| Kansas                                                         | 48-0201080                                |
|---------------------------------------------------------------------|-------------------------------------------|
| (State      or other jurisdiction of incorporation or organization) | (I.R.S.      Employer Identification No.) |
|                                                                |                                      |
| 401      Cottage StreetAbilene,      Kansas                    |   67410-2832                    |
| (Address      of principal executive offices)                       | (Zip      Code)                           |

| TABLE      OF CONTENTS |
|------------------------|
|                   |   |   |   |
| PART      I            | FINANCIAL      INFORMATION |   |
|                   | Item      1. | Financial      Statements | 3 |
|                   | Item      2. | Management's      Discussion and Analysis of Financial Condition and Results of      Operations | 8 |
|                   | Item      3. | Quantitative      and Qualitative Disclosure About Market Risk | 14 |
|                   | Item      4. | Controls      and Procedures | 15 |
|                   |   |
| PART      II           | OTHER      INFORMATION |   |
|                   | Item      1. | Legal      Proceedings | 15 |
|                   | Item      1A. | Risk      Factors | 16 |
|                   | Item      2. | Unregistered      Sales of Equity Securities and Use of Proceeds | 16 |
|                   | Item      3. | Defaults      Upon Senior Securities | 16 |
|                   | Item      4. | Submissions      of Matters to a Vote of Security Holders | 16 |
|                   | Item      5. | Other      Information | 16 |
|                   | Item      6. | Exhibits | 16 |
|                   |   |
| Signature              | 18 |

----

| Duckwall-ALCO      Stores, Inc. and Subsidiaries                                                            |   |
|-------------------------------------------------------------------------------------------------------------|--------|
| Consolidated      Balance Sheets                                                                            |   |
| (in      thousands, except share amounts)                                                                   |   |
|                                                                                                        |   |   |   |   |   |   |
| Assets                                                                                                      |   |
|                                                                                                        |   |  August      3, |   |   | February      3, |   |
|                                                                                                        |   | 2008 |   |   | 2008 |   |
|                                                                                                        |   | (Unaudited) |   |   |   |   |
| Current      assets:                                                                                        |   |   |   |   |   |   |
|    Cash      and cash equivalents                                                            |   | $ | 4,653 |   |   |   | 5,501 |   |
|    Receivables                                                                               |   |   | 3,743 |   |   |   | 4,905 |   |
|    Prepaid      income taxes                                                                 |   |   | 2,423 |   |   |   | 768 |   |
|    Inventories                                                                               |   |   | 145,658 |   |   |   | 128,545 |   |
|    Prepaid      expenses                                                                     |   |   | 4,106 |   |   |   | 3,101 |   |
|    Deferred      income taxes                                                                |   |   | 6,835 |   |   |   | 7,094 |   |
|           Total      current assets                       |   |   | 167,418 |   |   |   | 149,914 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Property      and equipment, at cost:                                                                       |   |   |   |   |   |   |   |   |
|    Land      and land improvements                                                           |   |   | 2,758 |   |   |   | 2,205 |   |
|    Buildings      and building improvements                                                  |   |   | 12,105 |   |   |   | 11,931 |   |
|    Furniture,      fixtures and equipment                                                    |   |   | 60,486 |   |   |   | 58,911 |   |
|    Transportation      equipment                                                             |   |   | 1,280 |   |   |   | 1,310 |   |
|    Leasehold      improvements                                                               |   |   | 13,913 |   |   |   | 15,419 |   |
|    Construction      work in progress                                                        |   |   | 1,365 |   |   |   | 1,282 |   |
|           Total      property and equipment               |   |   | 91,907 |   |   |   | 91,058 |   |
|    Less      accumulated depreciation                                                        |   |   | 62,682 |   |   |   | 64,019 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
|           Net      property and equipment                 |   |   | 29,225 |   |   |   | 27,039 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Property      under capital leases                                                                          |   |   | 12,266 |   |   |   | 13,571 |   |
|    Less      accumulated amortization                                                        |   |   | 8,294 |   |   |   | 8,654 |   |
|           Net      property under capital leases          |   |   | 3,972 |   |   |   | 4,917 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Other      non-current assets                                                                               |   |   | 249 |   |   |   | 262 |   |
| Deferred      income taxes                                                                                  |   |   | 3,078 |   |   |   | 3,254 |   |
|           Total      assets                               |   | $ | 203,942 |   |   |   | 185,386 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Liabilities      and Stockholders' Equity                                                                   |   |
| Current      liabilities:                                                                                   |   |   |   |   |   |   |   |   |
|    Current      maturities of long-term debt                                                 |   | $ | 1,319 |   |   |   | 1,278 |   |
|    Current      maturities of capital lease obligations                                      |   |   | 1,828 |   |   |   | 1,860 |   |
|    Accounts      payable                                                 |   |   | 35,879 |   |   |   | 19,134 |   |
|    Accrued      salaries and commissions                                                     |   |   | 5,092 |   |   |   | 3,711 |   |
|    Accrued      taxes other than income                                                      |   |   | 4,338 |   |   |   | 4,301 |   |
|    Self-insurance      claim reserves                                                        |   |   | 4,205 |   |   |   | 4,571 |   |
|    Other      current liabilities                                                            |   |   | 6,815 |   |   |   | 7,360 |   |
|           Total      current liabilities                  |   |   | 59,476 |   |   |   | 42,215 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Long      term debt, less current maturities                                                                |   |   | 3,557 |   |   |   | 4,227 |   |
| Notes      payable under revolving loan                                                                     |   |   | 26,257 |   |   |   | 20,715 |   |
| Capital      lease obligations - less current maturities                                                    |   |   | 4,002 |   |   |   | 4,933 |   |
| Deferred      gain on leases                                                                                |   |   | 4,792 |   |   |   | 4,985 |   |
| Other      noncurrent liabilities                                                                           |   |   | 1,457 |   |   |   | 1,139 |   |
|           Total      liabilities                          |   |   | 99,541 |   |   |   | 78,214 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Stockholders'      equity:                                                                                  |   |   |   |   |   |   |   |   |
|   Common      stock, $.0001 par value, authorized                                                 |   |   |   |   |   |   |   |   |
|     20,000,000      shares; issued and outstanding                                      |   |   |   |   |   |   |   |   |
|     3,820,591      shares and 3,810,591 shares respectively                             |   |   | 1 |   |   |   | 1 |   |
|    Additional      paid-in capital                                                           |   |   | 38,590 |   |   |   | 38,766 |   |
|    Retained      earnings                                                                    |   |   | 65,810 |   |   |   | 68,405 |   |
|           Total      stockholders' equity                 |   |   | 104,401 |   |   |   | 107,172 |   |
|           Total      liabilities and stockholders' equity |   | $ | 203,942 |   |   |   | 185,386 |   |
| See      accompanying notes to unaudited consolidated financial      statements.                            |   |

