ABILENE, Kan. Duckwall-ALCO Stores announced that it will close 44 Duckwall stores and redeploy the capital into higher-return ALCO stores. The company, which currently operates 214 broad line ALCO 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.
Rich Wilson, president and CEO, 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% of sales and little or no profit. Duckwall locations, averaging just 6,755 sq. ft., 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 sq. ft., 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."
The company said it 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 million in capital to the ALCO stores.