ALCO Stores, Inc. Reports Operating Results for Third Quarter and Year-to-Date Fiscal 2014

ALCO Stores, Inc. Reports Operating Results for Third Quarter and Year-to-Date
Fiscal 2014

COPPELL, Texas, Dec. 18, 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 third quarter ended November 3, 2013.

Net sales from continuing operations, excluding fuel, increased 1.0% to $105.4
million during the third quarter of fiscal 2014, compared to $104.3 million in
the third quarter of fiscal 2013. Same-store sales, excluding fuel, decreased
2.9% to $101.1 million during the third quarter of fiscal 2014. For the 39
weeks ended November 3, 2013, net sales from continuing operations, excluding
fuel, increased 1.7% compared to the same period of the prior year to $338.7
million. Same-store sales, excluding fuel, decreased 1.5% to $327.6 million
during the 39 weeks ended November 3, 2013.

Net loss for the third quarter of fiscal 2014 was $16.6 million, or $5.11 per
diluted share, compared to a net loss of $1.4 million, or $0.37 per diluted
share, for the third quarter of fiscal 2013. Results in the third quarter of
fiscal 2014 included a non-cash charge of $9.8 million related to a valuation
allowance on the Company's cumulative deferred tax asset, and $1.1 million of
non-recurring expenses attributable to merger activity.

Net loss for the 39 weeks ended November 3, 2013, was $17.8 million, or $5.47
per diluted share, compared to net loss of $0.7 million, or $0.17 per diluted
share, for the 39 weeks ended October 28, 2012. Results in the 39 weeks
included the non-cash charge of $9.8 million related to a valuation allowance
on the Company's cumulative deferred tax asset, and a total of $2.9 million of
non-recurring expenses attributable to the relocation of the corporate office
and merger activity.

Richard Wilson, President and CEO, commented, "Operating results in the third
quarter were impacted by several significant one-time events, as we dealt with
a proposed merger and also took steps to fix long-term problems that have hurt
ALCO's profitability. We recorded approximately $1.1 million in merger-related
costs. We experienced a net reduction in gross margin dollars of approximately
$5 million, primarily due to increased promotional activity in an attempt to
reduce inventory and debt levels. In addition, ALCO has closed eight
underperforming stores in the first three quarters of fiscal 2014 and decided
in October to close 10 more locations by year-end. Store-closing costs in the
quarter were approximately $934,000. Finally, we recognized a large non-cash
charge relating to the accounting for deferred tax assets on the Company's
balance sheet."

Mr. Wilson added, "Moving forward, ALCO is focused on executing five major
initiatives to improve profitability and deliver value for shareholders. These
actions include:

  *Maximizing the benefit of our headquarters relocation to the Dallas area,
    which is enabling ALCO to recruit experienced managers, buyers and
    marketers from some of the nation's top retail organizations. Our new team
    is largely in place.
  *Expanding gross margins by completing the price optimization initiative
    with Revionics, which increases top-line sales and gross margin by
    adjusting prices store-by-store and item-by-item based on detailed demand
    data.
  *Improving our real estate portfolio by closing unprofitable stores and
    opening more productive ones. By the end of fiscal 2014 we will have
    closed a total of 18 underperforming stores and opened three
    high-performing locations in regions with growing energy-based economies.
  *Upgrading our information technology (IT) with a new Enterprise Resource
    Planning system and a new supply chain service provider. These systems
    will increase efficiency, reduce costs and improve inventory management.
  *Reducing inventory and associated debt levels by, in addition to the store
    rationalization and IT upgrades mentioned, making a number of targeted
    changes in store layout and merchandise mix to appeal to ALCO shoppers."

In summary, Mr. Wilson stated, "We look forward to delivering greater
shareholder value by executing on these initiatives to substantially increase
profitability for the ALCO enterprise. Across ALCO's 202 stores, our team is
committed to providing personal, friendly service and great values to our ALCO
shoppers during this holiday season – and beyond. Early holiday sales results
have been positive on a same-store basis."

