Duckwall-ALCO Stores, Inc. said it will close 44 Duckwall stores, including three in Nebraska, and redeploy the capital into higher-return ALCO stores.
The company, which currently operates 214 ALCO general merchandise stores in 23 states, said it intends to change its corporate name to ALCO Stores, Inc., to reflect its new strategic focus. The name change will likely take place in fiscal 2012.
The Duckwall stores in Nebraska to be closed are in Ravenna, Oxford and Cambridge. ALCO has 16 stores in Nebraska.
Duckwall-ALCO Stores, Inc. is a regional retailer that describes its specialty as in offering a wide variety of products at reasonable prices to the smaller, underserved communities of America.
Rich Wilson, chief executive officer, commented: "After careful analysis, we have concluded that the small, limited-selection Duckwall stores no longer meet the needs of most shoppers. These stores account for only 3.9 percent of sales and little or no profit. Duckwall locations, averaging just 6,755 square feet, consume a disproportionate share of resources in distribution, back-office support, inventory investment and other costs. Plus, the necessary technology upgrades to bring these stores into the corporate IT infrastructure would be cost-prohibitive. These factors led us to conclude that the best course of action is to close the Duckwall stores. We expect that redeploying the resources used in the Duckwall stores to our more productive ALCO stores will improve the Company's earnings."
Wilson added, "Making this change will enable the company to focus on maximizing the performance of our ALCO stores. In the past eight months, we have upgraded all of the Company's ALCO stores, averaging 25,446 square feet, to better serve consumers and offer expanded selections of food and consumables. ALCO customers are telling us they like the wider aisles, better lighting, expanded food assortment and upgraded selection of merchandise."
Among the 400 new items in ALCO stores are high-quality, lower-cost "Best Choice" and "Always Save" grocery and paper products. These private-label brands are provided through a new partnership with Associated Wholesale Grocers (AWG), which allows ALCO stores to reduce inventory, improve turnover and lower expenses at its distribution facility in Abilene, Kansas. "Our relationship with AWG will allow us to grow profitability in the coming months," Wilson noted.
Wilson said consumers have responded positively to the many changes, improving the recent sales trends in ALCO stores and the productivity of space and inventory. Conversely, sales at Duckwall stores have been declining in recent years, he said.
The 44 Duckwall stores have a total of 267 full- and part-time associates. Forty-three of the stores will close permanently and one Duckwall store in Hettinger, N.D., will reopen as an ALCO store.
The Company expects to record expenses of approximately $1.8 million during the fourth quarter for closing costs attributable to severance, lease liability, inventory liquidation and other related costs. Upon conclusion of the closing process, the Company expects to redeploy approximately $4.0 million in capital to the ALCO stores.
Wilson concluded, "This was not an easy decision to make, and we know it will have an impact on our employees and the local communities we serve. We wish to express our thanks to the many customers who have become our friends over the years, and we also thank all of our Duckwall employees who have served our Company faithfully during that time."