|UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|-----------------------------------------------------------------------



|FORM 10-Q
|---------



|[X] | QUARTERLY
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------





|For the quarterly period ended
August 3, 2003
|---------------------------------------------



|OR
|--



|[   ] | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|----- | ----------------------------------------------------------------------------------------





|Commission File Number 0-20269
|------------------------------



|DUCKWALL-ALCO STORES, INC.(Exact name of registrant as specified in its charter)
|--------------------------------------------------------------------------------

| | Kansas                                                               |  | 48-0201080                                 | 
| | -------------------------------------------------------------------- |  | ------------------------------------------ | 
| | (State or other jurisdiction of
      incorporation or organization) |  | (I.R.S. Employer
      Identification No.) | 

| | 401 Cottage Street
      Abilene, Kansas |  | 67410-2832 | 
| | ---------------------------------------- |  | ---------- | 
| | (Address of principal executive offices) |  | (Zip Code) | 



|Registrants telephone number including
area code: (785) 263-3350
|-----------------------------------------------------------------



|Indicate by check
mark whether the registrant (1) has filed all reports  required to be filed by Section 13
or 15(d) of the Securities Exchange Act of  1934 during the preceding 12 months (or for
such shorter period that the  registrant was required to file such reports), and (2) has
been subject to such  filing requirements for the past 90 days. Yes [X] No[ ]
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Indicate by check mark whether
      the registrant is an accelerated filer (as defined in Rule 12b-2 of the
      Act). Yes [  ] No [X]
|----------------------------------------------------------------------------------------------------------------------------------------



|APPLICABLE ONLY TO CORPORATE ISSUERS:
|-------------------------------------



|4,205,632 shares
of common stock, $.0001 par value (the issuers only  class of common stock), were
outstanding as of August 3, 2003.
|-------------------------------------------------------------------------------------------------------------------------------------



| |  | 
| |  | 



---





|Duckwall-ALCO Stores, Inc.
And Subsidiaries
Consolidated Balance Sheets(Dollars in Thousands)
|---------------------------------------------------------------------------------------------



|Assets
|------

|                                          | August 3, 
        2003 | February 2, 
        2003
|----------------------------------------- | ----------------------- | -------------------------
|                                          | (Unaudited)             |                          
|Current assets:                           |                         |                          
|Cash and cash equivalents                 | $1,809                  |                          
|Receivables                               | 2,045                   |                          
|Inventories                               | 132,067                 |                          
|Prepaid expenses                          | 2,617                   |                          
|                                          |                         |                          
|Total current assets                      | 138,538                 |                          
|                                          |                         |                          
|Property and equipment                    | 85,315                  |                          
|Less accumulated depreciation             | 56,779                  |                          
|                                          |                         |                          
|Net property and equipment                | 28,536                  |                          
|                                          |                         |                          
|Property under capital leases             | 20,120                  |                          
|Less accumulated amortization             | 16,775                  |                          
|                                          |                         |                          
|Net property under capital
        leases | 3,345                   |                          
|                                          |                         |                          
|Other non-current assets                  | 202                     |                          
|Deferred income taxes                     | 557                     |                          
|                                          |                         |                          
|Total assets                              | $171,178                |                          
|                                          |                         |                          

|See accompanying notes to
unaudited consolidated financial statements.
|----------------------------------------------------------------------



| |  | 
| |  | 



---





|Duckwall-ALCO Stores, Inc.
And Subsidiaries
Consolidated Balance Sheets(Dollars in Thousands)
|---------------------------------------------------------------------------------------------



|Liabilities and Stockholders Equity
|------------------------------------

|                                                                                                                                                                | August 3, 
      2003 |  | February 2, 
      2003
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- |  | -----------------------
|
|Current
      liabilities:                                                                                                                                      | (Unaudited)           |  |                        
|Current maturities of:                                                                                                                                          |                       |  |                        
|Long term debt                                                                                                                                                  | $516                  |  |                        
|Capital lease obligations                                                                                                                                       | 712                   |  |                        
|Accounts payable                                                                                                                                                | 28,499                |  |                        
|Income taxes payable                                                                                                                                            | 1,395                 |  |                        
|Accrued salaries and commissions                                                                                                                                | 4,593                 |  |                        
|Accrued taxes other than income                                                                                                                                 | 4,822                 |  |                        
|Other current liabilities                                                                                                                                       | 2,832                 |  |                        
|Deferred income taxes                                                                                                                                           | 2,175                 |  |                        
|                                                                                                                                                                |                       |  |                        
|Total current liabilities                                                                                                                                       | 45,544                |  |                        
|                                                                                                                                                                |                       |  |                        
|Notes
      payable under revolving loan                                                                                                                        | 14,576                |  |                        
|Long
      term debt - less current maturities                                                                                                                  | 271                   |  |                        
|Capital
      lease obligations - less current maturities                                                                                                       | 5,028                 |  |                        
|Other
      noncurrent liabilities                                                                                                                              | 1,397                 |  |                        
|Deferred
      revenue                                                                                                                                          | 638                   |  |                        
|                                                                                                                                                                |                       |  |                        
|Total liabilities                                                                                                                                               | 67,454                |  |                        
|                                                                                                                                                                |                       |  |                        
|Stockholders'
      equity:                                                                                                                                     |                       |  |                        
|Common stock, $.0001 par value, authorized 
           20,000,000 shares; issued and outstanding 
           4,205,632 shares and 4,260,557 shares respectively | 1                     |  |                        
|
|
|Additional paid-in capital                                                                                                                                      | 48,216                |  |                        
|Retained earnings                                                                                                                                               | 55,507                |  |                        
|                                                                                                                                                                |                       |  |                        
|Total stockholders' equity                                                                                                                                      | 103,724               |  |                        
|                                                                                                                                                                |                       |  |                        
|Total liabilities and stockholders'
      equity                                                                                                                | $171,178              |  |                        
|                                                                                                                                                                |                       |  |                        