Investor Conference Call

The Company will host an investor conference call at 10:00 a.m. Central Time
on Wednesday, December 18, 2013, to discuss operating results for the third
quarter ended November 3, 2013. The dial-in number for the conference call is
888-417-8516 (international/local participants dial 719-325-2491), and the
Conference Code is 9639165. 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 1:00 p.m. Central
Time December 18, 2013 through December 23, 2013, by dialing 888-203-1112
(international/local participants dial 719-457-0820), and the Replay Code is
9639165. 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 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 certainitems. 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
                                                      November 3, February 3,
                                                       2013        2013
Assets                                                 (Unaudited) 
Current assets:                                                   
Cash                                                   $2,972    $3,160
Receivables                                            12,125      13,187
Inventories                                            194,101     166,671
Prepaid expenses                                       4,005       3,767
Deferred income taxes                                  —           3,081
Property held for sale                                 568         568
Total current assets                                   213,771     190,434
                                                                 
Property and equipment, at cost:                                  
Land and land improvements                             5,648       5,648
Buildings and building improvements                    10,499      10,499
Furniture, fixtures and equipment                      78,118      74,066
Transportation equipment                               988         988
Leasehold improvements                                 21,138      21,138
Construction work in progress                          9,360       5,083
Total property and equipment                           125,751     117,422
Less accumulated depreciation and amortization         87,537      81,794
Net property and equipment                             38,214      35,628
                                                                 
Property under capital leases                          26,972      26,972
Less accumulated amortization                          12,220      11,476
Net property under capital leases                      14,752      15,496
                                                                 
Deferred income taxes — non current                    —           1,693
Other non-current assets                               2,288       624
Total assets                                           $269,025  $243,875
                                                                 
Liabilities and Stockholders' Equity                              
Current liabilities:                                              
Current maturities of capital lease obligations        $537      $580
Accounts payable                                       66,800      39,220
Accrued salaries and commissions                       2,907       3,111
Accrued taxes other than income taxes                  6,182       5,046
Self-insurance claim reserves                          4,118       4,429
Other current liabilities                              5,158       4,429
Total current liabilities                              85,702      56,815
                                                                 
Notes payable under revolving loan                     77,995      63,446
Capital lease obligations - less current maturities    15,497      15,936
Deferred gain on leases                                2,763       3,053
Other noncurrent liabilities                           2,376       2,462
Total liabilities                                      184,333     141,712
                                                                 
Stockholders' equity:                                             
Common stock, $.0001 par value, authorized 20,000,000
shares;3,258,163 shares issued and outstanding,       1           1
respectively
Additional paid-in capital                             36,868      36,533
Retained earnings                                      47,823      65,629
Total stockholders' equity                             84,692      102,163
Total liabilities and stockholders' equity             $269,025  $243,875


ALCO Stores, Inc.
Statements of Operations
(dollars in thousands, except share data)
(Unaudited)
                        Thirteen Week Periods Ended Thirty-Nine Week Periods
                                                     Ended
                        November 3,    October      November 3,  October 28,
                         2013           28, 2012     2013         2012
Net sales                $106,661     $105,918   $343,172   $338,188
Cost of sales            78,740         72,974       242,826      232,844
                                                              
Gross margin             27,921         32,944       100,346      105,344
                                                              
Selling, general and     35,032         31,831       102,684      96,775
administrative
Depreciation and         2,112          2,177        6,439        6,356
amortization expenses
                                                              
Total operating expenses 37,144         34,008       109,123      103,131
                                                              
Operating earnings       (9,223)        (1,064)      (8,777)      2,213
(loss)
                                                              
Interest expense         852            859          2,862        2,395
                                                              
Loss from continuing
operations before income (10,075)       (1,923)      (11,639)     (182)
taxes
                                                              
Income tax expense       5,981          (779)        5,395        (89)
(benefit)
                                                              
Loss from continuing     (16,056)       (1,144)      (17,034)     (93)
operations
                                                              
Loss from discontinued
operations, net of
income tax benefit of    (579)          (229)        (772)        (580)
$354, $140, $471, and
$354 respectively
Net loss                 $(16,635)     $(1,373)    $(17,806)   $(673)
                                                              
Loss per share                                                 
Basic                                                          
Continuing operations    $(4.93)     $(0.31)     $(5.23)     $(0.02)
Discontinued operations  (0.18)         (0.06)       (0.24)       (0.15)
                                                              
Net loss per share       $(5.11)       $(0.37)     $(5.47)     $(0.17)
                                                              
