ALCO Stores, Inc. Reports Operating Results for First Half of Fiscal 2014

ALCO Stores, Inc. Reports Operating Results for First Half of Fiscal 2014

COPPELL, Texas, Sept. 17, 2013 (GLOBE NEWSWIRE) -- ALCO Stores, Inc.
(Nasdaq:ALCS), which specializes in providing a superior selection of
essential products for everyday life in small-town America, today announced
operating results for its second quarter ended August 4, 2013.

Net sales from continuing operations, excluding fuel, increased 3.9% to $122.4
million during the second quarter of fiscal 2014, compared to $117.9 million
in the second quarter of fiscal 2013. Same-store sales, excluding fuel
centers, increased 1.4% to $119.3 million during the second quarter of fiscal
2014. For the 26 weeks ended August 4, 2013, net sales from continuing
operations, excluding fuel, increased 2.0% to $236.2 million, compared to the
same period of the prior year. Same-store sales, excluding fuel centers,
decreased 0.8% to $229.4 million during the 26 weeks ended August 4, 2013.

Net income was $0.5 million, or $0.15 per diluted share, for the second
quarter of fiscal 2014 compared to net income of $2.0 million, or $0.52 per
diluted share, for the second quarter of fiscal 2013.

Results in the second quarter of fiscal 2014 included $1.8 million ($1.2
million net of tax benefit) of non-recurring expenses attributable to the
relocation of the corporate office and the pending merger. On an adjusted
basis, net income from continuing operations was $1.8 million, or $0.54 per
diluted share, for the second quarter of fiscal 2014.

Net loss for the 26 weeks ended August 4, 2013 was $1.2 million, or $0.36 per
diluted share, compared to net income of $0.7 million, or $0.18 per diluted
share, for the 26 weeks ended July 29, 2012.

Results in the first half of fiscal 2014 also included $1.8 million ($1.2
million net of tax benefit) of non-recurring expenses attributable to the
relocation of the corporate office and the pending merger. On an adjusted
basis, net income from continuing operations was $0.2 million, or $0.04 per
diluted share, for the 26 weeks ended August 4, 2013.

Richard Wilson, President and CEO, commented, "Operating results in the second
quarter benefited from an increase in average market basket and same-store
sales as ALCO shoppers embraced the value proposition and merchandise mix in
our stores. Excluding the non-recurring costs associated with our pending
merger and the now-completed headquarters move to the Dallas area, net income
per share increased modestly from the prior-year period. This summer also
marked the beginning of a strategic change for ALCO Stores following the July
25 announcement of a proposed merger agreement, which shareholders will read
about in the upcoming proxy filing."

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 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. 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 EBITDA, management also utilizesGAAP performance measures such as
gross margin return on investment, return on equity and cash flow from
operating activities. As a result, Adjusted EBITDAmay not reflect important
aspects of the results of the Company's operations.

ALCO Stores, Inc.

ALCO Stores, Inc. is a broad-line retailer, primarily located in small
underserved communities across 23 states.The Company has 213 ALCO stores that
offer both name brand and private label products of exceptional quality at
reasonable prices.We are proud to have continually provided friendly,
personal service to our customers for the past 112 years.To learn more about
the Company visit 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"). 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.

                             - Tables to follow -

ALCO Stores, Inc.
Balance Sheets
                                                                 
(dollars in thousands, except share data)            August 4,   February 3,
                                                      2013        2013
Assets                                                 (Unaudited) 
Current assets:                                                   
Cash                                                   $2,834      $3,160
Receivables                                            12,434      13,187
Inventories                                            174,528     166,671
Prepaid expenses                                       4,389       3,767
Deferred income taxes                                  4,079       3,081
Property held for sale                                 568         568
Total current assets                                   198,832     190,434
                                                                 
Property and equipment, at cost:                                  
Land and land improvements                             5,658       5,648
Buildings and building improvements                    10,500      10,499
Furniture, fixtures and equipment                      78,118      74,066
Transportation equipment                               988         988
Leasehold improvements                                 21,138      21,138
Construction work in progress                          5,575       5,083
Total property and equipment                           121,977     117,422
Less accumulated depreciation and amortization         85,631      81,794
Net property and equipment                             36,346      35,628
                                                                 