|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 
      Periods Ended |  | For
      the Twenty-Six Week 
      Periods Ended
|------------------------------------------------------------------------------- | ------------------------------------------------ |  | --------------------------------------------------
|                                                                                |                                                  |  |                                                   
|                                                                                | August
      3, 2003                             |  | August
      4, 2002                              
|                                                                                |                                                  |  |                                                   
|Net
      sales                                                                 | $109,501                                         |  | $101,785                                          
|Cost
      of sales                                                             | 73,712                                           |  | 67,860                                            
|                                                                                |                                                  |  |                                                   
|Gross
      margin                                                              | 35,789                                           |  | 33,925                                            
|                                                                                |                                                  |  |                                                   
|Selling,
      general and administrative                                       | 31,414                                           |  | 29,800                                            
|Depreciation
      and amortization                                             | 1,878                                            |  | 1,662                                             
|                                                                                |                                                  |  |                                                   
|Total operating expenses                                                        | 33,292                                           |  | 31,462                                            
|                                                                                |                                                  |  |                                                   
|Operating
      income from 
         continuing operations                     | 2,497                                            |  | 2,463                                             
|Interest
      expense                                                          | 328                                              |  | 350                                               
|                                                                                |                                                  |  |                                                   
|Earnings
      from continuing operations 
         before income taxes         | 2,169                                            |  | 2,113                                             
|Income
      tax expense                                                        | 786                                              |  | 776                                               
|                                                                                |                                                  |  |                                                   
|Earnings
      from continuing operations                                       | 1,383                                            |  | 1,337                                             
|Earnings
      (Loss) from discontinued 
         operations, net of income tax | 216                                              |  | (68)                                              
|                                                                                |                                                  |  |                                                   
|Net
      earnings                                                              | $1,599                                           |  | $1,269                                            
|                                                                                |                                                  |  |                                                   
|Earnings
      per share                                                        |                                                  |  |                                                   
|Basic                                                                           |                                                  |  |                                                   
|Continuing operations                                                           | $0.33                                            |  | $0.31                                             
|Discontinued operations                                                         | $0.05                                            |  | ($0.01)                                           
|                                                                                |                                                  |  |                                                   
|Net earnings                                                                    | $0.38                                            |  | $0.30                                             
|                                                                                |                                                  |  |                                                   
|Diluted                                                                         |                                                  |  |                                                   
|Continuing operations                                                           | $0.32                                            |  | $0.30                                             
|Discontinued operations                                                         | $0.05                                            |  | ($0.01)                                           
|                                                                                |                                                  |  |                                                   
|Net earnings                                                                    | $0.37                                            |  | $0.29                                             
|                                                                                |                                                  |  |                                                   

|See accompanying notes to
unaudited consolidated financial statements.
|----------------------------------------------------------------------



| |  | 
| |  | 



---





|Duckwall-ALCO Stores, Inc.
And Subsidiaries
Consolidated Statements of Cash FlowsDollars in Thousands
(Unaudited)
|-----------------------------------------------------------------------------------------------------------------