----

| Duckwall-ALCO      Stores, Inc. and Subsidiaries                                                |   |
|-------------------------------------------------------------------------------------------------|--------|
| Consolidated      Statements of Operations                                                      |   |
| (dollars      in thousands, except per share amounts)                                           |   |
| (Unaudited)                                                                                     |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   | For      the Thirteen Week |   |   | For      the Twenty-Six Week |   |
|                                                                                            |   | Periods      Ended |   |   | Periods      Ended |   |
|                                                                                            |   | August      3, 2008 |   |   | July      29, 2007 |   |   | August      3, 2008 |   |   | July      29, 2007 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales                                                                                  |   | $ | 129,555 |   |   |   | 119,013 |   |   |   | 235,537 |   |   |   | 225,279 |   |
| Cost      of sales                                                                              |   |   | 86,123 |   |   |   | 79,555 |   |   |   | 160,269 |   |   |   | 153,012 |   |
| Gross      margin                                                                               |   |   | 43,432 |   |   |   | 39,458 |   |   |   | 75,268 |   |   |   | 72,267 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative                                                        |   |   | 35,187 |   |   |   | 31,947 |   |   |   | 72,097 |   |   |   | 65,297 |   |
| Depreciation      and amortization                                                              |   |   | 1,905 |   |   |   | 1,786 |   |   |   | 3,680 |   |   |   | 3,540 |   |
|            Total      operating expenses |   |   | 37,092 |   |   |   | 33,733 |   |   |   | 75,777 |   |   |   | 68,837 |   |
| Operating      earnings (loss) from continuing operations                                       |   |   | 6,340 |   |   |   | 5,725 |   |   |   | (509 | ) |   |   | 3,430 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense, net                                                                      |   |   | 551 |   |   |   | 839 |   |   |   | 1,156 |   |   |   | 1,597 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) from continuing operations before income taxes                             |   |   | 5,789 |   |   |   | 4,886 |   |   |   | (1,665 | ) |   |   | 1,833 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      tax expense (benefit)                                                               |   |   | 2,356 |   |   |   | 1,936 |   |   |   | (707 | ) |   |   | 726 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) from continuing operations                                                 |   |   | 3,433 |   |   |   | 2,950 |   |   |   | (958 | ) |   |   | 1,107 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from discontinued operations, net of income tax benefit                               |   |   | (177 | ) |   |   | (356 | ) |   |   | (1,637 | ) |   |   | (745 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      earnings (loss)                                                                        |   |   | 3,256 |   |   |   | 2,594 |   |   |   | (2,595 | ) |   |   | 362 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Basic                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Continuing      operations                |   |   | 0.90 |   |   |   | 0.77 |   |   |   | (0.25 | ) |   |   | 0.29 |   |
|          Discontinued      operations              |   |   | (0.05 | ) |   |   | (0.09 | ) |   |   | (0.43 | ) |   |   | (0.20 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Net      earnings (loss) per share        |   |   | 0.85 |   |   |   | 0.68 |   |   |   | (0.68 | ) |   |   | 0.09 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Diluted                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Continuing      operations                |   |   | 0.90 |   |   |   | 0.77 |   |   |   | (0.25 | ) |   |   | 0.29 |   |
|          Discontinued      operations              |   |   | (0.05 | ) |   |   | (0.09 | ) |   |   | (0.43 | ) |   |   | (0.20 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Net      earnings (loss) per share        |   | $ | 0.85 |   |   |   | 0.68 |   |   |   | (0.68 | ) |   |   | 0.09 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See      accompanying notes to unaudited consolidated financial      statements.                |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Duckwall-ALCO      Stores, Inc. and Subsidiaries                                                                    |   |
|---------------------------------------------------------------------------------------------------------------------|--------|
| Consolidated      Statements of Cash Flows                                                                          |   |
| (dollars      in thousands)                                                                                         |   |
| (Unaudited)                                                                                                         |   |
|                                                                                                                |   | For      the Twenty-Six Week |   |
|                                                                                                                |   | Periods      Ended |   |
|                                                                                                                |   | August      3, 2008 |   |   | July      29, 2007 |   |
|                                                                                                                |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                                          |   |   |   |   |   |   |
| Net      earnings (loss)                                                                                            |   | $ | (2,595 | ) |   |   | 362 |   |
| Adjustments      to reconcile net earnings (loss) to      net cash provided by (used in) operating activities: |   |   |   |   |   |   |   |   |
|                                                                                                                |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                                                                                  |   |   | 3,725 |   |   |   | 3,746 |   |
| Gain      on sale of assets                                                                                         |   |   | (60 | ) |   |   | (199 | ) |
| Share-based      compensation                                                                                       |   |   | (135 | )  |   |   | 576 |   |
| Tax      benefit of stock options exercised                                                                         |   |   | - |   |   |   | 11 |   |
