ABILENE, Kan., Sept. 10, 2009 (GLOBE NEWSWIRE) -- Duckwall-ALCO Stores, Inc. (Nasdaq:DUCK), which specializes in providing a superior selection of essential products for everyday life in small-town America, today announced operating results for its second quarter ending August 2, 2009.
Net sales from continuing operations for the second quarter decreased 1.6% to $123.4 million and same-store sales decreased 3.0%. Net sales from continuing operations year-to-date increased 4.1% to $237.6 million and same-store sales increased 1.2%.
Net earnings for the second quarter were $3.0 million, or $0.78 per diluted share, compared to net earnings of $3.3 million, or $0.85 per diluted share, for the second quarter of the prior fiscal year. Net earnings in the current year were impacted by a charge of $435,000, net after taxes, or $0.11 per diluted share, for the Company's store transformation project, which was completed as planned in June 2009.
Net earnings for year-to-date were $3.0 million, or $0.77 per diluted share, compared to a net loss of $2.6 million, or ($0.68) per basic share, for year-to-date of the prior fiscal year. This $5.6 million improvement in net earnings is attributable primarily to a $4.6 million increase, or 6.0%, in Adjusted Gross Margin dollars. Adjusted Gross Margin as a percentage of sales has increased 110 basis points for the fiscal year-to-date compared to the prior fiscal year-to-date. Year-to-date earnings from continuing operations, before income taxes, have increased $6.5 million compared to the prior fiscal year-to-date. This improvement is attributable to a total gross margin dollar improvement of $5.9 million.
Larry Zigerelli, President and CEO, commented, "Strong fiscal year-to-date earnings reflect progress in both top and bottom line performance. Continued gross margin improvement is especially encouraging in the face of a weakened economy. All elements of our strategic transformation plan that began last fall remain on or ahead of schedule. We expect continued progress near term."
Investor Conference Call
The Company will host an investor conference call at 10:00 a.m. Central Daylight Time on September 15, 2009, to discuss operating results for the second quarter ended August 2, 2009. The dial-in number for the conference call is 888-819-8018 (international/local participants dial 913-661-9178), and the Confirmation Code is 5278547. 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 September 15 through September 20 by dialing 888-203-1112 or for international/local callers by dialing 719-457-0820. The Replay Passcode is 5278547. 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-Q.
Certain Non-GAAP Financial Measures
The Company has included Adjusted Gross Margin and Adjusted EBITDA, non-GAAP performance measures, as part of its disclosure as a means to enhance its communications with stockholders. Certain stockholders have specifically requested this information to assist them in comparing the Company to other retailers that disclose similar non-GAAP performance measures. Further, management utilizes these measures in internal evaluation; review of performance and comparison with the Company's financial measures to those 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, as does Adjusted Gross Margin. 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 Gross Margin and 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 Gross Margin and 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 regional broad line retailer that specializes in meeting the needs of smaller, underserved communities across 23 states, primarily in the central United States. The Company offers an exceptional selection of 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 257 stores, 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 share and per share amounts)
(Unaudited)
For the Thirteen For the Twenty-Six
Week Periods Ended Week Periods Ended
------------------ ------------------
August 2, August 3, August 2, August 3,
2009 2008 2009 2008
-------- -------- -------- --------
Net sales $125,291 129,186 240,695 234,813
Cost of sales 82,880 85,868 159,748 159,771
-------- -------- -------- --------
Gross margin 42,411 43,318 80,947 75,042
Selling, general and
administrative 34,614 35,055 70,325 71,821
Depreciation and
amortization 2,268 1,904 4,646 3,676
-------- -------- -------- --------
Total operating expenses 36,882 36,959 74,971 75,497
Operating income (loss)
from continuing operations 5,529 6,359 5,976 (455)
Interest expense, net 521 551 1,057 1,156
-------- -------- -------- --------
Earnings (loss) from
continuing operations
before income taxes 5,008 5,808 4,919 (1,611)
Income tax expense (benefit) 1,977 2,364 1,936 (685)
-------- -------- -------- --------
Earnings (loss) from
continuing operations 3,031 3,444 2,983 (926)
Loss from discontinued
operations, net of income
tax benefit -- (188) (2) (1,670)
-------- -------- -------- --------
Net earnings (loss) $ 3,031 3,256 2,981 (2,596)
======== ======== ======== ========
Earnings (loss) per diluted
share
Continuing operations $ 0.78 0.90 0.77 (0.24)
-------- -------- -------- --------
Net earnings (loss) $ 0.78 0.85 0.77 (0.68)
-------- -------- -------- --------
Weighted-average shares
outstanding:
Basic 3,798 3,814 3,798 3,812
Diluted 3,902 3,825 3,857 3,812
Supplemental Data:
For the Thirteen For the Twenty-Six
Week Periods Ended Week Periods Ended
------------------ ------------------
August 2, August 3, August 2, August 3,
2009 2008 2009 2008
-------- -------- -------- --------
Gross margin as reported $ 42,411 43,318 80,947 75,042
