Alco swings to Q2 loss on expenses

Coppell, Texas – An increase in selling, general and administrative (SG&A) expenses driven by growing costs of advertising, new stores and store support helped Alco Stores Inc. swing to a net loss of $7 million in the second quarter of fiscal 2014 from net earnings of $800,000 a year earlier.



Net sales dropped 6% to $110.7 million, from $117.7 million. Same-store sales declined 8.9%.



According to Stanley B. Latacha, the recently appointed CEO of Alco, the company has a new management team dedicated to adapting to an evolving retail environment, managing the balance sheet, and driving sustainable change while focusing on smaller markets. The company is also attempting to launch a recapitalization.



"Alco is working hard to develop and implement a turnaround plan," said Latacha. "While our new board of directors and I have been in place with the company for only three weeks, we are wasting no time addressing the operational needs of the business as well as analyzing strategic alternatives for the company, including overhauling our balance sheet and evaluating options for raising additional capital. We are in the process of developing a strategy with our key financial stakeholders, including existing lenders, vendors, stockholders and landlords to create a long-term solution. The details of a recapitalization have yet to be finalized, but we are reviewing several alternatives. There is no pre-determined outcome to this work. Our highest priority is crafting a solution that maximizes value to all of our stakeholders."