ABILENE, Kan., Dec. 7, 2007 (PRIME NEWSWIRE) -- Duckwall-ALCO Stores, Inc. (Nasdaq:DUCK), which operates 264 retail stores in 22 states, today announced its operating results for the third quarter ending October 28, 2007. Dollar amounts are presented in thousands unless otherwise noted.
Net loss for the third quarter was $(1.6) million, or $(0.43) per basic share, compared with net loss of $(648), or $(0.17) per basic share, in the third quarter of the prior fiscal year. Net loss year-to-date was $(1.3) million, or $(0.34) per basic share, compared to net income of $1.3 million, or $0.34 per diluted share, in the prior fiscal year.
Net sales from continuing operations for the third quarter increased 5.0% to $114.3 million, while same-store sales increased 2.2%. Year-to-date sales from continuing operations increased 3.9% to $348.3 million, while same-store sales increased 1.8%.
Gross margin for the third quarter was 32.2% compared to 31.1% in the third quarter of the prior year. Contributing to this quarter's increase were primarily lower freight costs, improved initial markon percentages, and increased vendor support. These quarterly improvements were offset by increased markdowns and shrinkage. Gross margin year-to-date increased 160 basis points to 31.9% from 30.3% in the prior year. Although lower freight costs, increased vendor support, and improved initial markon percentages contributed to the year-to-date margin increase, these improvements were partially offset by increased markdowns and shrinkage.
Operating expenses for the third quarter increased to 34.0% of sales from 31.5% in the prior-year quarter. Items that impacted the change include:
* Increased IT initiative costs of $360 (System and POS);
* Increased costs associated with growth initiative of $2.3
million;
* Increased costs associated with material weaknesses
remediation initiative of $105;
* Increased timing variances of $1.0 million; and
* Increased other fluctuations, including depreciation, of $946.
Operating expenses increased on a year-to-date basis by 260 basis points to 31.8% from 29.2%. Items that impacted the change include:
* Increased IT initiative costs of $1.3 million (System and POS);
* Increased costs associated with growth initiative of $4.5
million;
* Increased costs associated with material weaknesses
remediation initiative of $729;
* Increased timing variances of $2.5 million; and
* Increased other fluctuations, including depreciation, of
$2.6 million.
Commenting on the results of the third quarter of fiscal 2008, Bruce Dale, President and CEO stated, "We are managing our business well despite a very difficult selling environment. We are confident we will achieve our planned gross margin percent, our SG&A expense, and our inventory targets for fiscal 2008. Any under performance to current EBITDA guidance will be a direct result of lower than expected sales. I remain very optimistic about the Company's long-term outlook and feel the positive impact from our three-year turnaround plan will begin to be reflected in the Company's fiscal 2009 results."
Store Operations Update
Since January 28, 2007, the Company has opened eighteen stores located in Georgia, Illinois, Indiana, Kansas, Minnesota, New Mexico, North Dakota, Oklahoma, and Texas. The Company also closed ten locations, one in Arizona, one in Texas, three in Kansas, one in Arkansas, three in Oklahoma, and one in Nebraska. Two of these markets had ALCO stores open where a Duckwall store was closed. In addition, the Company opened two new prototype ALCO stores to replace two smaller Class 12 ALCOs.
The average annualized prototype new store sales performance is currently projected at $2.3 million per store.
Investor Conference Call
The Company will host an investor conference call at 10:00 a.m. central daylight time on December 7, 2007, to discuss operating results in greater detail for the quarter ended October 28, 2007. The dial-in number for the conference call is 888-221-9588 (international/local participants dial 913-312-1496), and the Confirmation Code is 9340494. 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 two hours after completion from December 7 through December 21 by dialing 888-203-1112 or for international/local callers by dialing 719-457-0820. The Replay Passcode is 9340494.
About Duckwall-ALCO Stores, Inc.
