Duckwall-ALCO Stores, Inc. (Nasdaq:DUCK), which specializes in
providing a superior selection of essential consumer products for
everyday life in underserved communities, today announced operating
results for its second quarter ended July 31, 2011.
Net sales from continuing operations for the second quarter of
fiscal 2012 increased 7.9% to $122.0 million, compared to second
quarter of fiscal 2011.Same-store sales, excluding fuel center
sales, increased 7.2%. Net sales from continuing operations for the
first half of fiscal 2012 increased 6.8% to $236.2 million,
compared to a year earlier. Same-store sales, excluding fuel center
sales, increased 5.2%.
Net earnings for the second quarter of fiscal 2012 were $1.2
million, or $0.32 per diluted share, compared to a net loss of $1.1
million, or $0.28 per diluted share, for the second quarter of
fiscal 2011. Net loss for the first half of fiscal 2012 was
$0.6 million, or $0.16 per diluted share, compared to a net loss of
$3.3 million, or $0.87 per diluted share, for the same period of
the prior year.
Richard Wilson, President and CEO, commented, "The improved
operating results in the first half of fiscal 2012 demonstrate the
progressive benefit of changes we have
implemented. Merchandising strategies and cost-reduction
initiatives have enabled us to deliver strong same-store sales
growth while achieving better operating results as we progress
through the year. Gross margin has improved from first to
second quarter as a result of the increased sales performance of
departments such as Apparel, Housewares and
Domestics. Top-line growth continues to be strong in other
departments such as Consumables, Electronics, and Sporting
Goods."
Wilson added, "While the Company maintains a primary focus on
serving small-town America, we are excited to announce an addition
to our growth strategy. We are launching a pilot project to add
future store locations in selected urban markets where the ALCO
value proposition and shopping experience can offer superior
convenience to consumers. During the second half of fiscal
2012, the Company anticipates opening ALCO stores in Grand Prairie,
Texas (a suburb of Dallas, Texas), and in Houston, Texas. We
believe these stores in more densely populated areas will reach a
higher volume of customers with merchandise that meets their basic
daily shopping needs."
Wilson concluded, "We continue to build momentum across the
Company and are focused on achieving further improvement of the
business through future initiatives."
During the second quarter, the Company entered a five-year
revolving credit agreement with Wells Fargo Bank, National
Association and Wells Capital Finance, LLC. The $120 million
revolving credit facility replaced the Company's previous $120
million credit facility and expires July 20, 2016. Benefits include
a 150 basis point reduction in interest rates, access to more
availability through an increase of advance rates on collateral, a
streamlined treasury management process and an extended term. The
Company recognized a one-time, non-cash after-tax charge of
approximately $0.3 million, or $0.08 per share, in the second
quarter ended July 31, 2011. This charge was the result of
accelerated recognition of certain deferred financing fees from the
Company's previous revolving credit agreement.
The Company disclosed an anticipated insurance settlement that
will benefit third-quarter earnings. On June 1, 2011, the Company's
corporate office and distribution center in Abilene, Kansas,
sustained cosmetic roof damage as the result of wind and
hail. On August 29, 2011, the Company received notification
from the insurer of a tentative settlement for an appearance
allowance for the property damage. The insurer noted that no repair
is needed or advised. The Company anticipates it will finalize
the settlement with the insurer and receive proceeds during the
third quarter of fiscal 2012. At that time, the Company
intends to record estimated pre-tax income of approximately $2.0
million related to the settlement.
Investor Conference Call
The Company will host an investor conference call at 10:00 a.m.
Central Time on Friday, September 9, 2011, to discuss operating
results for the second quarter ended July 31, 2011. The
dial-in number for the conference call is 877-704-5378
(international/local participants dial 913-312-0416), and the
Confirmation Code is 4473968. Parties interested in
participating in the conference call should dial in approximately
five minutes prior to 10:00 a.m. Central Time. A replay of the
call will be available after 1:30 p.m. Central Time September 9,
2011, through September 13, 2011, by dialing 888-203-1112
(international/local participants dial 719-457-0820), and the
Confirmation Code is 4473968. 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 in comparing 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 213 ALCO
stores, the Company is proud to have continually provided excellent
products at good value prices to its customers for 110 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.