| Deferred      income tax expense (benefit), net                                                                     |   |   | 304 |   |   |   | (148 | ) |
| Changes      in:                                                                                                    |   |   |   |   |   |   |   |   |
|    Receivables                                                                                       |   |   | 1,162 |   |   |   | (1,041 | ) |
|         Prepaid income taxes                                                                              |   |   | (1,655 | )  |   |   | (1,838 | )  |
|    Inventories                                                                                       |   |   | (17,113 | )  |   |   | (4,613 | )  |
|    Prepaid      expenses                                                                             |   |   | (1,005 | ) |   |   | (1,967 | ) |
|         Other assets                                                                                      |   |   | 13  |   |   |   | 94 |   |
|    Accounts      payable                                                                             |   |   | 16,745 |   |   |   | 1,027 |   |
|    Accrued      salaries and commissions                                                             |   |   | 1,381 |   |   |   | 131 |   |
|    Accrued      taxes other than income                                                              |   |   | 37 |   |   |   | 888 |   |
|    Self-insurance      claim reserves                                                                |   |   | (366 | ) |   |   | 614 |   |
|    Other      liabilities                                                                            |   |   | (420 | ) |   |   | (348 | ) |
|       Net      cash provided by (used in) operating activities                        |   |   | 18 |   |   |   | (2,705 | ) |
|                                                                                                                |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                                          |   |   |   |   |   |   |   |   |
| Proceeds      from the sale of assets                                                                               |   |   | 164 |   |   |   | 30 |   |
| Acquisition      of:                                                                                                |   |   |   |   |   |   |   |   |
|     Fixtures,      equipment and leasehold improvements                                         |   |   | (5,070 | ) |   |   | (4,072 | ) |
|       Net      cash used in investing activities                                      |   |   | (4,906 | ) |   |   | (4,042 | ) |
|                                                                                                                |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                                          |   |   |   |   |   |   |   |   |
| Net      borrowings under revolving loan credit agreement                                                      |   |   | 5,542 |   |   |   | 8,799 |   |
| Proceeds      from stock sale                                                                                       |   |   | 90 |   |   |   | - |   |
| Proceeds      from exercise of outstanding stock options                                                            |   |   | - |   |   |   | 261 |   |
| Excess      tax benefit from share-based compensation                                                               |   |   |  - |   |   |   | 11 |   |
| Net pay      downs under term loan                                                                             |   |   | (629 | ) |   |   | - |   |
| Principal      payments under capital lease obligations                                                             |   |   | (963 | ) |   |   | (1,090 | ) |
|       Net      cash provided by financing activities                                  |   |   | 4,040 |   |   |   | 7,981 |   |
|                                                                                                                |   |   |   |   |   |   |   |   |
|       Net      increase (decrease) in cash and cash equivalents                       |   |   | (848 | ) |   |   | 1,234 |   |
| Cash      and cash equivalents at beginning of period                                                               |   |   | 5,501 |   |   |   | 2,983 |   |
|                                                                                                                |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents at end of period                                                                     |   | $ | 4,653 |   |   |   | 4,217 |   |
|                                                                                                                |   |   |   |   |   |   |   |   |
| Supplemental      disclosures of cash flow information:                                                             |   |   |   |   |   |   |   |   |
|                                                                                                                |   |   |   |   |   |   |   |   |
| Cash      paid (received) during the period for:                                                                    |   |   |   |   |   |   |   |   |
| Interest                                                                                                            |   | $ | 1,151 |   |   |   | 1,458 |   |
| Income      taxes                                                                                                   |   |   | (230 | ) |   |   | 2,324 |   |
|                                                                                                                |   |   |   |   |   |   |   |   |
| See      accompanying notes to unaudited consolidated financial      statements.                                    |   |   |   |   |   |   |   |   |

----

----

|                                        |   |                  |   |   | For      the Thirteen Week |   |    | For      the Twenty-Six Week |   |
|---------------------------------------------|--------|-----------------------|--------|--------|----------------------------|--------|---------|------------------------------|--------|
|                                        |   |                  |   |   | Periods      Ended         |   |    | Periods      Ended           |   |
|                                        |   | February      3, 2008 |   |   | August      3, 2008        |   |    | July      29, 2007           |   |   | August      3, 2008 |   |   | July      29, 2007 |   |
| Stock      options granted                  |   |                  | 88,000 |   |                       |   | 312,000 |                         |   |   | 43,000 |   |   |   | 374,500 |   |   |   | 63,000 |   |
| Weighted      average exercise price        |   | $                     | 39.02  |   |                       |   | 12.17   |                         |   |   | 39.10 |   |   |   | 12.39 |   |   |   | 38.77 |   |
| Weighted      average grant date fair value |   | $                     | 10.93  |   |                       |   | 4.17    |                         |   |   | 10.58 |   |   |   | 4.15 |   |   |   | 11.01 |   |

