ABILENE, Kan., June 11, 2007 (PRIME NEWSWIRE) -- Duckwall-ALCO Stores, Inc. (Nasdaq:DUCK), which operates 255 retail stores in 21 states, today announced its operating results for the first quarter ending April 29, 2007.
Net loss for the first quarter was ($2.2 million), or ($0.59) per basic share, compared with net earnings of $541,000, or $0.14 per diluted share, in the first quarter of the prior fiscal year. The decline is attributable to increases in operating expenses offset by increased gross margin.
Net sales from continuing operations for the first quarter increased 2.9% to $111.4 million, while same-store sales increased 1.2%. Sales were unfavorably impacted by categories dependent on the weather and increases in the price of gasoline.
Gross margin for the first quarter was 30.9% compared to 29.9% in the first quarter of the prior year. The increase is due to increased markon percentage (1.0%) and vendor support (0.5%) and was negatively impacted by increased lower margin fuel sales (0.5%).
Operating expenses for the first quarter increased to 31.7% of sales from 27.4% in the prior-year quarter. Items that impacted the change include:
* Increase of $750,000 for non-comparable store expenses.
* Decrease in CO-OP advertising offset to expense of $900,000 for
the quarter. Fiscal 2008 CO-OP offset is expected to be
consistent with fiscal 2007.
* Increased expenses relating to the IT initiative of $832,000
which will continue to trend higher than fiscal year 2007.
* Increased store maintenance expenses of $620,000. Maintenance
expenses for remaining quarters of fiscal 2008 are expected to be
consistent with fiscal 2007.
* Increased professional accounting fees of $450,000 due to
increased audit fees for fiscal 2007.
* Increased vacation expense of $400,000 due to increased wages,
number of employees and timing of vacation. The vacation expense
for fiscal 2008 is expected to be consistent with fiscal 2007.
* Additional planned overhead associated with preparation of more
aggressive store rollout plan and strengthening our internal
controls of $250,000.
* Increased inventory service fees of $247,000 due to accelerated
store physical inventories. Inventory service fees for fiscal
2008 are expected to be consistent with fiscal 2007.
Commenting on the results of the first quarter of fiscal 2008, Bruce Dale, President and CEO stated, "The timing of several expense items negatively affected our first quarter compared with last year's first quarter. Nevertheless, our primary challenge in the quarter was our sales shortfall. We missed our sales plan by over $5 million dollars for the quarter, with only a 1.2% comparable store increase. Inclement weather, particularly in February and April, was the primary reason. We remain confident in our business model."
Guidance Update
The Company also updates its Adjusted EBITDA guidance for the full fiscal year ended February 3, 2008, to the range of $27 million to $30 million. This update is due to the results of the first quarter of fiscal 2008. The Company is also updating the number of new stores to be opened during fiscal 2008 to 18 -- 20.
Store Operations Update
Since January 28, 2007, the Company has opened two new ALCO stores located in Illinois and Indiana and closed three locations, one in Texas, one in Kansas and one in Nebraska. The locations in Kansas and Texas were destroyed by tornados.
Investor Conference Call
The Company will host an investor conference call at 3:00 p.m. Central Daylight Time on June 12, 2007, to discuss operating results in greater detail for the quarter ended April 29, 2007. The dial-in number for the conference call is 800-811-0667 (international/local participants dial 913-981-4901), and the Confirmation Code is 7243518. Parties interested in participating in the conference call should dial in approximately five minutes prior to 3:00 p.m. Central Daylight Time. A replay of the call will be available two hours after completion from June 12 through June 26 by dialing 888-203-1112 or for international/local callers by dialing 719-457-0820. The Replay Passcode is 7243518.
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 255 stores across 21 states, we are proud to have continually provided high quality products at good value prices to our customers for 106 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
----------------------
April 29, April 30,
2007 2006
----------------------
Net sales $ 111,429 $ 108,283
Cost of sales 77,039 75,960
--------- ---------
Gross margin 34,390 32,323
Selling, general and
administrative 35,340 29,625
Depreciation and amortization 1,864 1,604
--------- ---------
Total operating expenses 37,204 31,229
Operating income from continuing
operations (2,814) 1,094
Interest expense 758 571
--------- ---------
Earnings from continuing
operations before income taxes (3,572) 523
Income tax expense (1,412) 198
--------- ---------
Earnings from continuing
operations (2,160) 325
Earnings / (loss) from
discontinued operations,
net of income tax (72) 216
Net earnings $ (2,232) $ 541
========= =========
Per share data (diluted):
Earnings from continuing
operations $ (0.57) $ 0.08
Net earnings $ (0.59) $ 0.14
Weighted-average shares
outstanding:
Basic 3,800 3,788
Diluted 3,800 3,810
Supplemental Data: Thirteen Weeks Ended
April 29, April 30,
2007 2006
========================
Same Store Sales change 1.2% 6.6%
Total customer count change (2.7)% 5.0%
Average sale per ticket change 3.7% 6.4%
EBITDA:
Earnings (loss) from continuing
operations $ (2,160) $ 325
Plus interest 758 571
Plus taxes (1,412) 198
Plus depreciation 1,864 1,604
Plus stock option expense 282 46
---------- ----------
EBITDA from continuing operations $ (668) $ 2,744
========== ==========
Average annualized new store sale
performance on prototype stores $ 2,430
Incremental expenses related to IT
Initiative* $ 832 $ 172
*(excludes incremental depreciation
and additional costs related to
performing SKU level inventories)
DUCKWALL-ALCO STORES, INC.
Consolidated Balance Sheet
(In thousands)
Unaudited
April 29, April 30,
2007 2006
--------------------
Assets
Current assets:
Cash and cash equivalents $ 4,986 $ 2,809
Receivables 4,571 4,058
Prepaid income tax 1,780 --
Inventories 158,820 143,136
Prepaid expenses 2,957 2,312
Deferred income taxes 3,037 --
Property held for sale -- 350
Total current assets 176,151 152,665
-------- --------
Property and equipment 88,619 95,478
Less accumulated amortization 65,400 64,817
Net property and equipment 23,219 30,661
-------- --------
Property under capital leases,
net of accumulated amortization 6,447 6,482
Other non-current assets 35 29
Deferred income taxes 5,580 1,363
Total assets $211,432 $191,200
======== ========
Liabilities and Stockholders' Equity
Current Liabilities:
Current maturities of capital
lease obligations $ 2,060 $ 1,878
Accounts payable 39,487 31,542
Income taxes payable -- 348
Accrued salaries and commissions 4,012 4,057
Accrued taxes other than income 5,173 5,153
Other current liabilities 3,714 2,740
Self-insurance claim reserve 4,719 4,137
Deferred income taxes -- 37
-------- --------
Total current liabilities 59,165 49,892
Notes payable under revolving loan 34,076 30,300
Capital lease obligations, less
current maturities 6,305 6,835
Deferred gain on leases 5,276 1,112
Other noncurrent liabilities 2,477 275
Total liabilities 107,299 88,414
-------- --------
Stockholders' equity
Common Stock, $.0001 par value,
authorized 20,000,000 shares
in 2006 and 2005; issued and
outstanding 3,804,216 and
3,790,386 shares in 2007 and
2006, respectively 1 1
Additional paid-in capital 37,735 36,509
Retained earnings 66,397 66,276
Total stockholders' equity 104,133 102,786
Total liabilities and
stockholders' equity $211,432 $191,200
======== ========