|                                                                                             |                                                         | For the Twenty-Six Week 
      Periods Ended
|-------------------------------------------------------------------------------------------- | ------------------------------------------------------- | --------------------------------------------
|
|                                                                                             |                                                         | August
      3, 2003                        
|Cash
      Flows From Operating Activities:                                                  |                                                         |                                             
|Net
      earnings                                                                           | $2,157                                                  |                                             
|Adjustments to reconcile net earnings to net cash 
         provided by operating activities |                                                         |                                             
|
|                                                                                             |                                                         |                                             
|                                                                                             | Amortization of debt financing costs                    | 37                                          
|                                                                                             | Depreciation and amortization                           | 3,693                                       
|                                                                                             | (Increase) decrease in inventories                      | (2,390)                                     
|                                                                                             | Increase in accounts payable                            | 3,258                                       
|                                                                                             | (Increase) decrease in receivables                      | (30)                                        
|                                                                                             | Increase in prepaid expenses                            | (202)                                       
|                                                                                             | Increase in accrued taxes other than income             | 887                                         
|                                                                                             | (Decrease) increase in accrued salaries and commissions | (779)                                       
|                                                                                             | Increase (decrease) in income taxes payable             | 69                                          
|                                                                                             | Increase (decrease) in deferred income taxes            | 11                                          
|                                                                                             | (Decrease) increase in deferred revenue                 | (219)                                       
|                                                                                             | (Decrease) increase in other liabilities                | (55)                                        
|                                                                                             |                                                         |                                             
|Net
      cash provided by operating activities                                              | 6,437                                                   |                                             
|                                                                                             |                                                         |                                             
|Cash
      Flows From Investing Activities:                                                  |                                                         |                                             
|                                                                                             | Proceeds from sale of property                          | 763                                         
|                                                                                             | Capital expenditures                                    | (2,696)                                     
|                                                                                             |                                                         |                                             
|Net
      cash used in investing activities                                                  | (1,933)                                                 |                                             
|                                                                                             |                                                         |                                             
|Cash
      Flows From Financing Activities:                                                  |                                                         |                                             
|                                                                                             | Proceeds from exercise of stock options                 | 115                                         
|                                                                                             | Repurchase of common stock                              | (658)                                       
|                                                                                             | Decrease in revolving loan                              | (2,907)                                     
|                                                                                             | Principal payments on long term notes                   | (245)                                       
|                                                                                             | Principal payments on capital leases                    | (356)                                       
|                                                                                             | Debt issue costs                                        | 0                                           
|                                                                                             |                                                         |                                             
|Net
      cash used in financing activities                                                  | (4,051)                                                 |                                             
|                                                                                             |                                                         |                                             
|Net
      increase (decrease) in cash and cash equivalents                                   | 453                                                     |                                             
|Cash
      and cash equivalents at beginning of period                                       | 1,356                                                   |                                             
|                                                                                             |                                                         |                                             
|Cash
      and cash equivalents at end of period                                             | $1,809                                                  |                                             
|                                                                                             |                                                         |                                             

|See accompanying notes to
unaudited consolidated financial statements
|---------------------------------------------------------------------



| |  | 
| |  | 



---





|Duckwall-ALCO Stores, Inc.
And Subsidiaries
Notes to Unaudited Consolidated Financial Statements
|------------------------------------------------------------------------------------------------



|(1) | Basis
of Presentation
|--- | ---------------------





|The accompanying
unaudited consolidated financial statements are for  interim periods and, consequently,
do not include all disclosures required by  generally accepted accounting principles for
annual financial statements. It is  suggested that the accompanying unaudited
consolidated financial statements be  read in conjunction with the consolidated financial
statements included in the  Companys fiscal 2003 Annual Report. In the opinion of
management of  Duckwall-ALCO Stores, Inc., the accompanying unaudited consolidated
financial  statements reflect all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position of the Company and the  results of its
operations and cash flows for the interim periods.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Principles
of Consolidation
|--- | ---------------------------





|The consolidated
financial statements include the accounts of  Duckwall-ALCO Stores, Inc. and its wholly
owned subsidiaries. All significant  intercompany transactions and balances have been
eliminated in consolidation.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Stock-based
Compensation
|--- | ------------------------





|The Company
applies the intrinsic-value-based method of  accounting prescribed by Accounting
Principles Board (APB) Opinion No. 25,  Accounting for Stock Issued to Employees, and
related interpretations to account  for its fixed-plan stock options. Under this method,
compensation expense is  recorded on the date of grant only if the current market price
of the underlying  stock exceeded the exercise price. If the Company had elected to
recognize  compensation cost based on the fair value of the options granted at grant
date,  net earnings and net earnings per share would have been decreased to the pro
forma amounts indicated in the table below:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                            | For The Thirteen Week
      Periods Ended |  | For The Twenty-Six Week 
      Periods Ended
|--------------------------------------------------------------------------- | ----------------------------------------- |  | --------------------------------------------
|
|                                                                            |                                           |  |                                             
|                                                                            | August
      3, 2003                      |  | August
      4, 2002                        
|Net
      earnings as reported                                              | $1,599                                    |  | $1,269                                      
|Pro
      forma stock-based employee 
        compensation cost, net of tax | (21)                                      |  | (62)                                        
|
|                                                                            |                                           |  |                                             
|Pro
      forma net earnings                                                | $1,578                                    |  | $1,207                                      
|                                                                            |                                           |  |                                             
|Earnings
      per share as reported:                                       |                                           |  |                                             
|Basic                                                                       | $0.38                                     |  | $0.30                                       
|Diluted                                                                     | $0.37                                     |  | $0.29                                       
|                                                                            |                                           |  |                                             
|Earnings
      per share, pro forma:                                        |                                           |  |                                             
|Basic                                                                       | $0.38                                     |  | $0.28                                       
|Diluted                                                                     | $0.37                                     |  | $0.27                                       

|(4) | Impact
of Change in Accounting Principle
|--- | ----------------------------------------





|Effective February
4, 2002, the Company adopted SFAS No. 144,  Accounting for the Impairment or Disposal of
Long-Lived Assets. SFAS No. 144 provides a single accounting model for long-lived assets
to be disposed of. The statement also changes the criteria for classifying an asset as
held for sale, broadens the scope of assets to be disposed of that qualify for reporting
as discontinued operations and changes the timing of recognizing losses on such
operations. The adoption of SFAS No. 144 resulted in the reclassification of certain
prior year revenue and expense activity related to five stores closed during fiscal year
2003 as discontinued operations. In
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | 
| |  | 