|                                          |   |                  |   |   | For      the Thirteen Week |   |   | For      the Twenty-Six Week |   |
|-----------------------------------------------|--------|-----------------------|--------|--------|----------------------------|--------|--------|------------------------------|--------|
|                                          |   |                  |   |   | Periods      Ended         |   |   | Periods      Ended           |   |
|                                          |   | February      3, 2008 |   |   | August      3, 2008        |   |   | July      29, 2007           |   |   | August      3, 2008 |   |   | July      29, 2007 |   |
| Expected      price volatility                |   |                  | 25.6   | %      |                       |   | 36.4   | %                            |   |   | 25.4 | % |   |   | 36.1 | % |   |   | 27.9 | % |
| Risk-free      interest rate                  |   |                  | 4.8    | %      |                       |   | 2.7    | %                            |   |   | 4.8 | % |   |   | 2.6 | % |   |   | 4.8 | % |
| Weighted      average expected lives in years |   |                  | 3.8    |   |                       |   | 4.6    |                         |   |   | 3.8 |   |   |   | 4.5 |   |   |   | 3.7 |   |
| Dividend      yield                           |   |                  | 0.00   | %      |                       |   | 0.00   | %                            |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |

----

| The      average number of shares used in computing earnings per share was as      follows: |   |   |      |   |    |   |
|---------------------------------------------------------------------------------------------|--------|--------|-----------|--------|---------|--------|
|                                                                                        |   |   |      |   |    |   |
| Thirteen      Weeks Ended                                                                   |   | Basic  |      |   | Diluted |   |
|                                                                                        |   |   |      |   |    |   |
| August      3, 2008                                                                         |   |   | 3,814,217 |   |    |   | 3,824,668 |   |
| July      29, 2007                                                                          |   |   | 3,807,515 |   |    |   | 3,845,795 |   |
|                                                                                        |   |   |      |   |    |   |   |   |
|                                                                                        |   |   |      |   |    |   |   |   |
| Twenty-Six      Weeks Ended                                                                 |   |   |      |   |    |   |   |   |
|                                                                                        |   |   |      |   |    |   |   |   |
| August      3, 2008                                                                         |   |   | 3,812,404 |   |    |   | 3,812,404 |   |
| July      29, 2007                                                                          |   |   | 3,804,014 |   |    |   | 3,847,975 |   |

| Beginning      balance as of May 4, 2008 |   | $      | 436  |   |
|------------------------------------------|--------|--------|------|--------|
| Lease      payments                      |   |   | (186 | )      |
| Change      in estimated sublease income |   |   | 119  |   |
| Ending      balance as of August 3, 2008 |   | $      | 369  |   |

----

| · | Merchandising      initiative:  The Company is in the process of evaluating its      merchandise offerings.  Every category is being reviewed to ensure      the individual offerings within those categories represent a quality,      relative and essential piece of the overall merchandise      strategy. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Marketing      initiative:  The Company is aggressively reviewing its fiscal      2009 marketing strategies to find the most effective and cost efficient      method to reach its customers.                                                                                                                  |
| · | Operational      initiative:  The Company is aggressively looking to improve its      operational effectiveness.  This includes both store operations      and corporate office expensestructures.                                                                                                        |

| · | Lawrence      J. Zigerelli joined the Company on July 1, 2008 to become the President –      Chief Executive Officer.                                               |   |   |   |   |   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| · | Donny      R. Johnson was promoted to Executive Vice President - Chief Financial      Officer on July 1, 2008 after serving as Interim Chief Executive      Officer. |   |
| · | Jane      F. Gilmartin joined the Company on July 24, 2008 to become the Executive      Vice President – Chief Operating Officer.                                   |   |   |   |   |
| · | On      August 13, 2008 the Company announced that it was resuming its stock      repurchase program.                                                                     |   |   |   |
| · | Anthony      C. Corradi, Senior Vice President - Technology and Supply Chain resigned      from the Company on August 1, 2008.                                            |   |   |   |   |   |
| · | Edmond      C. Beaith joined the Company as Senior Vice President - Chief Information      Officer on August 25, 2008.                                                    |   |   |   |   |

| · | Net      sales increased 8.9% to $129.6 million.  Same store sales      decreased 2.1% compared to the prior year second  quarter.                                                                                                                                                                                                                                                                                           |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Gross      margin percentage increased to 33.5% of sales, when compared to 33.2% in      the prior year second quarter.                                                                                                                                                                                                                                                                                                                |
| · | Net      earnings per share was $0.85 in the second quarter of fiscal 2009 compared      to $0.68 net earnings per share in the prior year second      quarter.                                                                                                                                                                                                                                                                        |
| · | The      Company’s earnings from continuing operations before interest, taxes,      depreciation and amortization, share-based compensation expense,      preopening store costs, inventory review initiative and executive and      staff severance (“Adjusted EBITDA”) for the second quarter 2009      was $9.2 million compared to the prior year second quarter of $8.1      million.  |

