DUCK Alco Stores, Inc. (MM)

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 fourth quarter and fiscal year ended January 29, 2012.

Net sales from continuing operations for the fourth quarter of fiscal 2012 increased 1.0% to $137.5 million, compared to fourth quarter of fiscal 2011. Same-store sales, excluding fuel center sales, for the fourth quarter of fiscal 2012 decreased 0.6% to $133.4 million, compared to fourth quarter of fiscal 2011. Net sales from continuing operations for fiscal year 2012 increased 4.4% to $482.8 million, compared to fiscal year 2011. Same-store sales, excluding fuel center sales, for fiscal year 2012 increased 3.0% to $467.7 million.

Net earnings for the fourth quarter of fiscal 2012 were $0.8 million, or $0.22 per diluted share, compared to $0.8 million, or $0.21 per diluted share, for the fourth quarter of fiscal 2011.  Net earnings for fiscal 2012 were $1.7 million, or $0.43 per diluted share, compared to a net loss of $4.6 million, or $1.20 per diluted share, for fiscal year 2011. Earnings from continuing operations, net of tax, for the fourth quarter of fiscal 2012 were $0.9 million, or $0.23 per diluted share, compared to $1.9 million, or $0.49 per diluted share, for the fourth quarter of fiscal 2011. Earnings from continuing operations, net of tax, for fiscal 2012 were $1.9 million, or $0.48 per diluted share, compared to a net loss of $3.5 million, or $0.90 per diluted share, for fiscal 2011.  Both Net Earnings and Earnings from Continuing Operations, for fiscal 2012, included other operating income of $1.7 million, after tax, related to an insurance settlement due to wind and hail damage. In addition, during the fourth quarter of fiscal 2012, the Company elected to change its method of accounting for inventory from the retail inventory method to the weighted average cost method. Had the Company not changed its policy for accounting for inventory Net Earnings and Earnings from Continuing Operations would have been approximately $1.9 million less, after tax, for fiscal 2012.    

Richard Wilson, President and CEO, commented, "We are excited about the many improvements that have taken place throughout the Company this year. We are also encouraged by our sales and net earnings growth over the prior year's results. While net sales were negatively impacted during the fourth quarter of fiscal 2012 as a result of unseasonably warm temperatures, we were still able to achieve same-store sales increases for the full year over fiscal 2011. We attribute this turnaround to our merchandising strategies and enhanced product mix, which is providing ALCO customers with better value and a more organized shopping environment. In addition, net earnings improvement over the prior year has been achieved through cost-reduction initiatives."

Investor Conference Call

The Company will host an investor conference call at 10:00 a.m. Central Time on Friday, April 13, 2012, to discuss operating results for the fourth quarter and fiscal year ended January 29, 2012. The dial-in number for the conference call is 888-221-9588 (international/local participants dial 913-981-5546), and the Conference Code is 5403523. 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 April 13, 2012 through April 18, 2012, by dialing 888-203-1112 (international/local participants dial 719-457-0820), and the Replay Code is 5403523. 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-K.

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 214 ALCO stores, the Company is proud to have continually provided excellent products at good value prices to its customers for 111 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.It just
Statements of Operations
Fiscal Years Ended January 29, 2012 and January 30, 2011
(dollars in thousands, except share and per share amounts)
	(unaudited)		(unaudited)
	For the Thirteen Week Periods Ended		For the Fifty-Two Week Periods Ended
	January 29, 2012	January 30, 2011	January 29, 2012	January 30, 2011
Net sales	$ 137,534	136,197	482,767	462,572
Cost of sales	98,134	96,311	336,587	320,336
Gross margin	39,400	39,886	146,180	142,236
Selling, general and administrative	35,210	33,106	132,957	134,567
Depreciation and amortization	2,221	2,466	8,650	9,997
Total operating expenses	37,431	35,572	141,607	144,564
Other operating income	--	--	2,270	--
Operating income (loss) from
continuing operations	1,969	4,314	6,843	(2,328)
Interest expense	871	1,092	4,207	3,502
Earnings (loss) from continuing
operations before income taxes	1,098	3,222	2,636	(5,830)
Income tax expense (benefit)	198	1,351	777	(2,364)
Earnings (loss) from continuing operations	900	1,871	1,859	(3,466)
Earnings (loss) from discontinued
operations, net of income tax benefit	(68)	(1,062)	(204)	(1,169)
Net earnings (loss)	$ 832	809	1,655	(4,635)
Earnings (loss) per share
Basic
Continuing operations	$ 0.23	0.49	0.48	(0.90)
Discontinued operations	$ (0.02)	(0.28)	(0.05)	(0.30)
Net earnings (loss) per share	$ 0.22	0.21	0.43	(1.20)
Earnings (loss) per share
Diluted
Continuing operations	$ 0.23	0.49	0.48	(0.90)
Discontinued operations	$ (0.02)	(0.28)	(0.05)	(0.30)
Net earnings (loss) per share	$ 0.22	0.21	0.43	(1.20)
Weighted-average shares outstanding:
Basic	3,842,745	3,841,895	3,842,745	3,841,895
Diluted	3,842,745	3,841,895	3,842,745	3,841,895