---





|addition, seven stores  were closed in the first
quarter of fiscal year 2004, and one store was closed  in the second quarter of fiscal
year 2004. Certain revenue and expense activity  related to the stores closed in Fiscal
2004 was also reclassified as  discontinued operations.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Effective February
3, 2003, the Company adopted SFAS No. 143,  Accounting for Asset Retirement Obligations.
SFAS No. 143 requires the Company to record the fair value of an asset retirement
obligation as a liability in the period in which it incurs a legal obligation associated
with the retirement of tangible long-lived assets that result from the acquisition,
construction, development, and/or normal use of the assets. The Company also records a
corresponding asset that is depreciated over the life of the asset. Subsequent to the
initial measurement of the asset retirement obligation, the obligation will be adjusted
at the end of each period to reflect the passage of time and changes in the estimated
future cash flows underlying the obligation. The adoption of SFAS No. 143 did not have a
material effect on the Companys financial statements.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|The Company
adopted Emerging Issues Task Force Issue 02-16, Accounting by a Customer (Including a
Reseller) for Certain Consideration Received from a Vendor (EITF 02-16). EITF 02-16
provides guidance on the income statement classification of amounts received by a
customer, including a reseller (including reimbursements for expenses such as
cooperative advertising), for transactions entered into after December 31, 2002 and
limited guidance regarding timing of recognition for volume rebates for transactions
entered into after November 21, 2002. The adoption of EITF 02-16 did not have a
significant impact on the Companys financial statements for the thirteen or
twenty-six weeks ending August 3, 2003.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Earnings
Per Share
|--- | ------------------





|Basic net earnings
per share is computed by dividing net earnings by  the weighted average number of shares
outstanding. Diluted net earnings per  share reflects the potential dilution that could
occur if contracts to issue  securities (such as stock options) were exercised.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|The average number
of shares used in computing earnings per share was  as follows:
|----------------------------------------------------------------------------------

| | Thirteen
      Weeks Ended   | Basic     | Diluted
| | ---------------------------- | --------- | -------
| |                              |           |        
| | August
      3, 2003         | 4,197,224 |        
| | August
      4, 2002         | 4,253,054 |        
| |                              |           |        
| | Twenty-Six
      Weeks Ended |           |        
| |                              |           |        
| | August
      3, 2003         | 4,228,129 |        
| | August
      4, 2002         | 4,212,258 |        

|ITEM 2. MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|---------------------------------------------------------------------------------------------



|(Dollars in thousands)
|----------------------



|The thirteen weeks
ended August 3, 2003 and August 4, 2002 are referred  to herein as the second quarter of
fiscal 2004 and 2003 respectively.
|----------------------------------------------------------------------------------------------------------------------------------------------



|As used below the
term competitive market refers to any market  wherein there is one or more
national or regional full-line discount stores  located in the market served by the
Company. The term non-competitive market refers to any market where there is
no national or regional full-line discount  store located in the market served by the
Company. Even in a non-competitive  market, the Company faces competition from a variety
of sources.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | 
| |  | 



---





|RESULTS OF OPERATIONS
|---------------------



|Thirteen and Twenty-Six Weeks Ended August 3,
2003 Compared to Thirteen and Twenty-Six Weeks Ended August 4, 2002.
|------------------------------------------------------------------------------------------------------------------



|The Company
continues to execute its basic strategy of opening stores  in under-served markets that
have no competition from national or regional  full-line discount retailers. During the
second quarter of fiscal 2004 the  Company closed one Duckwall store and replaced it with
an ALCO store in the same  market. For the twenty-six week period ending August 3, 2003,
the Company opened  seven stores and closed eight stores. The operations of stores closed
in the  current and prior year have been reflected as discontinued operations in all
periods presented. As of August 3, 2003 over 85% of the Companys 263 stores are  in
non-competitive markets.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Net sales for the
second quarter of fiscal 2004 increased $7,716 or  7.6% to $109,501 compared to $101,785
for the second quarter of fiscal 2003.  Same store sales decreased $210 or 0.2%. Sales of
spring and summer seasonal  products were generally soft in May and early June, but
improved as the quarter  progressed. July same-store sales increased 2.7%. Net sales for
the twenty-six  week period ending August 3, 2003 increased $12,918 or 6.6% to $209,549
compared  to $196,631 in the comparable twenty-six week period of the prior fiscal year.
Same store sales increased $31, which, in percentage terms, was essentially flat  to the
prior year.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Gross margin for
the second quarter of fiscal 2004 increased $1,864 or  5.5% to $35,789 compared to
$33,925 in the second quarter of fiscal 2003. Gross  margin as a percentage of sales was
32.7% for the second quarter of fiscal 2004  compared to 33.3% for the second quarter of
fiscal 2003. The decline in the  gross margin percentage was due to soft sales of higher
margin spring and summer  seasonal products during May and early June, as well as an
increase in shrinkage  expense.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Gross margin for
the twenty-six week period ended August 3, 2003 was  $69,137, which was $3,592 or 5.5%
higher than last years twenty-six week gross  margin of $65,545. As a percent of
net sales, gross margin for the twenty-six  week period ended August 3, 2003 was 33.0%
compared to 33.3% in the twenty-six  week period of the prior fiscal year. The slight
decline in the gross margin  percentage was due entirely to issues in the second quarter
described above.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Selling, general
and administrative expense increased $1,614 or 5.4% to  $31,414 in the second quarter of
fiscal 2004 compared to $29,800 in the second  quarter of fiscal 2003. As a percentage of
net sales, selling, general and  administrative expenses in the second quarter of fiscal
2004 were 28.7%,  compared to 29.3% in the second quarter of fiscal 2003. The decrease in
the  selling, general and administrative expense percentage was due to lower
distribution center and incentive compensation costs, which were partially  offset by
increased general insurance expense.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Selling, general
and administrative expense increased $3,139 or 5.4% to  $61,517 for the twenty-six week
period ended August 3, 2003 compared to $58,378  for the comparable twenty-six week
period of the prior fiscal year. Selling,  general and administrative expense as a
percent of net sales was 29.4% for the  twenty-six week period ending August 3, 2003
compared to 29.7% for the  twenty-six week period of the prior fiscal year. The decrease
in the selling,  general and administrative expense percentage was due primarily to lower
store  remodeling, payroll, and incentive compensation costs, which were partially
offset by higher store opening and general insurance expenses.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Depreciation and
amortization expense increased $216 or 13.0% to $1,878  in the second quarter of fiscal
2004 compared to $1,662 in the second quarter of  fiscal 2003. Depreciation and
amortization expense increased $415 or 12.7% to  $3,675 for the twenty-six week period
ended August 3, 2003 compared to $3,260 in  the comparable twenty-six week period of the
prior fiscal year.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Operating income
from continuing operations increased $34 or 1.4% to  $2,497 in the second quarter of
fiscal 2004 compared to $2,463 in the second  quarter of fiscal 2003. Operating income
from continuing operations
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | 
| |  | 