----

----

----

|                                                                                                                                                            |   |                                     |   |   |                                       |   |   |                |   |   |               |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|--------|--------|--------------------------------------------|--------|--------|---------------------|--------|--------|--------------------|---------|
|                                                                                                                                                            |   | For      the Thirteen Week Periods Ended |   |   | For      the Twenty-Six Week Periods Ended |   |
| SG&A      Expenses Breakout                                                                                                                                 |   | August      3, 2008                      |   |   | July      29, 2007                         |   |   | August      3, 2008 |   |   | July      29, 2007 |    |
| General      office (1)                                                                                                                                         |   | $                                        | 4,781  |   |                                       |   | 5,208  |                |   |   | 12,892             |    |   |   | 11,113 |   |
| Distribution      center                                                                                                                                        |   |                                     | 2,241  |   |                                       |   | 2,151  |                |   |   | 4,577              |    |   |   | 4,441 |   |
| 401K      expense                                                                                                                                               |   |                                     | 120    |   |                                       |   | 116    |                |   |   | 244                |    |   |   | 239 |   |
| Same-store      SG&A                                                                                                                                        |   |                                     | 23,072 |   |                                       |   | 23,751 |                |   |   | 45,987             |    |   |   | 48,169 |   |
| Non      same-store SG&A (2)                                                                                                                                |   |                                     | 4,779  |   |                                       |   | 427    |                |   |   | 8,532              |    |   |   | 759 |   |
| Share-based      compensation expense                                                                                                                           |   |                                     | 194    |   |                                       |   | 294    |                |   |   | (135               | )  |   |   | 576 |   |
| Final      SG&A as reported                                                                                                                                 |   |                                     | 35,187 |   |                                       |   | 31,947 |                |   |   | 72,097             |    |   |   | 65,297 |   |
| Less:                                                                                                                                                           |   |                                     |   |   |                                       |   |   |                |   |   |               |    |   |   |   |   |
| Share-based      compensation expense                                                                                                                           |   |                                     | (194   | )      |                                       |   | (294   | )                   |   |   | 135                |    |   |   | (576 | ) |
| Preopening      store costs (2)                                                                                                                                 |   |                                     | (773   | )      |                                       |   | (252   | )                   |   |   | (1,495             | )       |   |   | (351 | ) |
| Executive      and staff severance (1)                                                                                                                          |   |                                     | -      |   |                                       |   | -      |                |   |   | (1,942             | )       |   |   | - |   |
| Adjusted      SG&A                                                                                                                                          |   | $                                        | 34,220 |   |                                       |   | 31,401 |                |   |   | 68,795             |    |   |   | 64,370 |   |
|                                                                                                                                                            |   |                                     |   |   |                                       |   |   |                |   |   |               |    |   |   |   |   |
| Adjusted      SG&A as % of sales                                                                                                                            |   |                                     | 26.4   | %      |                                       |   | 26.4   | %                   |   |   | 29.2               | %       |   |   | 28.6 | % |
|                                                                                                                                                            |   |                                     |   |   |                                       |   |   |                |   |   |               |    |   |   |   |   |
| Sales      per average selling square foot                                                                                                                      |   | $                                        | 29.40  |   |                                       |   | 30.56  |                |   |   | 54.11              |    |   |   | 54.89 |   |
|                                                                                                                                                            |   |                                     |   |   |                                       |   |   |                |   |   |               |    |   |   |   |   |
| Gross      margin dollars per average selling square feet (3)                                                                                                   |   | $                                        | 9.86   |   |                                       |   | 10.13  |                |   |   | 17.29              |    |   |   | 17.61 |   |
|                                                                                                                                                            |   |                                     |   |   |                                       |   |   |                |   |   |               |    |   |   |   |   |
| Adjusted      SG&A per average selling square foot (3)                                                                                                      |   | $                                        | 7.77   |   |                                       |   | 8.06   |                |   |   | 15.81              |    |   |   | 15.68 |   |
|                                                                                                                                                            |   |                                     |   |   |                                       |   |   |                |   |   |               |    |   |   |   |   |
| Adjusted      EBITDA per average selling square foot (3)(4)                                                                                                     |   | $                                        | 2.09   |   |                                       |   | 2.07   |                |   |   | 1.79               |    |   |   | 1.92 |   |
|                                                                                                                                                            |   |                                     |   |   |                                       |   |   |                |   |   |               |    |   |   |   |   |
| Average      inventory per average selling square feet (3)(5)(6)                                                                                                |   | $                                        | 28.07  |   |                                       |   | 31.54  |                |   |   | 26.43              |    |   |   | 29.89 |   |
|                                                                                                                                                            |   |                                     |   |   |                                       |   |   |                |   |   |               |    |   |   |   |   |
| Average      selling square feet (3)                                                                                                                            |   |                                     | 4,406  |   |                                       |   | 3,894  |                |   |   | 4,353              |    |   |   | 4,104 |   |
|                                                                                                                                                            |   |                                     |   |   |                                       |   |   |                |   |   |               |    |   |   |   |   |
| Total      stores operating beginning of period                                                                                                                 |   |                                     | 251    |   |                                       |   | 255    |                |   |   | 262                |    |   |   | 256 |   |
| Total      stores operating end of period                                                                                                                       |   |                                     | 257    |   |                                       |   | 255    |                |   |   | 257                |    |   |   | 255 |   |
| Total      stores less than twelve months old                                                                                                                   |   |                                     |   |   |                                       |   |   |                |   |   | 29                 |    |   |   | 6 |   |
| Total      Non same-stores                                                                                                                                      |   |                                     |   |   |                                       |   |   |                |   |   | 30                 |    |   |   | 9 |   |
|                                                                                                                                                            |   |                                     |   |   |                                       |   |   |                |   |   |               |    |   |   |   |   |
| Supplemental      Data:                                                                                                                                         |   |                                     |   |   |                                       |   |   |                |   |   |               |    |   |   |   |   |
| Same-store      sales change                                                                                                                                    |   |                                     | -2.1   | %      |                                       |   | 4.2    | %                   |   |   | -5.0               | %       |   |   | 3.9 | % |
| Same-store      gross margin dollar change                                                                                                                      |   |                                     | -3.6   | %      |                                       |   | 12.1   | %                   |   |   | -5.2               | %       |   |   | 12.1 | % |
| Same-store      SG&A dollar change                                                                                                                          |   |                                     | -2.9   | %      |                                       |   | 4.8    | %                   |   |   | -4.5               | %       |   |   | 7.9 | % |