Duckwall-ALCO Stores,
Inc. |
Statements of
Operations |
(dollars in thousands, except
share and per share amounts) |
(Unaudited) |
|
|
|
|
|
|
Thirteen Week
Periods Ended |
Twenty-Six Week
Periods Ended |
|
July 31, 2011 |
August 1, 2010 |
July 31, 2011 |
August 1, 2010 |
Net sales |
$ 121,991 |
$ 113,051 |
$ 236,214 |
$ 221,145 |
Cost of sales |
84,072 |
76,990 |
165,195 |
151,968 |
|
|
|
|
|
Gross margin |
37,919 |
36,061 |
71,019 |
69,177 |
|
|
|
|
|
Selling, general and administrative |
32,095 |
34,628 |
64,961 |
67,883 |
Depreciation and amortization expenses |
2,138 |
2,489 |
4,327 |
4,963 |
|
|
|
|
|
Total operating expenses |
34,233 |
37,117 |
69,288 |
72,846 |
|
|
|
|
|
Operating income (loss) from continuing
operations |
3,686 |
(1,056) |
1,731 |
(3,669) |
|
|
|
|
|
Interest expense |
1,649 |
721 |
2,718 |
1,395 |
|
|
|
|
|
Earnings (loss) from continuing operations
before income taxes |
2,037 |
(1,777) |
(987) |
(5,064) |
|
|
|
|
|
Income tax expense (benefit) |
755 |
(609) |
(369) |
(1,674) |
|
|
|
|
|
Earnings (loss) from continuing
operations |
1,282 |
(1,168) |
(618) |
(3,390) |
|
|
|
|
|
Earnings (loss) from discontinued operations,
net of income tax expense (benefit)of $32, ($67), $8, and ($35),
respectively |
(52) |
109 |
(12) |
57 |
Net income (loss) |
$ 1,230 |
$ (1,059) |
$ (630) |
$ (3,334) |
|
|
|
|
|
Earnings (loss) per share |
|
|
|
|
Basic |
|
|
|
|
Continuing operations |
$ 0.33 |
$ (0.31) |
$ (0.16) |
$ (0.89) |
Discontinued operations |
(0.01) |
0.03 |
0 |
0.02 |
|
|
|
|
|
Net earnings (loss) per
share |
$ 0.32 |
$ (0.28) |
$ (0.16) |
$ (0.87) |
|
|
|
|
|
Earnings (loss) per share |
|
|
|
|
Diluted |
|
|
|
|
Continuing operations |
$ 0.33 |
$ (0.31) |
$ (0.16) |
$ (0.89) |
Discontinued operations |
(0.01) |
0.03 |
0.00 |
0.02 |
|
|
|
|
|
Net earnings (loss) per
share |
$ 0.32 |
$ (0.28) |
$ (0.16) |
$ (0.87) |
|
|
|
|
|
Weighted-average shares outstanding: |
|
|
|
|
Basic |
3,842 |
3,836 |
3,842 |
3,823 |
Diluted |
3,842 |
3,836 |
3,842 |
3,823 |
|
|
|
|
|
|
Thirteen Week
Periods Ended |
Twenty-Six Week
Periods Ended |
|
|
|
July 31, 2011 |
August 1, 2010 |
July 31, 2011 |
August 1, 2010 |
|
|
|
|
|
Same-store adjusted gross margin dollar
change |
7.3% |
(1.5%) |
5.1% |
(1.8%) |
Same-store SG&A dollar change |
(3.6%) |
2.5% |
(2.1%) |
0.8% |
Same-store total customer count change |
(1.9%) |
(4.7%) |
(3.0%) |
3.9% |
Same-store average sale per ticket
change |
6.8% |
0.7% |
8.5% |
(0.9%) |
|
|
|
Duckwall-ALCO Stores,
Inc. |
Schedule of Adjusted
EBITDA |
(dollars in thousands, except
share and per share amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Thirteen
Week Periods Ended |
Trailing 52 Weeks
Ended |
Thirteen
Week Periods Ended |
Trailing 52 Weeks
Ended |
(dollars in
thousands) |
Fiscal 2011 |
May 1, 2011 |
May 2, 2010 |
May 1, 2011 |
July 31, 2011 |
August 1, 2010 |
July 31, 2011 |
Net earnings (loss) from continuing
operations (1) |
$ (3,471) |
(1,900) |
(2,221) |
(3,150) |
1,282 |
(1,168) |
(700) |
Plus: |
|
|
|
|
|
|
|
Interest |
3,502 |
1,069 |
674 |
3,897 |
1,649 |
721 |
4,825 |
Tax expense (benefit) (1) |
(2,414) |
(1,124) |
(1,065) |
(2,473) |
755 |
(609) |
(1,109) |
Depreciation and amortization (1) |
10,001 |
2,189 |
2,474 |
9,716 |
2,138 |
2,489 |
9,365 |
Share-based compensation |
333 |
100 |
81 |
352 |
82 |
119 |
315 |
Preopening store costs (2) |
543 |
— |
199 |
344 |
3 |
183 |
164 |
Executive and staff severance |
540 |
76 |
— |
616 |
55 |
— |
671 |
Store reset costs |
895 |
— |
— |
895 |
— |
— |
895 |
AWG transition costs |
210 |
— |
— |
210 |
— |
— |
210 |