---





|as a  percentage of net sales was 2.3% in the
second quarter of fiscal 2004 compared  to 2.4% in the second quarter of fiscal 2003.
|-----------------------------------------------------------------------------------------------------------------------------------



|Operating income
from continuing operations increased $38 or 1.0% to  $3,945 for the twenty-six week
period ended August 3, 2003 compared to $3,907 in  the comparable twenty-six week period
of the prior fiscal year.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Interest expense
decreased $22 or 6.3% to $328 in the second quarter of  fiscal 2004 compared to $350 in
the second quarter of fiscal 2003. Interest  expense decreased $82 or 10.3% to $718 for
the twenty-six week period ended  August 3, 2003 compared to $800 in the comparable
twenty-six week period of the  prior fiscal year. The reduction in interest expense was
due primarily to lower  interest rates for both the thirteen and twenty-six week periods
of fiscal 2004.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Earnings from
continuing operations for the second quarter of fiscal  2004 were $1,383, an increase of
$46 or 3.4% from the earnings from continuing  operations of $1,337 for the second
quarter of fiscal 2003. Earnings from  continuing operations for the twenty-six week
period ended August 3, 2003 were  $2,058, and increase of $92 or 4.7% compared to $1,966
in the comparable  twenty-six week period of the prior fiscal year.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Earnings from
discontinued operations, net of income tax, was $216 in  the second quarter of fiscal
2004, compared to a loss of $68 in the second  quarter of fiscal 2003. The operations of
closed stores have been reflected as  discontinued operations in all periods presented.
The increase in earnings from  discontinued operations was impacted by the gain on the
sale of a store building  that increased earnings by $259, or $0.06 per diluted share.
Earnings from  discontinued operations, net of income tax, was $99 for the twenty-six
week  period ended August 3, 2003, compared to a loss of $166 in the comparable
twenty-six week period of the prior fiscal year.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Net earnings for
the second quarter of fiscal 2004 were $1,599, an  increase of $330 or 26.0% from the net
earnings of $1,269 in the second quarter  of fiscal 2003. Diluted net earnings per share
for the second quarter of fiscal  2004 were $0.37, an increase of $0.08, or 27.6% from
the diluted net earnings  per share of $0.29 in the second quarter of fiscal 2003. Net
earnings for the  twenty-six week period ended August 3, 2003 were $2,157, an increase of
$357 or  19.8% compared to $1,800 in the comparable twenty-six week period of the prior
fiscal year. Diluted net earnings per share for the twenty-six week period ended  August
3, 2003 were $0.50, an increase of $0.09 or 22.0% compared to $0.41 per  share in the
comparable twenty-six week period or the prior fiscal year.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|LIQUIDITY AND CAPITAL RESOURCES
|-------------------------------



|The Companys
primary sources of funds are cash flows from operations,  borrowings under its revolving
loan credit facility, mortgage financing and  vendor trade credit financing (increases in
accounts payable).
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|At August 3, 2003
working capital (defined as current assets less  current liabilities) was $92,994
compared to $93,377 at the end of fiscal 2003.
|--------------------------------------------------------------------------------------------------------------------------------------------------



|Cash provided by
operating activities in the twenty-six week period of  fiscal 2004 and 2003 was $6,437
and $7,820 respectively. The decrease in the  amount of cash provided by operating
activities in the twenty-six week period of  fiscal 2004 compared to the twenty-six week
period of fiscal 2003 was primarily  due to a larger buildup of inventory levels in
fiscal 2004 compared to fiscal  2003, due to the higher number of store openings.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Cash used in
investing activities in the twenty-six week period of  fiscal 2004 and 2003 totaled
$1,933 and $3,563, respectively. Total anticipated  cash payments for acquisition of
property and equipment in fiscal 2004,  principally for store buildings and store and
warehouse fixtures and equipment  are approximately $8,000.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|The Company used
cash in financing activities in the twenty-six week  period of fiscal 2004 and 2003 of
$4,051 and $5,216 respectively. Cash was used  to pay down the revolving loan. Cash was
also used to purchase and retire 69,300  shares of Common Stock in fiscal 2004.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | 
| |  | 