| Same-store      total customer count change                                                                                                                     |   |                                     | -7.6   | %      |                                       |   | -4.8   | %                   |   |   | -8.5               | %       |   |   | -4.8 | % |
| Same-store      average sale per ticket change                                                                                                                  |   |                                     | 6.0    | %      |                                       |   | 9.5    | %                   |   |   | 3.8                | %       |   |   | 9.2 | % |
|                                                                                                                                                            |   |                                     |   |   |                                       |   |   |                |   |   |               |    |   |   |   |   |
| (1)      General office includes executive and staff severance                                                                                                  |   |                                     |   |   |                                       |   |   |                |   |   |               |    |   |   |   |   |
| (2)      Non same-stores are those stores opened in Fiscal 2009 & Fiscal 2008      and includes preopening costs                                            |   |                                     |   |   |                                       |   |   |                |   |
| (3)      Average selling square feet is (beginning square feet plus ending square      feet) divided by 2.                                                      |   |                                     |   |   |                                       |   |   |                |   |   |               |    |   |
| (4)      Adjusted EBITDA per selling square foot is a non-GAAP financial measure      and is calculated as Adjusted EBITDA divided by selling square      feet. |   |
| (5)      Average inventory is (beginning inventory plus ending inventory) divided      by 2. This includes only the merchandise inventory at store      level.  |   |
| (6)      Excludes inventory for unopened stores.                                                                                                                |   |                                     |   |   |                                       |   |   |                |   |   |               |    |   |   |   |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |             |    |   | For      the Thirteen Week Periods Ended |   |   | Trailing      Twelve Periods Ended |   |   | For      the Thirteen Week Periods Ended |   |   | Trailing      Twelve Periods Ended |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|---------|--------|------------------------------------------|--------|--------|------------------------------------|--------|--------|------------------------------------------|--------|--------|------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | Fiscal      2008 |    |   | May      4, 2008                         |   |   | April      29, 2007                |   |   | May      4, 2008                         |   |   | August      3, 2008                |    |   | July      29, 2007 |   |   | August      3, 2008 |   |
| Net      earnings (loss) from continuing operations (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $                | 522     |   |                                     |   | (4,392 | )                                  |   |   | (1,847                                   | )      |   |                               | (2,023  | ) |   |   | 3,433 |   |   |   | 2,950 |   |   |   | (1,540 | ) |
| Plus:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |             |    |   |                                     |   |   |                               |   |   |                                     |   |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |             | 3,382   |   |                                     |   | 605    |                               |   |   | 758                                      |   |   |                               | 3,229   |   |   |   | 551 |   |   |   | 839 |   |   |   | 2,941 |   |
| Taxes      (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |             | 538     |   |                                     |   | (3,063 | )                                  |   |   | (1,206                                   | )      |   |                               | (1,319  | ) |   |   | 2,356 |   |   |   | 1,936 |   |   |   | (899 | ) |
| Depreciation      and amortization (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |             | 9,475   |   |                                     |   | 1,774  |                               |   |   | 1,753                                    |   |   |                               | 9,496   |   |   |   | 1,905 |   |   |   | 1,786 |   |   |   | 9,615 |   |
| Share-based      compensation expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |             | 1,130   |   |                                     |   | (329   | )                                  |   |   | 282                                      |   |   |                               | 519     |   |   |   | 194 |   |   |   | 294 |   |   |   | 419 |   |
| Preopening      store costs (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |             | 2,783   |   |                                     |   | 722    |                               |   |   | 100                                      |   |   |                               | 3,405   |   |   |   | 773 |   |   |   | 252 |   |   |   | 3,926 |   |
| Inventory      review initiative                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |             | -       |   |                                     |   | 1,345  |                               |   |   | -                                        |   |   |                               | 1,345   |   |   |   | - |   |   |   | - |   |   |   | 1,345 |   |
| Executive      and staff severance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |             | -       |   |                                     |   | 1,942  |                               |   |   | -                                        |   |   |                               | 1,942   |   |   |   | - |   |   |   | - |   |   |   | 1,942 |   |
| =Adjusted      EBITDA (1)(3)(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |             | 17,830  |   |                                     |   | (1,396 | )                                  |   |   | (160                                     | )      |   |                               | 16,594  |   |   |   | 9,212 |   |   |   | 8,057 |   |   |   | 17,749 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |             |    |   |                                     |   |   |                               |   |   |                                     |   |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |             |    |   |                                     |   |   |                               |   |   |                                     |   |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjusted      EBITDA                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |             |    |   |                                     |   |   |                               |   |   |                                     |   |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Same-stores                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |             | 47,623  |   |                                     |   | 7,243  |                               |   |   | 8,199                                    |   |   |                               | 46,667  |   |   |   | 15,342 |   |   |   | 15,046 |   |   |   | 46,963 |   |
| Non      same-stores (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |             | 1,650   |   |                                     |   | (6     | )                                  |   |   | (42                                      | )      |   |                               | 1,686   |   |   |   | 1,281 |   |   |   | 487 |   |   |   | 2,480 |   |
| Corporate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |             | (22,116 | )      |                                     |   | (6,297 | )                                  |   |   | (6,027                                   | )      |   |                               | (22,386 | ) |   |   | (4,982 | ) |   |   | (5,325 | ) |   |   | (22,043 | ) |
| Warehouse                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |             | (9,327  | )      |                                     |   | (2,336 | )                                  |   |   | (2,290                                   | )      |   |                               | (9,373  | ) |   |   | (2,429 | ) |   |   | (2,151 | ) |   |   | (9,651 | ) |
| Reconciled      adjusted EBITDA (1)(3)(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |             | 17,830  |   |                                     |   | (1,396 | )                                  |   |   | (160                                     | )      |   |                               | 16,594  |   |   |   | 9,212 |   |   |   | 8,057 |   |   |   | 17,749 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |             |    |   |                                     |   |   |                               |   |   |                                     |   |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |             | 5,501   |   |                                     |   | 4,977  |                               |   |   | 4,986                                    |   |   |                               | 4,977   |   |   |   | 4,653 |   |   |   | 4,217 |   |   |   | 4,653 |   |
| Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |             | 33,013  |   |                                     |   | 41,080 |                               |   |   | 42,440                                   |   |   |                               | 41,080  |   |   |   | 36,964 |   |   |   | 37,698 |   |   |   | 36,964 |   |
| Debt,      net of cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $                | 27,512  |   |                                     |   | 36,103 |                               |   |   | 37,454                                   |   |   |                               | 36,103  |   |   |   | 32,311 |   |   |   | 33,481 |   |   |   | 32,311 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |             |    |   |                                     |   |   |                               |   |   |                                     |   |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1)      These amounts will not agree with the 2008 fiscal 2008 10-K filing due to      the 14 stores the Company closed in the first quarter of fiscal      2009. These stores are now shown in discontinued      operations.                                                                                                                                                                                                                                                                                                                                                               |   |
| (2) These      costs are not consistent quarter to quarter as the Company does not open      the same number of stores in each quarter of each fiscal year. These      costs are directly associated with the number of stores that have or will      be opened and are incurred prior to the grand opening of each      store.                                                                                                                                                                                                                                                   |   |
| (3) For      the trailing twelve periods ended August 3, 2008 the average open weeks      for the Company's 30 non same-stores is 32 weeks.                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
| (4) During      fiscal year 2009, the Company made a change in its Executive Management      team and Board of Directors resulting in several initiatives to reduce      SG&A expense. For the twenty-six weeks ended August 3, 2008, the      Company has reduced SG&A approximately $2.9 million when compared to      the same period for the previous fiscal year.  The initiatives      include, but are not limited to, executive and staff      reduction, reduced floor care services, professional service      providers' expense and travel expense. |   |