Loss per share                                                 
Diluted                                                        
Continuing operations    $(4.93)       $(0.31)     $(5.23)     $(0.02)
Discontinued operations  (0.18)         (0.06)       (0.24)       (0.15)
                                                              
Net loss per share       $(5.11)       $(0.37)     $(5.47)     $(0.17)


ALCO Stores, Inc.
Schedule of Adjusted SG&A
(Unaudited)

                        Thirteen Week PeriodsEnded Thirty-Nine Week
                                                     PeriodsEnded
                        November 3,   October 28,   November 3,  October 28,
                         2013          2012          2013         2012
SG&A Expenses from                                             
Continuing Operations
Store support center     $6,615      $5,245      $18,737    $15,207
^(1)
Distribution center      1,564         1,667         4,733        5,087
401K expense             125           —             375          —
Same-store SG&A ^(2)     25,807        24,796        76,369       76,088
Non same-store SG&A ^(3) 814           26            2,135        66
Share-based compensation 107           97            335          327
SG&A as reported         35,032        31,831        102,684      96,775
(Less) add:                                                    
Share-based compensation (107)         (97)          (335)        (327)
Merger Activity ^(1)     (1,065)       —             (2,273)      —
Office relocation ^(1)   —             —             (602)        —
Gain (loss) on sale of   —             (87)          —            4
fixed assets ^(1)
                                                              
Adjusted SG&A from       $33,860      $31,647      $99,474     $96,452
Continuing Operations
                                                              
Adjusted SG&A as % of    31.7%         29.9%         29.0%        28.5%
sales
                                                              
Sales per average        $24.53      $24.63      $78.86     $79.05
selling square feet ^(4)
                                                              
Gross Margin dollars per
average selling square   $6.50       $7.78       $23.36     $25.00
feet ^(4)
                                                              
Adjusted SG&A per
average selling square   $7.88       $7.47       $23.15     $22.89
feet ^(4)
                                                              
Adjusted EBITDA per
average selling square   $(1.59)    $0.23       $(0.06)   $1.92
feet ^(4)(5)
                                                              
Average inventory per
average selling square   $37.30      $35.83      $35.95     $35.60
feet ^(4)(6)(7)
                                                              
Average selling square   4,296         4,235         4,296        4,214
feet ^(4)
                                                              
Total stores operating   213           215           217          216
beginning of period
Total stores operating   210           215           210          215
end of period
Total stores less than   4             7             6            9
twelve months old
Total non-same stores    4             7             6            9
                                                              
Supplemental Data:                                             
Same-store gross margin  -19.7%        -2.1%         -8.2%        -0.7%
dollar change
Same-store SG&A dollar   -4.5%         -3.8%         -0.8%        0.0%
change
Same-store total         -4.0%         -6.8%         -5.0%        -5.0%
customer count change
Same-store average sale  1.1%          3.7%          3.7%         4.0%
per ticket 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  Thirteen Week    Trailing
                        Twenty-Six Week  53Weeks  Periods          53Weeks
              53Weeks    Periods Ended    Ended     Ended            Ended
                          August   July    August 4, November October November
             Fiscal2013 4,       29,     2013      3,       28,     3,
                          2013     2012              2013     2012    2013
Net earnings  $1,307    (1,171)  700     (564)     (16,635) (1,373) (15,826)
(loss)
Plus:                                                           
Interest      3,477       2,010    1,536   3,951     852      859     3,944
Taxes         311         (703)    476     (868)     5,627    (919)   5,678
Depreciation
and           8,902       4,393    4,263   9,032     2,144    2,216   8,960
amortization
EBITDA        13,997      4,529    6,975   11,551    (8,012   783     2,756
Plus:                                                           
Share-based   381         228      230     379       107      97      389
compensation
Office        —           602      —       602       —        —       602
relocation
Merger        —           1,208    —       1,208     1,065    —       2,273
activity
(Gain) loss
asset         141         —        (91)    232       —        87      145
disposals
Adjusted      14,519      6,567    7,114   13,972    (6,840)  967     6,165
EBITDA
                                                               
Cash          3,160       2,834    2,407   2,834     2,972    1,179   2,972
Debt          79,962      97,757   56,567  97,757    94,029   74,745  94,029
Debt, net of  $76,802   94,923   54,160  94,923    91,057   73,566  91,057
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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