ALCO files for Chapter 11; to close 52 units in 10 states - Duckwall-Alco discount stores

Discount Store News, May 22, 1989 by Mary Ellen Kelly

ALCO Files for Chapter 11; To Close 52 Units in 10 States

ABILENE, Kan. -- Duckwall-ALCO filed for Chapter 11 protection this month and will close 52 of its 151 units as part of its restructuring. Competitions, mostly from Wal-Mart, resulted in a $10 million loss at the 52 stores last year.

The filing occurs nearly a year after the chain realigned its management team when chairman Robert Soelter retired. The bankruptcy also comes about four years after it completed a management-led leveraged buyout.

Glen Shank, president of the company since last June, attributed the discounter's current financial problems to various competitive and market conditions.

In a published statement, Shank cited, "the emergence of heavily financed competitors...the setbacks suffered in the economies of rural areas and small towns, and the heavy debt structure of the company," as factors making the filing necessary. "We determined this was the best approach to ensure the health of the entire Duckwall-ALCO organization."

The company has secured a $76 million revolving line of credit through Jan. 1, 1990, from General Electric Capital Corp., according to ALCO's attorney, John Donner of Stinson, Mag & Fizzell, Overland Park, Kan. The filing listed ALCO's total assets at $152.2 million and total liabilities at $149.5 million.

Donner said that ALCO has been losing money for the past few years, "principally due to losses at these 52 stores. The stores to be closed lost $10 million last year alone...This has been generally attributed to competition from Wal-Mart," he added.

Another four stores might be closed, depending on whether lease agreements can be negotiated for a shorter period of time, Donner said.

The store closings will be scattered throughout 10 states: Arkansas, Colorado, Illinois, Iowa, Kansas, Mississippi, Nebraska, New Mexico, Texas and Wyoming. No stores will be closed in South Dakota, nor its sole Minnesota location.

Among the closings will be all six of its Wichita stores, both of its Topeka units, and three of its four Colorado Springs locations.

The restructuring also includes plans to enlarge the staff, both in the ongoing stores and the general office.

Merchandising changes will also be made to improve the discounter's position. Details of these changes were not available at presstime.

The closings involve many of the stores acquired from three regional chains, David's in Wichita, the Hornsby chain in Illinois, and the Sterling/Magic Mart chain in Mississippi and Arkansas, according to published statements from ALCO.