---





|BUSINESS OPERATIONS AND SEGMENT INFORMATION
|-------------------------------------------



|The Companys
business activities include operation of ALCO discount  stores in towns with populations
which are typically less than 5,000 not served  by other regional or national full-line
discount chains and Duckwall variety  stores that offer a more limited selection of
merchandise which are primarily  located in communities of less than 2,500 residents.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|For financial
reporting purposes, the Company has established two  operating segments: ALCO
Discount Stores, and All Other, which includes the  Duckwall variety
stores and other business activities, such as general office,  warehouse and distribution
activities.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                        | For The Thirteen Week 
      Periods Ended |  | For The Twenty-Six Week 
      Periods Ended
|--------------------------------------- | ------------------------------------------ |  | --------------------------------------------
|
|                                        |                                            |  |                                             
|                                        | August 3, 2003                             |  | August 4, 2002                              
|                                        |                                            |  |                                             
|Segment Information                     |                                            |  |                                             
|                                        |                                            |  |                                             
|Net Sales:                              |                                            |  |                                             
|ALCO
      Discount Stores              | $100,923                                   |  | $93,798                                     
|All
      Other                         |                                            |  |                                             
|External                                | 8,578                                      |  | 7,987                                       
|Intercompany                            | 51,169                                     |  | 48,534                                      
|                                        |                                            |  |                                             
|                                        | $160,670                                   |  | $150,319                                    
|                                        |                                            |  |                                             
|Depreciation and
      Amortization     |                                            |  |                                             
|ALCO
      Discount Stores              | $1,156                                     |  | $1,012                                      
|All
      Other                         | 738                                        |  | 672                                         
|                                        |                                            |  |                                             
|                                        | $1,894                                     |  | $1,684                                      
|                                        |                                            |  |                                             
|Income
      (expense) from Operations: |                                            |  |                                             
|ALCO Discount Stores                    | $8,941                                     |  | $8,925                                      
|All Other                               | (6,489)                                    |  | (6,495)                                     
|                                        |                                            |  |                                             
|                                        | $2,452                                     |  | $2,430                                      
|                                        |                                            |  |                                             
|                                        |                                            |  |                                             
|Capital
      Expenditures:             |                                            |  |                                             
|ALCO Discount Stores                    | $1,009                                     |  | $1,618                                      
|All Other                               | 162                                        |  | 99                                          
|                                        |                                            |  |                                             
|                                        | $1,171                                     |  | $1,717                                      
|                                        |                                            |  |                                             
|Identifiable
      Assets:              |                                            |  |                                             
|ALCO Discount Stores                    | $131,944                                   |  | $124,427                                    
|All Other                               | 39,234                                     |  | 37,758                                      
|                                        |                                            |  |                                             
|                                        | $171,178                                   |  | $162,185                                    
|                                        |                                            |  |                                             

| |  | 
| |  | 



---





|Income from operations as reflected in the above
segment information has been  determined differently than income from operations in the
accompanying  consolidated statements of operations as follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Intercompany Sales
Intercompany sales represent transfers of merchandise from the warehouse to ALCO
discount stores and Duckwall variety stores.
| | ------------------------------------------------------------------------------------------------------------------------------------------------



| | Intercompany Expense Allocations
General and administrative expenses incurred at the general office
have not been allocated to the ALCO Discount Stores for purposes of determining income
from operations for the segment information.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Warehousing
and distribution costs including freight applicable to  merchandise purchases, have been
allocated to the ALCO Discount Stores  segment based on the Companys customary
method of allocation for such  costs (primarily as a stipulated percentage of merchandise
purchases).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Inventories
Inventories are based on the FIFO method for segment information purposes and on the
LIFO method for the consolidated statements of operations.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| | Leases
All
leases are accounted for as operating leases for purposes of determining income from
operations for purposes of determining the segment information for the ALCO Discount
Stores whereas capital leases are accounted for as such in the consolidated statements
of operations.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Identifiable
assets as reflected in the above segment information  include cash and cash equivalents,
receivables, inventory, property and  equipment, and property under capital leases.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|A reconciliation of the segment information to
the amounts reported in the  consolidated financial statements is presented below:
|---------------------------------------------------------------------------------------------------------------------------------

