Duckwall-ALCO Stores Reports Operating Results for First Thirteen Weeks of Fiscal 2011
June 10 2010 - 4:15PM
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 first quarter ending May 2, 2010.
Net sales from continuing operations for the first quarter of
fiscal 2011 decreased 1.9% to $113.0 million, and same-store sales
decreased 2.7%.
Net loss for the first quarter was $1.9 million, or $0.51 per
diluted share, compared to a net loss of $50,000, or $0.01 per
diluted share, for the first quarter of the fiscal 2010.
Richard Wilson, President and CEO, commented, "First-quarter
results were negatively impacted by weak sales, which reduced gross
margin contribution by approximately $950,000. We needed to take
$1.4 million in clearance markdowns to address aged inventory, and
sales mix also impacted results by approximately $630,000. We
continued to make progress on SG&A expense with an overall
reduction of $789,000 primarily as a result of additional savings
on store labor and benefits. Our focus in fiscal 2011 will be on
executing five core initiatives designed to increase store traffic,
maximize profitability and drive shareholder value. In addition, we
have significantly strengthened our balance sheet by reducing
debt."
The Company is committed to executing the following five core
initiatives for fiscal 2011:
- Providing "Everyday Value" with a core assortment of high
quality, competitively priced merchandise.
- Driving traffic with expanded food and consumable
assortments.
- Improving profitability and prices with an emphasis on growing
"Private Label" products.
- Rationalizing assortments to provide a better shopping
experience and improve operating results.
- Building store productivity by refining space allocation and
productivity metrics.
Investor Conference Call
The Company will host an investor
conference call at 10:00 a.m. Central Daylight Time on June 11,
2010, to discuss operating results for the first quarter ended May
2, 2010. The dial-in number for the
conference call is 866-316-1367 (international/local participants
dial 913-312-1268), and the Confirmation Code is
7674121. 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 June 11, 2010 through June 16,
2010 by dialing 888-203-1112 or for international/local callers by
dialing 719-457-0820. The Replay Passcode is 7674121. 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 [loss] from
continuing 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
cash flow from operating activities. 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 256 stores,
Duckwall-ALCO Stores is proud to have continually provided
excellent products at good value prices to its customers for 109
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, the company's high
operating leverage in an environment of flat or declining consumer
spending, the economic viability of small rural towns the company
serves and macro-economic factors affecting, and potentially
affecting, the retail industry in general such as a decline in the
value of the US dollar against the currencies of countries from
which US retailers import product, the introduction of a national
sales tax or Value Added Tax, continued high levels of
unemployment, rising fuel prices and the high level of consumer
indebtedness. 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. |
Consolidated Statements
of Operations |
(dollars in thousands, except
share and per share amounts) |
(Unaudited) |
|
|
|
|
For the Thirteen Week
Periods Ended |
|
May 2, 2010 |
May 3, 2009 |
Net sales |
$ 113,023 |
115,160 |
Cost of sales |
77,852 |
76,712 |
Gross margin |
35,171 |
38,448 |
|
|
|
|
|
|
Selling, general and administrative |
34,814 |
35,603 |
Depreciation and amortization |
2,482 |
2,377 |
Total operating expenses |
37,296 |
37,980 |
|
|
|
Operating income (loss) from |
|
|
continuing operations |
(2,125) |
468 |
Interest expense, net |
674 |
537 |
|
|
|
Loss from continuing |
|
|
operations before income taxes |
(2,799) |
(69) |
Income tax benefit |
(1,011) |
(33) |
|
|
|
Loss from continuing operations |
(1,788) |
(36) |
|
|
|
Loss from discontinued |
|
|
operations, net of income tax
benefit |
(141) |
(14) |
Net loss |
$ (1,929) |
(50) |
|
|
|
Loss per diluted share |
|
Continuing operations |
$ (0.47) |
(0.01) |
Net loss per share |
$ (0.51) |
(0.01) |
|
|
|
Weighted-average shares
outstanding: |
Basic |
3,811 |
3,798 |
Diluted |
3,811 |
3,798 |
|
|
|
For the Thirteen Week
Periods Ended |
|