Inventory review initiative -- -- -- 1,345
-------- -------- -------- --------
Adjusted Gross Margin $ 42,411 43,318 80,947 76,387
======== ======== ======== ========
Same-store gross margin
dollar change 3.9 % 2.6 % 6.7 % 1.2 %
Same-store SG&A dollar change (3.8)% 5.0 % (3.4)% 4.4 %
Same-store total customer
count change (2.3)% (2.7)% (0.5)% (3.3)%
Same-store average sale per
ticket change (2.3)% 6.8 % 0.1 % 4.6 %
Reconciliation of Adjusted EBITDA to net earnings (loss) from
continuing operations:
Trailing
Twelve
For the Thirteen Week Periods
Periods Ended Ended
------------------------------
Fiscal May 3, May 4, May 3,
2009 2009 2008 2009
--------------------------------------
Net earnings (loss) from
continuing operations (1) $(2,996) (43) (4,367) 1,328
Plus:
Interest 1,867 537 605 1,799
Taxes (1) (2,090) (45) (3,054) 919
Depreciation and
amortization (1) 9,302 2,377 1,773 9,906
Share-based compensation 186 185 (329) 700
Preopening store costs (2) 1,846 -- 722 1,124
Inventory review initiative 1,345 -- 1,345 --
Executive and staff severance 1,942 -- 1,942 --
Store transformation project
costs 2,220 1,378 -- 3,598
--------------------------------------
=Adjusted EBITDA (1)(3)(4)(5) 13,622 4,389 (1,363) 19,374
======================================
Cash 4,744 8,208 4,977 8,208
Debt 49,841 60,946 41,080 60,946
--------------------------------------
Debt, net of cash $ 45,097 52,738 36,103 52,738
======================================
Trailing
Twelve
For the Thirteen Week Periods
Periods Ended Ended
----------------------------
August 2, August 3, August 2,
2009 2008 2009
----------------------------
Net earnings (loss) from
continuing operations (1) $ 3,031 3,444 915
Plus:
Interest 521 551 1,769
Taxes (1) 1,977 2,364 532
Depreciation and amortization (1) 2,268 1,904 10,270
Share-based compensation 261 194 767
Preopening store costs (2) -- 773 351
Inventory review initiative -- -- --
Executive and staff severance -- -- --
Store transformation project costs 718 -- 4,316
----------------------------
=Adjusted EBITDA (1)(3)(4)(5) 8,776 9,230 18,920
============================
Cash 5,446 4,653 5,446
Debt 48,802 36,964 48,802
----------------------------
Debt, net of cash
$ 43,356 32,311 43,356
============================
(1) These amounts will not agree with the fiscal 2009 first quarter
10-Q filing due to the one store the Company closed in the third
quarter of fiscal 2009. These amounts will not agree with the fiscal
year end 2009 or fiscal 2010 first quarter 10-Q filing due to the one
store the Company closed in the second quarter of fiscal 2010. 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 the trailing twelve periods ended August 2, 2009 the average
open weeks for the Company's three non same-stores is 49 weeks.
(4) During fiscal year 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 the trailing twelve
periods ended August 2, 2009, these initiatives resulted in
approximately $5.9 million reduced SG&A expenses when compared to the
same prior year trailing twelve periods. The initiatives include, but
are 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 insurance and
travel expenses.
(5) In addition to continued efforts regarding the fiscal 2009 cost
reduction initiatives, the Company has also implemented new
initiatives for fiscal year 2010. The fiscal 2010 initiatives include,
but are not limited to, reduced point-of-sale hardware lease expense,
energy expense and accident reduction programs. These initiatives
achieved approximately $1.4 million in reduced SG&A savings for the
twenty-six weeks of fiscal 2010 when compared to the prior year same
period.
Duckwall-ALCO Stores, Inc. and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands, except share amounts)
(Unaudited)
August 2, August 3,
2009 2008
-------- --------
Assets
Current assets:
Cash and cash equivalents $ 5,446 $ 4,653
Receivables 5,656 3,743
Prepaid income taxes 423 2,423
Inventories 148,499 145,658
Prepaid expenses 4,067 4,106
Deferred income taxes 5,345 6,835
Assets held for sale 1,539 --
-------- --------
Total current assets 170,975 167,418
-------- --------
Property and equipment, at cost 100,761 91,907
Less accumulated depreciation 69,230 62,682
-------- --------
Net property and equipment 31,531 29,225
-------- --------
Property under capital leases, net of accumulated
amortization 2,231 3,972
Other non-current assets 164 249
Deferred income taxes 31 3,078
-------- --------
Total assets $204,932 $203,942
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 1,406 $ 1,319
Current maturities of capital lease obligations 1,903 1,828
Accounts payable 25,682 35,879
Accrued salaries and commissions 4,632 5,092
Accrued taxes other than income 4,792 4,338
Self-insurance claim reserves 4,841 4,205
Other current liabilities 4,548 6,815
-------- --------
Total current liabilities 47,804 59,476
Long-term debt, less current maturities 2,151 3,557
Notes payable under revolving loan 41,308 26,257
Capital lease obligations - less current maturities 2,034 4,002
Deferred gain on leases 4,405 4,792
Deferred income taxes 160 --
Other noncurrent liabilities 1,662 1,457
-------- --------
Total liabilities 99,524 99,541
-------- --------
Stockholders' equity:
Common stock, $.0001 par value, authorized
20,000,000 shares; issued and outstanding
3,797,947 shares and 3,820,591 shares,
respectively 1 1
Additional paid-in capital 39,002 38,590
Retained earnings 66,405 65,810
-------- --------
Total stockholders' equity 105,408 104,401
-------- --------
Total liabilities and stockholders' equity $204,932 $203,942
======== ========