|                                                                                   | For The Thirteen Week 
      Periods Ended |  | For The Twenty-Six Week 
      Periods Ended
|---------------------------------------------------------------------------------- | ------------------------------------------ |  | --------------------------------------------
|
|                                                                                   |                                            |  |                                             
|                                                                                   | August
      3, 2003                       |  | August
      4, 2002                        
|                                                                                   |                                            |  |                                             
|Net
      sales per above segment information                                      | $160,670                                   |  | $150,319                                    
|Intercompany
      elimination                                                     | (51,169)                                   |  | (48,534)                                    
|                                                                                   |                                            |  |                                             
|Net sales per consolidated statementsof operations                                 | $109,501                                   |  | $101,785                                    
|
|                                                                                   |                                            |  |                                             
|Income
      from operations per above 
         segment information               | $2,452                                     |  | $2,430                                      
|Leases                                                                             | 45                                         |  | 33                                          
|                                                                                   |                                            |  |                                             
|Income
      from operations per consolidated 
           statements of operations | $2,497                                     |  | $2,463                                      
|                                                                                   |                                            |  |                                             
|
|



| |  | 
| |  | 



---





|MARKET RISK DISCLOSURE
|----------------------



|The revolving
credit facility has a floating interest rate that is  affected by changes in market
interest rates. The Company entered into an  interest rate swap in December 2000 with a
notional principal amount of $10,000  whereby the Company paid a fixed rate of interest
and received interest based on  LIBOR for the period April 15, 2001 to April 15, 2002 to
mitigate a portion of  its interest rate risk under the revolving credit facility.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|On April 15, 2002,
the Company replaced the existing line of credit  with a new line of credit with Fleet
Retail Finance Inc. that expires in April  2006. The credit line available is
$70,000,000, which carries a variable rate of  interest.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|CRITICAL ACCOUNTING POLICIES
|----------------------------



|As discussed in
Note 1 (d) to the Consolidated Financial Statements in  the Companys fiscal 2003
Annual Report, inventories are stated at the lower of  cost or net realizable value with
cost determined using the last-in, first-out  (LIFO) method. The retail inventory method (RIM)
used by the Company is an  averaging method that has been widely used in the retail
industry. This method  calculates a cost to retail ratio that is applied to the retail
value of  inventory to calculate cost inventory and the resulting gross margin.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Use of the RIM
method does not eliminate the use of management  judgments and estimates, including
markdowns and shrinkage, which significantly  impact the ending inventory valuation at
cost and the resulting gross margins.  The Company continually evaluates product
categories to determine if markdown  action is appropriate, or if a markdown reserve
should be established. The  Company recognizes that the use of the retail inventory
method will result in  valuing inventories at lower of cost or market if markdowns are
currently taken  as a reduction of the retail value of inventories. As of August 3, 2003
and  August 4, 2002, the Company had recorded markdowns that had not been taken and
which served to reduce inventories to lower of cost or market by approximately  $619,000
and $479,000, respectively.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Management
believes that the Companys RIM provides an inventory  valuation which reasonably
approximates cost and results in carrying inventory  at the lower of cost or market.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|The Company
considers determination of impairment of long-lived assets  as a critical accounting
policy because determination as to whether the  long-lived assets of a store are impaired
and, if impaired, the fair value of  such assets requires the use of judgment,
particularly as it relates to  projecting whether the sum of expected undiscounted future
cash flows for the  store over an extended period of time will equal or exceed the
carrying value of  such assets. Management uses the best information available to make
the  determination; however, actual future cash flows for the store may vary
significantly from the cash flows projected in conjunction with the impairment
assessment. The potential impact on the financial statements of incorrect  judgments
regarding impairment of long-lived assets is that a provision for  impairment could be
needlessly recorded if projected future cash flows for a  store are significantly under
estimated or a provision for impairment could be  deferred until later determined
necessary in a future period if initial  projected cash flows are over estimated. See
Note 1 of Notes to Consolidated  Financial Statements for a description of the Companys
accounting policy for  impairment of long-lived assets.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ITEM 4.  CONTROLS AND PROCEDURES/INTERNAL
CONTROLS
|--------------------------------------------------



|As of the end of
the quarter ended August 3, 2003, our management,  including our Chairman of the Board,
President and Chief Financial Officer, has  evaluated the effectiveness of the design and
operation of our disclosure  controls and procedures pursuant to Rule 13a-15(b) under the
Securities Exchange  Act of 1934. Based upon that evaluation, our Chairman of the Board,
President  and Chief Financial Officer concluded that our disclosure controls and
procedures were effective to provide reasonable assurance that the objectives of  our
disclosure controls and procedures are satisfied. There has been no change  in our
internal control over financial reporting during the quarter ended August  3, 2003 that
has materially affected, or is reasonably likely to materially  affect, our internal
control over financial reporting.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | 
| |  | 