Property under capital leases                          26,972      26,972
Less accumulated amortization                          11,981      11,476
Net property under capital leases                      14,991      15,496
                                                                 
Deferred income taxes — non current                    1,538       1,693
Other non-current assets                               1,955       624
Total assets                                           $253,662    $243,875
                                                                 
Liabilities and Stockholders' Equity                              
Current liabilities:                                              
Current maturities of capital lease obligations        $574        $580
Accounts payable                                       30,129      39,220
Accrued salaries and commissions                       3,674       3,111
Accrued taxes other than income taxes                  5,559       5,046
Self-insurance claim reserves                          4,291       4,429
Other current liabilities                              5,812       4,429
Total current liabilities                              50,039      56,815
                                                                 
Notes payable under revolving loan                     81,562      63,446
Capital lease obligations - less current maturities    15,621      15,936
Deferred gain on leases                                2,860       3,053
Other noncurrent liabilities                           2,361       2,462
Total liabilities                                      152,443     141,712
                                                                 
Stockholders' equity:                                             
Common stock, $.0001 par value, authorized 20,000,000
shares;3,258,163 and 3,808,338 shares issued and      1           1
outstanding, respectively
Additional paid-in capital                             36,761      36,533
Retained earnings                                      64,457      65,629
Total stockholders' equity                             101,219     102,163
Total liabilities and stockholders' equity             $253,662    $243,875
                                                                 

                                                                
ALCO Stores, Inc.
Statements of Operations
(dollars in thousands, except share data)
(Unaudited)
                                                                
                                Thirteen Week Periods Twenty-Six Week Periods
                                 Ended                 Ended
                                August 4,   July 29,  August 4,    July 29,
                                2013        2012      2013         2012
Net sales                        $124,057    $119,817  $239,366     $235,095
Cost of sales                    84,848      80,542    166,059      161,794
                                                                
Gross margin                     39,209      39,275    73,307       73,301
                                                                
Selling, general and             35,052      32,870    68,509       65,823
administrative
Depreciation and amortization    2,194       2,116     4,361        4,214
expenses
                                                                
Total operating expenses         37,246      34,986    72,870       70,037
                                                                
Operating income                 1,963       4,289     437          3,264
                                                                
Interest expense                 957         792       2,010        1,536
                                                                
Earnings (loss) from continuing  1,006       3,497     (1,573)      1,728
operations before income taxes
                                                                
Income tax expense (benefit)     376         1,415     (589)        685
                                                                
Earnings (loss) from continuing  630         2,082     (984)        1,043
operations
                                                                
Loss from discontinued
operations, net of income tax    (133)       (97)      (188)        (343)
benefit of $81, $59, $114, and
$209 respectively
Net earnings (loss)              $497        $1,985    $(1,172)     $700
                                                                
Earnings (loss) per share                                        
Basic                                                            
Continuing operations            $0.19       $0.55     $(0.30)      $0.27
Discontinued operations          (0.04)      (0.03)    (0.06)       (0.09)
                                                                
Net earnings (loss) per share    $0.15       $0.52     $(0.36)      $0.18
                                                                
Earnings (loss) per share                                        
Diluted                                                          
Continuing operations            $0.19       $0.55     $(0.30)      $0.27
Discontinued operations          (0.04)      (0.03)    (0.06)       (0.09)
                                                                
Net earnings (loss) per share    $0.15       $0.52     $(0.36)      $0.18
                                                                

                                                                  
ALCO Stores, Inc.
Schedule of Adjusted SG&A
(Unaudited)
                                                                  
                                        Thirteen Week      Twenty-Six Week
                                         PeriodsEnded      PeriodsEnded
                                        August 4, July29, August 4, July29,
                                        2013      2012     2013      2012
SG&A Expenses from Continuing Operations                           
Store support center ^(1)                $6,931    $4,678   $12,122   $9,963
Distribution center                      1,343     1,632    3,169     3,420
401K expense                             125       —        250       —
Same-store SG&A ^(2)                     25,934    26,420   51,413    52,170
Non same-store SG&A ^(3)                 631       40       1,327     40
Share-based compensation                 88        100      228       230
SG&A as reported                         35,052    32,870   68,509    65,823
(Less) add:                                                        
Share-based compensation                 (88)      (100)    (228)     (230)
Pending merger ^(1)                      (1,208)   —        (1,208)   —
Office relocation ^(1)                   (602)     —        (602)     —
Gain (loss) on sale of fixed assets ^(1) —         (1)      —         92
                                                                  
