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Why Alco Stores (ALCS) Stock Is Down This Afternoon

NEW YORK (TheStreet) -- Shares of Alco Stores Inc. (ALCS) are down -11.30% to $8.55 after the general merchandise retailer reported operating results for its fourth quarter and fiscal year ended February 2, 2014.

Net sales from continuing operations during the fourth quarter of fiscal 2014 (13 weeks) decreased -8.9% to $130.9 million, compared to $143.6 million in the fourth quarter of fiscal 2013 (14 weeks). Excluding the 14th week of the fiscal 2013 quarter, net sales from continuing operations decreased -4.7%.

Same-store sales, excluding fuel centers, decreased -11.7% to $124.8 million during the fourth quarter of fiscal 2014. Excluding the 14th week of the fiscal 2013 quarter, same-store sales, excluding fuel centers, decreased -7.6%.

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Net loss for the fourth quarter of fiscal 2014 was $8.6 million, or $2.65 per diluted share, compared to a net income of $2.0 million, or $0.61 per diluted share, for the fourth quarter of fiscal 2013.

Net sales from continuing operations during the 52 weeks of fiscal year 2014 decreased -1.6% to $474.1 million, compared to net sales during the 53 weeks of fiscal year 2013 of $481.8 million. Excluding the 53rd week of fiscal year 2013, net sales from continuing operations decreased -0.3%.

Same-store sales, excluding fuel centers, during the 52 weeks of fiscal year 2014 decreased -4.5% to $452.5 million. Excluding the 53rd week of fiscal year 2013, same-store sales, excluding fuel centers, decreased -3.2%.

Net loss for fiscal 2014 was $26.4 million, or $8.11 per diluted share, compared to net income of $1.3 million, or $0.36 per diluted share. 

TheStreet Ratings team rates ALCO STORES INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate ALCO STORES INC (ALCS) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Multiline Retail industry. The net income has significantly decreased by 1111.6% when compared to the same quarter one year ago, falling from -$1.37 million to -$16.64 million.
  • The debt-to-equity ratio of 1.11 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.18, which clearly demonstrates the inability to cover short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Multiline Retail industry and the overall market, ALCO STORES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ALCO STORES INC is currently lower than what is desirable, coming in at 26.18%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -15.59% is significantly below that of the industry average.
  • ALCO STORES INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, ALCO STORES INC increased its bottom line by earning $0.58 versus $0.48 in the prior year.
  • You can view the full analysis from the report here: ALCS Ratings Report
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