Alco toughs out Q3 challenges

Internal upgrades underway

Retail Editor 3, December 18, 2013

Coppell, Texas - Alco Inc. took some hits in its third quarter as the company - in the midst of a proposed merger that ultimately fizzled.

Net loss for the quarter, ended Nov. 3, widened substantially to $16.6 million, or $5.11 per share, compared to a net loss of $1.4 million, or 37 cents per diluted share, for the year-ago third quarter. The results
included a non-cash charge of $9.8 million related to a deferred tax asset and $1.1 million of non-recurring expenses generated by the merger activity.

President and ceo Richard Wilson outlined five major initiatives the company is undertaking to shift into the black:

  • The company's relocation to the Dallas area has allowed Alco to recruit experienced managers, buyers and marketers in the area, where massive lay-offs at JCPenney earlier this year and in 2012 unleashed a pool of talent. This new team is largely in place, the company said.
  • The completion of a price optimization initiative with Revionics is expanding gross margins and increasing top-line sales by adjusting prices store-by-store and item-by-item based on demand data.
  • Alco's real estate portfolio is closing unprofitable stores and opening more productive ones. By the end of fiscal 2014 the company will have closed 18 stores and opened three units in regions with growing energy-based economies.
  • The retailer is upgrading its information system and a working with a new supply chain service provider.
  • Inventory levels and associated debt have been reduced through a combination of store closings and IT upgrades, and the company plans changes in store layout and merchandise mix.

Net sales from continuing operations, excluding fuel, increased 1.0% to $105.4 million. Same-store sales, excluding fuel, decreased 2.9% to $101.1 million last year.

Year to date, net loss was $17.8 million, or $5.47 per diluted share, versus a net loss of $700,000, or $0.17 per diluted share, a year ago. Net sales from continuing operations, excluding fuel, rose 1.7% to $343.2 million, with comps down 1.5%, excluding fuel.

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