Duckwall-ALCO Takes Strategic Actions to Focus on ALCO Stores and Enhance Profitability
November 29 2010 - 10:00AM
Duckwall-ALCO Stores, Inc. (Nasdaq:DUCK) today announced strategic
actions it believes will better allocate shareholders' capital and
improve profitability. The Company will close 44 Duckwall stores
and redeploy the capital into higher-return ALCO stores. The
Company, which currently operates 214 broad line ALCO stores in 23
states, intends to change its corporate name to ALCO Stores, Inc.,
to reflect its new strategic focus. The name change will likely
take place in fiscal 2012.
Rich Wilson, President and Chief Executive Officer, commented:
"After careful analysis, we have concluded that the small,
limited-selection Duckwall stores no longer meet the needs of most
shoppers. These stores account for only 3.9% of sales and little or
no profit. Duckwall locations, averaging just 6,755 square feet,
consume a disproportionate share of resources in distribution,
back-office support, inventory investment and other costs. Plus,
the necessary technology upgrades to bring these stores into the
corporate IT infrastructure would be cost-prohibitive. These
factors led us to conclude that the best course of action is to
close the Duckwall stores. We expect that redeploying the resources
used in the Duckwall stores to our more productive ALCO stores will
improve the Company's earnings."
Wilson added, "Making this change will enable the Company to
focus on maximizing the performance of our ALCO stores. In the past
eight months, we have upgraded all of the Company's ALCO stores,
averaging 25,446 square feet, to better serve consumers and offer
expanded selections of food and consumables. ALCO customers are
telling us they like the wider aisles, better lighting, expanded
food assortment and upgraded selection of merchandise."
Among the 400 new items in ALCO stores are high-quality,
lower-cost "Best Choice" and "Always Save" grocery and paper
products. These private-label brands are provided through a new
partnership with Associated Wholesale Grocers (AWG), which allows
ALCO stores to reduce inventory, improve turnover and lower
expenses at its distribution facility in Abilene, Kansas. "Our
relationship with AWG will allow us to grow profitability in the
coming months," Wilson noted.
Wilson added that consumers have responded positively to the
many changes, improving the recent sales trends in ALCO stores and
the productivity of space and inventory. Conversely, sales at
Duckwall stores have been declining in recent years.
The 44 Duckwall stores have a total of 267 full- and part-time
associates. Forty-three of the stores will close permanently and
one Duckwall store in Hettinger, ND, will reopen as an ALCO store.
Customers of a number of the Duckwall stores will find broad line
ALCO stores located within driving distance.
The Company expects to record expenses of approximately $1.8
million during the fourth quarter for closing costs attributable to
severance, lease liability, inventory liquidation and other related
costs. Upon conclusion of the closing process, the Company expects
to redeploy approximately $4.0 million in capital to the ALCO
stores.
Wilson concluded, "This was not an easy decision to make, and we
know it will have an impact on our employees and the local
communities we serve. We wish to express our thanks to the many
customers who have become our friends over the years, and we also
thank all of our Duckwall employees who have served our Company
faithfully during that time."
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 214 ALCO stores,
the Company is proud to have continually provided excellent
products at good value prices to its customers for 109 years. To
learn more about the company 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"). Forward-looking statements can be identified by the
inclusion of "will," "believe," "intend," "expect," "plan,"
"project" and similar future-looking terms. You should not rely
unduly on these forward-looking statements. These forward-looking
statements reflect management's current views and projections
regarding economic conditions, retail industry environments, and
Company performance. Forward-looking statements inherently involve
risks and uncertainties, and, accordingly, actual results may vary
materially. 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.
CONTACT: Duckwall-ALCO Stores, Inc.
Wayne S. Peterson, Senior Vice President -
Chief Financial Officer
785-263-3350 X164
wpeterson@ALCOstores.com
Hagen and Partners
Debbie Hagen
913-652-6547
dhagen@hagenandpartners.com
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