• Cecile Corral

Duckwall-Alco Falls Short in 4Q, Fiscal 2010; Looks to Improve With New Values

Duckwall-Alco blamed itself for declines in sales and comps for the fourth quarter and full fiscal 2010, admitting it did not respond effectively to consumers' demands for value-priced goods.

“The board has looked very carefully at whether the company's challenges have been related to its business model or with our execution. We believe it clearly has been with our execution,” said Royce Winsten, chairman of the board, during the company's quarterly conference call. “Duckwall failed to adequately address certain market and merchandise opportunities, which have been successfully exploited by others. The good news is, the problems are simple and straightforward. So are the fixes. Unfortunately, what is simple is not necessarily easy.”

To correct the misstep, the 254-unit regional discounter, which operates stores in 23 Central U.S. states, is implementing a new five-pronged merchandise initiative program that includes the expansion of the food and consumables department to help increase store traffic, build basket size and provide customers with “high-quality merchandise at competitive prices,” explained Rich Wilson, who joined the company as president and ceo in February upon the resignation of Lawrence Zigerelli.

These initiatives include:

-- Introducing a new everyday-value program “to improve the company's value profile in the marketplace,” he said. The merchandise will be available in every department from apparel to healthy and beauty;

-- Expanding food and consumables category, representing areas of “key growth opportunities” and can be expected to drive more frequent store trips;

-- Increasing penetration of private-label merchandise;

-- Reallocating space and creating a new store layout, resizing departments based on productivity.

-- Reducing sku counts throughout the store.

Brighter results for the fourth quarter and fiscal 2010 came in turned-around net earnings, which were positive for both periods compared to year-ago losses.

Net income for the fourth quarter ended Jan. 31 were $1.5 million, or 37 cents per share, compared to a net loss of $715,000, or 19 cents per share in the prior same period.

Sales from continuing operations fell 2.5% to $136.5 million, and same-store sales dropped 2.9%.

Of this 13-week sales decline, approximately $4.5 million was due to soft lines, home décor, and music and movies. Those reductions in sales were slightly offset by increases in commodities, toys and photo accessory business.

For the full fiscal year, net income for fiscal 2010 was $3.0 million, or 77 cents per share, compared to a net loss of $5.0 million, or $1.31 per share, in the prior fiscal year,” the company noted.

Sales from continuing operations decreased 0.2% to $488.7 million, and same-store sales declined 0.7%.

Real estate initiatives for this year call for six new Alco locations – four in Texas, the company's largest market; one in Utah; and one in Iowa.

In other news, Duckwall-Alco is actively searching for a new director of stores, a post which was vacated in February.

Cecile CorralCecile Corral | Senior Product Editor, Home & Textiles Today

Cecile B. Corral has been a product editor with Home Textiles Today since late 2000. She covers the area and accent rug, kitchen textiles, table linens, beach towels, decorative bath and decorative pillow categories, as well as some retail subjects.

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