Discount gas gift card

ABILENE, RAN. -- Regional discounter Duckwall-Alco Stores recently announced a multifaceted turnaround plan to revive same-store sales growth that includes expansion of a test format with expanded food, technology upgrades, cost-cutting and a store portfolio and assortment analysis that likely will lead to store closures and merchandise-mix changes.

The initiatives announced earlier this month came at the same time the company reported disappointing results for the fourth quarter and fiscal 2005 that included flat full-year comps. More detailed results, including data on profits, will be reported later this month.

"We understand the need to elevate the performance of all areas of our company," said Warren Gfeller, chairman of the board, adding later that the company needs to be proactive and "operate with a sense of urgency" to accomplish its goals and create shareholder value.

Meanwhile, Duckwall-Alco continues its search for a new chief following ceo Glen Shank's decision to retire by April 30, or sooner if a successor is hired. The longtime ceo announced he was retiring for personal reasons a few months after investor pressure arose to improve the chain's performance. The retailer last fall retained turnaround firm Alix-Partners, which already has concluded its work and submitted a report.

Dick Mansfield, cfo, said many of the initiatives announced March 1 already had been under consideration by management. They include performing a comprehensive review of store performance and closing any that do not meet return-on-investment guidelines. Mansfield told DSN Retailing Today it was too early in the review to estimate the number of store closures. The company operates 266 Alco and Duckwall discount stores.

Other initiatives include reducing expenses, with specific emphasis on the costs of corporate overhead, insurance, utilities, credit card fees and distribution; a review of every product category and potential elimination of nonproductive segments; technology upgrades; development of a five-year growth strategy; improving seasonal inventory flow; a review of the company's capital structure; and actions to grow comps and store traffic.

Regarding the last point, Duckwall-Alco plans to expand its gift card program; implement a new point-of-sale system; conduct a thorough review of store procedures, merchandising and marketing efforts; and develop an Internet sales strategy. Another component is modest expansion of the Alco Market Place concept through conversion of select stores. The company now has three market stores in operation that offer an expanded selection of groceries, with initial results from the new concept noted as promising.

"The concept is still relatively new, so we're still evaluating the results and fine-tuning things," Mansfield said. "Future expansion is obviously going to depend on whether or not we're satisfied with the concept."

All of these programs, while laudable, still haven't convinced some major investors that Duckwall-Alco has the wherewithal to execute a plan that will boost the company's financial performance. Duckwall-Alco has reported lackluster sales growth for several years now, pointing to such factors as high gas prices impacting its core rural customer base.

"Many of these initiatives are things that we had been calling for for almost a year in our public filings," said Ray French of Strongbow Capital, whose firm owns nearly 10% of the company. "What we are demanding the company do now is execute."

French said store closures are likely needed, but more importantly he would like to see the company focus on expense reduction, which is listed as one of the company's priority initiatives.