ABILENE, Kan., Sept. 13, 2006 (PRIMEZONE) -- Duckwall-ALCO Stores, Inc. (Nasdaq:DUCK), which operates 253 retail stores in 21 states, today announced its operating results for the second quarter ending July 30, 2006.
Net earnings for the second quarter were $1.4 million, or $0.37 per diluted share, compared with a net loss of ($294,000), or ($0.07) per diluted share, in the second quarter of the prior fiscal year. Net income year-to-date was $2.0 million, or $0.51 per diluted share, compared with a net loss of ($3.0) million or ($0.71) per diluted share, in the prior fiscal year.
Net sales from continuing operations for the second quarter increased 11.3% to $120.7 million, while same-store sales increased 7.4% when compared with the prior-year quarter. Year-to-date sales from continuing operations increased 11.3% to $229.7 million, while same-store sales increased 7.0%.
President and CEO Bruce Dale stated, "We are pleased to report these positive earnings. The results for the quarter and year-to-date position us well going into the fall season. The strategies we have initiated are paying off. We approach the holiday season in high spirits and look forward to continued good news."
Gross margin for the second quarter remained flat at 30% compared to the second quarter of the prior year. Lower markdowns for the quarter were offset by increased freight costs. Gross margin year-to-date decreased 70 basis points to 29.9% from 30.6% in the prior-year. The increase in freight costs decreased the margin by 73 basis points. The margin was also negatively impacted 42 basis points by lower margins experienced on increased fuel sales at its fuel centers.
Operating expenses for the second quarter decreased 140 basis points to 27.4% of sales from 28.8% in the prior-year quarter. Operating expenses decreased on a year-to-date basis by 260 basis points to 28.1% from 30.7%. Incremental IT expenses for the second quarter related to the rollout of the previously announced IT initiative was approximately $248,000 and year-to-date was approximately $420,000.
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. During the second quarter ended July 30, 2006, the Company repurchased 3,337 shares at an average price of $30.46. There are 196,663 shares still authorized to be repurchased.
Sale-Leaseback Update
The Company has completed a sale-leaseback agreement for 11 of its locations. The proceeds from these agreements of approximately $11.2 million were used to reduce long-term debt. One location is currently still under construction and will be sold upon completion.
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 and closed one location in Wapokenta, OH. 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 September 13, 2006, to discuss operating results in greater detail for the quarter ended July 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 7214082. 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 September 13 through September 27 by dialing 888-203-1112 or for international/local callers by dialing 719-457-0820. The Replay Passcode is 7214082.
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 253 stores across 21 states, we are proud to have continually provided high quality products at good value prices to our customers for 105 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 Twenty-Six Weeks Ended
-------------------- ---------------------
July 30, July 31, July 30, July 31,
2006 2005 2006 2005
-------- -------- -------- --------
Net sales $120,748 $108,535 $229,735 $206,458
Cost of sales 84,527 75,909 160,983 143,197
-------- -------- -------- --------
Gross margin 36,221 32,626 68,752 63,261
Selling,
general and
administrative 31,448 29,831 61,303 60,422
Depreciation and
amortization 1,667 1,448 3,273 2,942
-------- -------- -------- --------
Total operating
expenses 33,115 31,279 64,576 63,364
Operating income
from continuing
operations 3,106 1,347 4,176 (103)
Interest expense 631 245 1,201 455
-------- -------- -------- --------
Earnings from
continuing operations
before income
taxes 2,475 1,102 2,975 (558)
Income tax
expense 1,034 390 1,224 (197)
-------- -------- -------- --------
Earnings from
continuing
operations 1,441 712 1,751 (361)
Earnings /(loss)
from discontinued
operations, net
of income tax (24) (1,006) 207 (2,663)
-------- -------- -------- --------
Net earnings $ 1,417 $ (294) $ 1,958 $ (3,024)
======== ======== ======== ========
Per share data (diluted):
Earnings from continuing
operations $0.38 $0.17 $0.46 ($0.08)
Net earnings $0.37 ($0.07) $0.51 ($0.71)
Weighted-average shares
outstanding:
Basic 3,793 4,066 3,791 4,252
Diluted 3,829 4,101 3,821 4,252
Supplemental Data:
Thirteen Weeks Twenty-Six Weeks
Ended Ended
July 30, July 31, July 30, July 31,
2006 2005 2006 2005
--------------------- -------------------
Same Store Sales
change 7.4% 3.5% 7.0% 1.7%
Total customer count
change 5.1% 8.2% 4.9% 1.5%
Average sale per
ticket change 6.3% 0.8% 6.2% 3.0%
EBITDA:
Income from continuing
operations $ 1,441 $ 712 $1,751 ($361)
Plus interest 631 245 1,201 455
Plus taxes 1,034 390 1,224 (197)
Plus depreciation 1,667 1,448 3,273 2,942
Plus 123R stock
option expense 226 -- 273 --
EBITDA from
continuing operations $ 4,999 $2,795 $7,722 $2,839
Average Annualized New
Store Sale performance
on prototype stores $ 2,284
Incremental expenses
related to IT
initiative $ 248 $ 420
DUCKWALL-ALCO STORES, INC.
Consolidated Balance Sheet
(In thousands)
Unaudited
July 30, July 31,
2006 2005
--------- --------
Assets
Current assets:
Cash and cash equivalents $ 1,686 $ 1,297
Receivables 4,062 2,402
Refundable income tax -- 1,865
Inventories 139,821 118,718
Prepaid expenses 2,712 2,310
Property held for sale -- 577
-------- --------
Total current assets 148,281 127,169
-------- --------
Property and equipment 88,780 87,685
Less accumulated amortization 65,222 63,464
-------- --------
Net property and equipment 23,558 24,221
-------- --------
Property under capital leases,
net of accum. amortization 7,078 2,287
Other non-current assets 62 108
Deferred income taxes 1,415 1,350
-------- --------
Total assets $180,394 $155,135
======== ========
Liabilities and Stockholders' Equity
Current Liabilities
Current maturities of capital
lease obligations $ 2,089 $ 856
Accounts payable 26,701 25,037
Accrued salaries and commissions 4,956 5,319
Accrued taxes other than income 4,664 4,925
Income taxes payable 432 --
Other current liabilities 2,454 3,602
Self-insurance claim reserve 4,181 2,293
Deferred income taxes 64 916
-------- --------
Total current liabilities 45,541 42,948
Notes payable under revolving
loan credit facility 18,136 4,495
Capital lease obligations, less
current maturities 7,140 3,298
Other noncurrent liabilities 5,148 1,420
-------- --------
Total liabilities 75,965 52,161
-------- --------
Stockholders' equity
Common Stock, $.0001 par value,
authorized 20,000,000 shares in
2006 and 2005; issued and
outstanding 3,792,515 and
4,017,939 shares in 2006 and
2005, respectively 1 1
Additional paid-in capital 36,735 42,211
Retained earnings 67,693 60,762
-------- --------
Total stockholders' equity 104,429 102,974
-------- --------
Total liabilities and stockholders'
equity $180,394 $155,135
======== ========