Duckwall-Alco Stores, Inc.
Schedule of Adjusted EBITDA
(dollars in thousands, except share and per share amounts)
(unaudited)
		For the Thirty-Nine		Trailing Twelve	For the Thirteen
	52 Weeks	Week Periods Ended		Period Ended	Week Periods Ended		52 Weeks
		October 30,	October 31,	October 30,	January 29,	January 30,
	Fiscal 2011	2011	2010	2011	2012	2011	Fiscal 2012
Net earnings (loss) from continuing operations (1)	$ (3,466)	959	(5,336)	2,829	901	1,870	1,860
Plus:
Interest	3,502	3,336	2,410	4,428	871	1,092	4,207
Taxes (1)	(2,364)	579	(3,715)	1,930	198	1,351	777
Depreciation and amortization (1)	9,997	6,429	7,531	8,895	2,221	2,466	8,650
Share-based compensation	333	274	267	340	(17)	66	257
Preopening store costs (2)	543	236	492	287	321	51	557
Executive and staff severance	540	131	540	131	12	--	143
(Gain) loss asset disposals	74	(126)	(7)	(45)	378	81	252
Insurance proceeds (4)	--	(2,270)	--	(2,270)	--	--	(2,270)
AWG transition costs	210	--	210	--	--	--	--
= Adjusted EBITDA	$ 9,369	9,548	2,392	16,525	4,885	6,977	14,433
Cash	$ 4,189	3,125	5,356	3,125	2,491	4,189	2,491
Debt	59,072	80,210	64,835	80,210	65,437	59,072	65,437
Debt, net of cash	$ 54,883	77,085	59,479	77,085	62,946	54,883	62,946
(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 January 29, 2012 the average open weeks for the Company's non same-stores was 20 weeks.
(4) On September 9, 2011, the Company received a $2.3 million settlement from Factory Mutual Insurance Company for damage sustained during the second quarter of fiscal 2012, due to wind and hail.

Duckwall-ALCO Stores, Inc.
Balance Sheets
(dollars in thousands, except share and per share amounts)
	(unaudited)
	January 29, 2012	January 30, 2011
Assets
Current assets:
Cash	$ 2,491	$ 4,189
Receivables	10,334	6,847
Prepaid income taxes	--	168
Inventories	156,214	151,079
Prepaid expenses	3,603	3,720
Deferred income taxes	5,607	2,563
Property held for sale	568	884
Total current assets	178,817	169,450
Property and equipment, at cost:
Land and land improvements	1,508	1,496
Buildings and building improvements	10,488	11,828
Furniture, fixtures and equipment	71,518	69,924
Transportation equipment	861	1,305
Leasehold improvements	19,289	16,449
Construction work in progress	1,177	350
Total property and equipment	104,841	101,352
Less accumulated depreciation and amortization	76,563	72,788
Net property and equipment	28,278	28,564
Property under capital leases	24,054	22,254
Less accumulated amortization	11,498	10,727
Net property under capital leases	12,556	11,527
Deferred income tax - non current	--	2,180
Other non-current assets	754	990
Total assets	$ 220,405	$ 212,711

Duckwall-ALCO Stores, Inc.
Balance Sheets
(dollars in thousands, except share and per share amounts)
	(unaudited)
	January 29, 2012	January 30, 2011
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt	$ --	$ 1,414
Current maturities of capital lease obligations	570	703
Accounts payable	26,695	25,970
Accrued salaries and commissions	3,984	4,133
Accrued taxes other than income	4,845	4,822
Self-insurance claim reserves	4,112	4,139
Other current liabilities	4,327	4,608
Total current liabilities	44,533	45,787
Notes payable under revolving loan	52,063	45,282
Capital lease obligations - less current maturities	12,804	11,673
Deferred gain on leases	3,439	3,826
Deferred income taxes	643	--
Other noncurrent liabilities	2,483	1,850
Total liabilities	115,965	108,418
Stockholders' equity:
Common stock, $.0001 par value,
authorized 20,000,000 shares; 3,842,745 and 3,841,895
shares issued and outstanding, respectively	1	1
Additional paid-in capital	40,115	40,003
Retained earnings	64,324	64,289
Total stockholders' equity	104,440	104,293
Total liabilities and stockholders' equity	$ 220,405	$ 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