May 2, 2010 |
May 3, 2009 |
|
|
|
Supplemental Data: |
|
|
|
|
|
Same-store gross margin dollar change |
(2.1) % |
1.5 % |
Same-store SG&A dollar change |
(0.9) % |
(0.9)% |
Same-store total customer count change |
(3.0) % |
5.9% |
Same-store average sale per ticket
change |
0.7% |
3.5% |
|
|
|
|
|
|
For the Thirteen Week
Periods Ended |
Trailing Twelve Periods Ended |
|
Fiscal 2010 |
May 2, 2010 |
May 3, 2009 |
May 2, 2010 |
Net earnings (loss) from continuing
operations (1) |
$ 3,100 |
(1,788) |
(36) |
1,348 |
Plus: |
|
|
|
|
Interest |
2,149 |
674 |
537 |
2,286 |
Taxes (1) |
2,174 |
(1,011) |
(33) |
1,196 |
Depreciation and amortization (1) |
9,982 |
2,482 |
2,377 |
10,087 |
Share-based compensation |
757 |
81 |
185 |
653 |
Preopening store costs (2) |
128 |
199 |
-- |
327 |
Store transformation project costs |
2,096 |
-- |
1,378 |
718 |
=Adjusted EBITDA (1)(3)(4)(5) |
20,386 |
637 |
4,408 |
16,615 |
|
|
|
|
|
|
|
|
|
|
Cash |
5,164 |
5,186 |
8,208 |
5,186 |
Debt |
40,992 |
35,606 |
60,946 |
35,606 |
Debt, net of cash |
$ 35,828 |
30,420 |
52,738 |
30,420 |
|
|
|
|
|
(1) These amounts will not agree
with the fiscal year end 2010 10-K or fiscal 2010 first quarter
10-Q filing due to the five stores the Company closed since 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
been or will be opened and are incurred prior to the grand
opening of each store. |
(3) For the trailing twelve
periods ended May 2, 2010 the average open weeks for the Company's
two non same-stores is nine weeks. |
(4) The Company 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 $734 in
SG&A savings for the first quarter of fiscal 2010 when compared
to the prior year same period. |
(5) The store transformation
project completed in fiscal 2010 continues to provide SG&A
savings in fiscal 2011. This initiative achieved approximately
$458 in SG&A savings for the first quarter of fiscal 2011 when
compared to the prior year same period. |
Duckwall-ALCO Stores,
Inc. |
Consolidated Balance
Sheets |
(dollars in thousands, except
share and per share amounts) |
(Unaudited) |
|
|
|
|
May 2, 2010 |
May 3, 2009 |
Assets |
|
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 5,186 |
$ 8,208 |
Receivables |
5,852 |
5,104 |
Prepaid income taxes |
1,605 |
5,710 |
Inventories |
137,892 |
159,994 |
Prepaid expenses |
2,919 |
3,445 |
Deferred income taxes |
3,864 |
5,345 |
Assets held for sale |
1,331 |
1,539 |
Total current assets |
158,649 |
189,345 |
|
|
|
Property and equipment, at cost |
100,025 |
98,375 |
Less accumulated depreciation |
69,894 |
67,442 |
Net property and equipment |
30,131 |
30,933 |
|
|
|
Property under capital leases, net of
accumulated amortization |
1,329 |
2,601 |
Other non-current assets |
1,326 |
185 |
|
|
|
Total assets |
$ 191,435 |
$ 223,064 |
Duckwall-ALCO Stores,
Inc. |
Consolidated Balance
Sheets |
(dollars in thousands, except
share and per share amounts) |
(Unaudited) |
|
|
|
|
May 2, 2010 |
May 3, 2009 |
|
|
|
Liabilities and Stockholders'
Equity |
|
|
|
|
|
Current liabilities: |
|
|
Current maturities of long-term
debt |
$ 1,475 |
$ 1,384 |
Current maturities of capital lease
obligations |
1,312 |
1,878 |
Accounts payable |
26,452 |
35,128 |
Accrued salaries and
commissions |
4,835 |
5,408 |
Accrued taxes other than
income |
5,096 |
4,235 |
Self-insurance claim reserves |
4,697 |
5,266 |
Other current liabilities |
4,005 |
3,661 |
Total current liabilities |
47,872 |
56,960 |
|
|
|
Long-term debt, less current maturities |
1,036 |
2,511 |
Notes payable under revolving loan
agreement |
30,630 |
52,634 |
Capital lease obligations - less current
maturities |
1,153 |
2,539 |
Deferred gain on leases |
4,115 |
4,502 |
Deferred income taxes |
705 |
160 |
Other noncurrent liabilities |
1,761 |
1,642 |
Total liabilities |
87,272 |
120,948 |
Stockholders' equity: |
|
|
Common stock, $.0001 par value,
authorized 20,000,000 |
|
|
shares; issued and outstanding
3,828,102 shares |
|
|
and 3,797,947 shares,
respectively |
1 |
1 |
Additional paid-in capital |
39,672 |
38,741 |
Retained earnings |
64,490 |
63,374 |
Total stockholders' equity |
104,163 |
102,116 |
|
|
|
Total liabilities and stockholders'
equity |
$ 191,435 |
$ 223,064 |
CONTACT: Duckwall-ALCO Stores, Inc.
Donny R. Johnson, Executive Vice President -
Chief Financial Officer
785-263-3350 X164
djohnson@alcostores.com
Hagen and Partners
Debbie Hagen
913-652-6547
dhagen@hagenandpartners.com
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