----

|                                                                     |   |                        |   |   |                          |   |   |                |   |   |               |   |
|--------------------------------------------------------------------------|--------|-----------------------------|--------|--------|-------------------------------|--------|--------|---------------------|--------|--------|--------------------|--------|
|                                                                     |   | For      the Thirteen Weeks |   |   | For      the Twenty-Six Weeks |   |
|                                                                     |   | Ended                       |   |   | Ended                         |   |
|                                                                     |   | August      3, 2008         |   |   | July      29, 2007            |   |   | August      3, 2008 |   |   | July      29, 2007 |   |
| Merchandise      Category:                                               |   |                        |   |   |                          |   |   |                |   |   |               |   |
| Consumables      and commodities                                         |   |                        | 29     | %      |                          |   | 29     | %                   |   |   | 31                 | %      |   |   | 31 | % |
| Electronics,      entertainment, sporting goods, toys and outdoor living |   |                        | 29     | %      |                          |   | 27     | %                   |   |   | 27                 | %      |   |   | 26 | % |
| Apparel      and accessories                                             |   |                        | 19     | %      |                          |   | 20     | %                   |   |   | 19                 | %      |   |   | 19 | % |
| Home      furnishings and décor                                     |   |                        | 13     | %      |                          |   | 13     | %                   |   |   | 13                 | %      |   |   | 13 | % |
| Other                                                                    |   |                        | 10     | %      |                          |   | 11     | %                   |   |   | 10                 | %      |   |   | 11 | % |
|                                                                     |   |                        |   |   |                          |   |   |                |   |   |               |   |   |   |   |   |
| Total                                                                    |   |                        | 100    | %      |                          |   | 100    | %                   |   |   | 100                | %      |   |   | 100 | % |

----

| · | The      Company did not have adequate transition plans to address turnover in      finance and accounting personnel.  As a result, due to      significant changes in these personnel that occurred around the Company’s      February 3, 2008 year-end closing process, the Company did not have      sufficient trained resources to effectively operate the year-end closing      process controls.  This resulted in misstatements that were      corrected prior to the issuance of the consolidated financial      statements.  As a result of this material weakness, there is more      than a reasonable possibility that a material misstatement of the      Company’s annual or interim financial statements will not be prevented or      detected on a timely basis. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                     |                  |                |                       |                       |                   |                        | Maximum      Number |
|------------------------------------------|-----------------------|---------------------|----------------------------|----------------------------|------------------------|-----------------------------|---------------------|
|                                     |                  |                |                       |                       | Total      Number of   | (or      Approximate Dollar |
|                                     |                  |                |                       |                       | shares      (or Units) | Value)      of Shares (or   |
|                                     | Total      Number     | Average      Price  | Purchased      as Part     | Units)      that May Yet   |
|                                     | Of      Shares (or    | Paid      per Share | of      Publicly Announced | Be      Purchased Under    |
| Period                                   | Units)      Purchased | (or      Unit)      | Plans      or Programs     | the      Plans or Programs |
| May      5, 2008 – June 1, 2008    |                  | -                   |                       | -                          |                   | -                           |                | 196,663 |
| June      2, 2008 – July 6, 2008   |                  | -                   |                       | -                          |                   | -                           |                | 196,663 |
| July      7, 2008 – August 3, 2008 |                  | -                   |                       | -                          |                   | -                           |                | 196,663 |