Adjusted SG&A from Continuing Operations $33,154   $32,769  $66,471   $65,685
                                                                  
Adjusted SG&A as % of sales              26.7%     27.3%    27.8%     27.9%
                                                                  
Sales per average selling square feet    $28.03    $27.51   $54.08    $54.03
^(4)
                                                                  
Gross Margin dollars per average selling $8.97     $9.16    $16.78    $17.10
square feet ^(4)
                                                                  
Adjusted SG&A per average selling square $7.59     $7.64    $15.21    $15.32
feet ^(4)
                                                                  
Adjusted EBITDA per average selling      $1.34     $1.49    $1.50     $1.66
square feet ^(4)(5)
                                                                  
Average inventory per average selling    $38.35    $33.82   $35.30    $32.77
square feet ^(4)(6)(7)
                                                                  
Average selling square feet ^(4)         4,369     4,287    4,369     4,287
                                                                  
Total stores operating beginning of      217       214      217       216
period
Total stores operating end of period     213       215      213       215
Total stores less than twelve months old 3         6        3         6
Total non-same stores                    3         6        3         6
                                                                  
Supplemental Data:                                                 
Same-store gross margin dollar change    -2.7%     -1.2%    -2.9%     0.0%
Same-store SG&A dollar change            1.3%      2.5%     1.0%      1.9%
Same-store total customer count change  -2.8%     -6.1%    -5.4%     -4.1%
Same-store average sale per ticket       4.3%      4.5%     4.9%      4.0%
change
                                                                  

^(1) Store support center includes gain (loss) on disposal of fixed assets
and costs associated with office relocation and pending merger.
^(2) Same-stores are those stores which were open at the end of the reporting
period, had reached their fourteenth month of operation, and include store
locations, if any, that had experienced a remodel, an expansion, or
relocation.Same-stores also include the Company's transactional website.
^(3)Non same-stores are those stores which have not reached their fourteenth
month of operation.
^(4)Average selling square feet is calculated as beginning square feet plus
ending square feet divided by 2.
^(5)Adjusted EBITDA per average selling square foot is calculated as Adjusted
EBITDA divided by average selling square feet.
^(6)Average store level merchandise inventory is calculated as beginning
inventory plus ending inventory divided by 2.
^(7)Excludes inventory for unopened stores.

                                                               
ALCO Stores, Inc.
Schedule of Adjusted EBITDA
(Unaudited)
                                                               
                                          Trailing             Trailing
                           Thirteen Week     53Weeks Thirteen Week 53Weeks
                             Periods                    Periods
                53Weeks    Ended             Ended    Ended         Ended
                           May 5,  April29, May 5,   August July   August
                                                        4,     29,    4,
                Fiscal2013 2013    2012      2013     2013   2012   2013
Net earnings     $1,307      (1,668) (1,284)   923      497    1,985  (565)
(loss)
Plus:                                                           
Interest         3,477       1,053   744       3,786    957    792    3,951
Taxes            311         (998)   (880)     193      295    1,356  (868)
Depreciation and 8,902       2,181   2,122     8,961    2,211  2,141  9,031
amortization
EBITDA           13,997      568     702       13,863   3,960  6,274  11,549
Plus:                                                           
Share-based      381         140     130       391      88     100    379
compensation
Pending merger   —           —       —         —        602    —      602
Office           —           —       —         —        1,208  —      1,208
relocation
(Gain) loss      141         —       (92)      233      —      1      232
asset disposals
Adjusted EBITDA 14,519      708     740       14,487   5,858  6,375  13,970
                                                               
Cash             3,160       2,923   612       2,923    2,834  2,407  2,834
Debt             79,962      87,979  53,208    87,979   97,757 56,567 97,757
Debt, net of     $76,802     85,056  52,596    85,056   94,923 54,160 94,923
cash
                                                               

CONTACT: For more information, contact:
         Wayne S. Peterson
         Senior Vice President - Chief Financial Officer
         469-322-2900 X1071
         email: wpeterson@alcostores.com
        
         or
        
         Debbie Hagen
         Hagen and Partners
         913-642-6363
         email: dhagen@hagenandpartners.com

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