Duckwall-ALCO Stores, Inc. is a 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. Our specialty is delivering those products with the friendly, personal service our customers have come to expect. With 264 stores across 22 states, we are proud to have continually provided excellent products at good value prices to our customers for 106 years. To learn more about Duckwall-ALCO Stores, Inc. 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. 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 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)
(Unaudited)
For the For the
Thirteen Week Thirty-Nine Week
Periods Ended Periods Ended
---------------------- ---------------------
Oct. 28, Oct. 29, Oct. 28, Oct. 29,
2007 2006 2007 2006
---------------------- ---------------------
Net sales $ 114,314 $ 108,830 $ 348,267 $335,143
Cost of sales 77,504 74,985 237,030 233,601
---------------------- ---------------------
Gross margin 36,810 33,845 111,237 101,542
Selling, general
and administrative 37,002 32,608 105,213 92,979
Depreciation and
amortization 1,905 1,636 5,637 4,890
---------------------- ---------------------
Total operating
expenses 38,907 34,244 110,850 97,869
Operating income
(loss) from
continuing
operations (2,097) (399) 387 3,673
Interest expense 929 809 2,526 2,010
---------------------- ---------------------
Earnings (loss)
from continuing
operations before
income taxes (3,026) (1,208) (2,139) 1,663
Income tax expense
(benefit) (1,254) (597) (901) 583
---------------------- ---------------------
Earnings (loss)
from continuing
operations (1,772) (611) (1,238) 1,080
Earnings (loss)
from discontinued
operations, net
of income taxes 137 (37) (35) 230
---------------------- ---------------------
Net earnings (loss) $ (1,635) $ (648) $ (1,273) $ 1,310
====================== =====================
Earnings (loss) per
diluted share
Continuing
operations $ (0.47) $ (0.16) $ (0.33) $ 0.28
---------------------- ---------------------
Net earnings
(loss) $ (0.43) $ (0.17) $ (0.34) $ 0.34
---------------------- ---------------------
Weighted-average
shares outstanding:
Basic 3,809 3,793 3,806 3,792
Diluted 3,809 3,793 3,806 3,832
Supplemental Data:
Thirteen Thirty-Nine
Weeks Ended Weeks Ended
--------------------- --------------------
Oct. 28, Oct. 29, Oct. 28, Oct. 29,
2007 2006 2007 2006
--------------------- --------------------
Same store sales
change 2.2% 5.0% 1.8% 6.4%
Total customer count
change -0.6% 1.4% -1.5% 3.3%
Average sale per
ticket change 3.3% 7.1% 3.5% 7.0%
Earnings (loss) from
continuing operations $ (1,772) $ (611) $(1,238) $ 1,080
Plus interest 929 809 2,526 2,010
Plus taxes (1,254) (597) (901) 583
Plus depreciation and
amortization 1,905 1,636 5,637 4,890
Plus shared based
compensation expense 317 268 893 541
--------------------- --------------------
EBITDA from continuing
operations $ 125 $ 1,505 $ 6,917 $9,104
==================== ===================
Average annualized
new store sale
performance on
prototype stores $ 2,320 $ 2,284
Incremental expenses
related to IT
initiative * $ 360 $ 274 $ 1,282 $ 694
*(excludes additional costs related to performing SKU level
inventories)
Duckwall-ALCO Stores, Inc. and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands, except share amounts)
(Unaudited)
Oct. 28, Oct. 29,
2007 2006
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 4,525 $ 4,847
Receivables 4,530 3,745
Prepaid expenses 3,353 2,879
Prepaid income taxes 2,590 2,973
Inventories 178,311 160,277
Deferred income taxes 3,037 --
-------- --------
Total current assets 196,346 174,721
-------- --------
Property and equipment, at cost 95,933 89,261
Less accumulated depreciation 67,699 66,432
-------- --------
Net property and equipment 28,234 22,829
-------- --------
Property under capital leases,
net of accumulated amortization 5,435 7,484
Other non-current assets 150 53
Deferred income taxes 5,736 3,959
-------- --------
Total assets $235,901 $209,046
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of capital
lease obligations $ 1,922 $ 2,192
Accounts payable 47,646 43,493
Income taxes payable -- --
Accrued salaries and commissions 4,007 3,990
Accrued taxes other than income 5,889 5,084
Self-insurance claim reserves 5,319 4,413
Other current liabilities 3,683 3,319
-------- --------
Total current liabilities 68,466 62,491
Notes payable under revolving loan 48,461 32,663
Capital lease obligations - less
current maturities 5,376 7,363
Deferred gain on leases 5,082 4,794
Other noncurrent liabilities 2,653 462
-------- --------
Total liabilities 130,038 107,773
-------- --------
Stockholders' equity:
Common stock, $.0001 par value,
authorized 20,000,000 shares;
issued and outstanding
3,809,841 shares and
3,793,528 shares, respectively 1 1
Additional paid-in capital 38,506 37,024
Retained earnings 67,356 64,248
-------- --------
Total stockholders' equity 105,863 101,273
-------- --------
Total liabilities and
stockholders' equity $235,901 $209,046
======== ========