=Adjusted EBITDA (1) (3)(4)(5) |
10,139 |
410 |
142 |
10,407 |
5,964 |
1,735 |
14,636 |
|
|
|
|
|
|
|
|
Cash |
4,189 |
5,720 |
5,186 |
5,720 |
6,431 |
3,690 |
6,431 |
Debt |
59,072 |
64,815 |
34,569 |
64,815 |
65,380 |
40,090 |
65,380 |
Debt, net of cash |
$ 54,883 |
59,095 |
29,383 |
59,095 |
58,949 |
36,400 |
58,949 |
|
|
|
|
|
|
|
|
(1) These amounts may not
agree with 10-Qs of previous quarters due to subsequent store
closures. These closed stores are now included 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 July 31, 2011 the average open weeks for the
Company's two, non-samestores was 40 weeks. |
(4) During fiscal year 2011,
the Company made changes in its executive management team and
warehouse operations. For the trailing twelve periods ended
July 31, 2011, these initiatives resulted in approximately $1.6
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. |
|
|
|
Duckwall-ALCO Stores,
Inc. |
Balance
Sheets |
(dollars in thousands, except
share and per share amounts) |
|
|
|
|
July 31, 2011 |
January 30,
2011 |
|
(Unaudited) |
|
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 6,431 |
$ 4,189 |
Receivables |
8,665 |
6,847 |
Prepaid income taxes |
158 |
168 |
Inventories |
160,133 |
151,079 |
Prepaid expenses |
3,992 |
3,720 |
Deferred income taxes |
2,940 |
2,563 |
Property held for sale |
856 |
884 |
Total current assets |
183,175 |
169,450 |
|
|
|
Property and equipment, at cost: |
|
|
Land and land improvements |
1,496 |
1,496 |
Buildings and building improvements |
11,847 |
11,828 |
Furniture, fixtures and equipment |
69,851 |
69,924 |
Transportation equipment |
803 |
1,305 |
Leasehold improvements |
16,559 |
16,449 |
Construction work in progress |
1,688 |
350 |
Total property and equipment |
102,244 |
101,352 |
Less accumulated depreciation and
amortization |
75,768 |
72,788 |
Net property and equipment |
26,476 |
28,564 |
|
|
|
Property under capital leases |
22,254 |
22,254 |
Less accumulated amortization |
11,109 |
10,727 |
Net property under capital leases |
11,145 |
11,527 |
|
|
|
Deferred income taxes — non current |
2,082 |
2,180 |
Other non-current assets |
886 |
990 |
Total assets |
223,764 |
212,711 |
|
|
|
Liabilities and Stockholders'
Equity |
|
|
Current liabilities: |
|
|
Current maturities of long-term debt |
$ 653 |
$ 1,414 |
Current maturities of capital lease
obligations |
559 |
703 |
Accounts payable |
32,017 |
25,968 |
Accrued salaries and commissions |
3,725 |
4,133 |
Accrued taxes other than income |
5,003 |
4,822 |
Self-insurance claim reserves |
4,008 |
4,139 |
Other current liabilities |
4,372 |
4,608 |
Total current liabilities |
50,337 |
45,787 |
|
|
|
Notes payable under revolving loan |
52,798 |
45,282 |
Capital lease obligations - less current
maturities |
11,370 |
11,673 |
Deferred gain on leases |
3,632 |
3,826 |
Other non-current liabilities |
1,916 |
1,850 |
Total liabilities |
120,053 |
108,418 |
|
|
|
Stockholders' equity: |
|
|
Common stock, $.0001 par value,
20,000,000 authorized shares; 3,872,745 and 3,841,895 shares issued
and outstanding at July 31, 2011 and January 30, 2011
respectively |
1 |
1 |
Additional paid-in capital |
40,051 |
40,003 |
Retained earnings |
63,659 |
64,289 |
Total stockholders' equity |
103,711 |
104,293 |
Total liabilities and stockholders'
equity |
$ 223,764 |
$ 212,711 |
CONTACT: Wayne S. Peterson
Senior Vice President--Chief Financial Officer
785-263-3350 X164
email: wpeterson@alcostores.com
or
Debbie Hagen
Hagen and Partners
913-642-6363
email: dhagen@hagenandpartners.com
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