| 3.1    | Articles      of Incorporation of Duckwall-ALCO Stores, Inc., amended as of June 13,      1994 and restated solely for filing with the Securities and Exchange      Commission (filed as Exhibit 3.1 to Company's Quarterly Report on Form      10-Q for the fiscal quarter ended August 1, 2004 and incorporated herein      by reference). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                         |
| 3.2    | Bylaws      of Duckwall-ALCO Stores, Inc. (filed as Exhibit 3.2 to Company's Quarterly      Report on Form 10-Q for the fiscal quarter ended August 1, 2004 and      incorporated herein by reference).                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                         |
| 4.1    | Specimen      of Duckwall-ALCO Stores, Inc. Common Stock Certificate.                                                                                                                                                                                                                                                                        |

----

|   |                                                                                                                                                                                                                         |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.2    | Reference      is made to the Amended and Restated Articles of Incorporation described      under 3.1 above and Bylaws described under 3.2 above.                                                                            |
|   |                                                                                                                                                                                                                         |
| 10.1   | Employment      Agreement dated July 1, 2008 between the Company and Lawrence J.      Zigerelli is incorporated by reference to Exhibit 10.1 to the Current      Report on Form 8-K of the Company dated July 3,  2008. |

| 10.2   | Stock Purchase      Agreement dated July 1, 2008 between the Company and Lawrence J. Zigerelli      is incorporated by reference to Exhibit 10.2 to the Current Report on Form      8-K of the Company dated July 3, 2008.              |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                    |
| 10.3   | Non-Qualified Stock      Option Agreement dated July 1, 2008 between the Company and Lawrence J.      Zigerelli is incorporated by reference to Exhibit 10.3 to the Current      Report on Form 8-K of the Company dated July 3,  2008. |

| 10.4 | Employment      Agreement dated July 24, 2008 between the Company and Jane F.      Gilmartin is incorporated by reference to Exhibit 10.4 to the Current      Report on Form 8-K of the Company dated July 24,  2008. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.5   | Employment      Agreement dated August 25, 2008 between the Company and Edmond C.      Beaith is incorporated by reference to Exhibit 10.5 to the Current Report      on Form 8-K of the Company dated August 25, 2008.                                                                                                                                                                                                      |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.6   | Separation      Agreement and Release, dated as of August 1, 2008, between the Company and      Anthony C. Corradi, including consulting agreement is incorporated by      reference to Exhibit 10.6 to the Current Report on Form 8-K of the Company      dated August 1, 2008.                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 31.1   | Certification      of Chief Executive Officer of Duckwall-ALCO Stores, Inc. dated September      11, 2008, pursuant to Rule 13a-4(a) under the Securities Exchange Act of      1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of      2002.                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 31.2   | Certification      of Chief Financial Officer of Duckwall-ALCO Stores, Inc. dated September      11, 2008, pursuant to Rule 13a-4(a) under the Securities Exchange Act of      1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of      2002.                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 32.1   | Certification      of Chief Executive Officer of Duckwall-ALCO Stores, Inc, dated September      11, 2008, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to      Section 906 of the Sarbanes-Oxley Act of 2002, which is furnished with      this Quarterly Report on Form 10-Q for the quarter ended August 3, 2008      and is not treated as filed in reliance upon § 601(b)(32) of      Regulations S-K.  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 32.2   | Certification      of Chief Financial Officer of Duckwall-ALCO Stores, Inc., dated September      11, 2008, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to      Section 906 of the Sarbanes-Oxley Act of 2002, which is furnished with      this Quarterly Report on Form 10-Q for the quarter ended August 3, 2008      and is not treated as filed in reliance upon § 601(b)(32) of      Regulations S-K. |

----

| Signature      and Title                                |   |   | Date                    |
|---------------------------------------------------------|--------|--------|-------------------------|
|                                                    |   |   |                    |
| /s/      Lawrence J. Zigerelli                          |   |   | September      11, 2008 |
| Lawrence      J. Zigerelli                              |   |   |                    |
| President      and Chief Executive Officer              |   |   |                    |
| (Principal      Executive Officer)                      |   |   |                    |
|                                                    |   |   |                    |
| /s/      Donny R. Johnson                               |   |   | September      11, 2008 |
| Donny      R. Johnson                                   |   |   |                    |
| Executive      Vice President - Chief Financial Officer |   |   |                    |
| (Principal      Financial and Accounting Officer)       |   |   |                    |
|                                                    |   |   |                    |
| /s/      Raymond A.D. French                            |   |   | September      11, 2008 |
| Raymond      A.D. French                                |   |   |                    |
| Director                                                |   |   |                    |
|                                                    |   |   |                    |
| /s/      James G. Hyde                                  |   |   | September      11, 2008 |
| James      G. Hyde                                      |   |   |                    |
| Director                                                |   |   |                    |
|                                                    |   |   |                    |
| /s/      Dennis E. Logue                                |   |   | September      11, 2008 |
| Dennis      E. Logue                                    |   |   |                    |
| Director                                                |   |   |                    |
|                                                    |   |   |                    |
| /s/      Lolan C. Mackey                                |   |   | September      11, 2008 |
| Lolan      C. Mackey                                    |   |   |                    |
| Director                                                |   |   |                    |
|                                                    |   |   |                    |
| /s/      Royce L. Winsten                               |   |   | September      11, 2008 |
| Royce      L. Winsten                                   |   |   |                    |
| Director      - Chairman of Board                       |   |   |                    |

----