under revolving loan
  credit facility                                  30,300           --
 Capital lease obligations, less
  current maturities                                6,835        3,512
 Other noncurrent liabilities                       1,387        1,449
                                                 --------     --------
    Total liabilities                              88,414       59,713
                                                 --------     --------
 Stockholders' equity
  Common Stock, $.0001 par value,
   authorized 20,000,000 shares in
   2006 and 2005; issued and outstanding
   3,790,386 and 4,085,992 shares in
   2006 and 2005, respectively                          1            1

   Additional paid-in capital                      36,509       43,810
   Retained earnings                               66,276       61,056
                                                 --------     --------
    Total stockholders' equity                    102,786      104,867
                                                 --------     --------
    Total liabilities and stockholders'
     equity                                      $191,200     $164,580