---





|OTHER INFORMATION
|-----------------



| | PART II
| | -------



| | Item 1. | Legal Proceedings
No legal proceedings except those covered by  insurance occurred
during the thirteen-week period  ended August 3, 2003.
| | ------- | -----------------------------------------------------------------------------------------------------------------------------------------



| | Item 2. | Changes in Securities
Not applicable
| | ------- | ------------------------------------



| | Item 3. | Defaults Upon Senior Securities
Not Applicable
| | ------- | ----------------------------------------------



| | Item 4. | Submission of Matters to a Vote of Security Holders
Not Applicable
| | ------- | ------------------------------------------------------------------



| | Item 5. | Other Information
None
| | ------- | ----------------------



| | Item 6. | Exhibits and Reports on Form 8-K
(a)  None
(b)  Current Report on Form 8-K (Item 12) dated on August 25, 2003
| | ------- | -------------------------------------------------------------------------------------------------------------



|SIGNATURES
|----------



|Pursuant to the
requirements of the Securities Exchange Act of 1934 the  registrant has duly caused this
report to be signed on its behalf by the  undersigned thereunto duly authorized.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | DUCKWALL-ALCO STORES, INC.
      (Registrant)
| | ---------------------------------------------

| | Date, September 5, 2003 |  | /s/ Richard A. Mansfield                                                           | 
| | ----------------------- |  | ---------------------------------------------------------------------------------- | 
| |                         |  | Richard A. MansfieldVice President - Finance
      Chief Financial Officer         | 
| |                         |  |                                                                                    | 
| |                         |  | Signing on behalf of the
      registrant and as principal
      financial officer | 



| |  | 
| |  | 



---





|EXHIBIT INDEX
|-------------



|3.1 | Amended
and Restated Articles of Incorporation (filed as Exhibit 3(a)  to Companys
Registration Statement on Form S-1 and hereby incorporated  herein by reference).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------





|3.2 | Certificate
of Amendment to the Articles of Incorporation (filed as  Exhibit 3(b) to Companys
Annual Report on Form 10-K for the fiscal  year ended January 29, 1995, and incorporated
herein by reference)  (filed as Exhibit 3(b) to Companys Annual Report on Form 10-K
for the  fiscal year ended January 29, 1995, and incorporated herein by  reference.)
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|3.3 | Bylaws
(filed as Exhibit 3(b) to Companys Registration Statement on Form S-1 and hereby
incorporated herein by reference).
|--- | ---------------------------------------------------------------------------------------------------------------------------





|4.1 | Specimen
Common Stock  Certificates  (filed as Exhibit 4.1 to Companys  Registration
Statement on Form S-1 and  incorporated  herein by reference).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------





|4.2 | Reference
is made to the Amended and Restated Articles of Incorporation  and Bylaws described above
under 3(1) and 3(3), respectively (filed as  Exhibit 4(a) to Companys Registration
Statement on Form S-1 and hereby  incorporated herein by reference).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|4.3 | Reference
is made to the Certificate of Amendment to the Articles of  Incorporation described above
under 3(2) (filed as Exhibit 3(2) to  Companys Annual Report on Form 10-K for the
fiscal year ended January  29, 1995, and incorporated herein by reference).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|10.11 | Employment
Agreement dated December 28, 2000 between the Company and  Glen L. Shank (filed as
Exhibit 10.11 to Companys Annual Report on  Form 10-K for the fiscal year ended
February 2, 2003, and incorporated  herein by reference).
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|10.12 | Employment
Agreement dated December 28, 2000 between the Company and  James E. Schoenbeck (filed as
Exhibit 10.12 to Companys Annual Report  on Form 10-K for the fiscal year ended
February 2, 2003, and  incorporated herein by reference).
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|10.13 | Employment
Agreement dated December 28, 2000 between the Company and  James R. Fennema (filed as
Exhibit 10.13 to Companys Annual Report on  Form 10-K for the fiscal year ended
February 2, 2003, and incorporated  herein by reference).
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|10.14 | Employment
Agreement dated December 28, 2000 between the Company and  Richard A. Mansfield. (filed
as Exhibit 10.14 to Companys Annual  Report on Form 10-K for the fiscal year ended
February 2, 2003, and  incorporated herein by reference.).
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|10.15 | Employment
Agreement dated December 28, 2000 between the Company and  Tom L. Canfield, Jr. (filed as
Exhibit 10.15 to Companys Annual Report  on Form 10-K for the fiscal year ended
February 2, 2003, and  incorporated herein by reference).
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|10.16 | Loan
and Security Agreement, dated as of April 15, 2002, between the  Company and Fleet Retail
Finance Inc. (filed as Exhibit 10.16 to  Companys Annual Report on Form 10-K for
the fiscal year ended February  2, 2003, and incorporated herein by reference).
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|10.17 | Joinder
Agreement and First Amendment to Loan and Security Agreement  dated September 9, 2002
among the Company, Fleet Retail Finance Inc.,  and DA Good Buys, Inc. (filed as Exhibit
10.17 to Companys Annual  Report on Form 10-K for the fiscal year ended February 2,
2003, and  incorporated herein by reference).
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|31.1 | Certificate of the Chairman of the
      Board, President of Duckwall-ALCO Stores, Inc. dated September 5, 2003 for
      the Quarterly Report on Form 10-Q for the quarter ended August 3, 2003 filed
      pursuant to Section 13a-14(a)/15d-14(a) of the Securities Exchange Act of
      1934.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|31.2 | Certificate of the Chief Financial
      Officer of Duckwall-ALCO Stores, Inc. dated September 5, 2003 for the Quarterly
      Report on Form 10-Q for the quarter ended August 3, 2003 filed pursuant
      to Section 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| |  | 
| |  | 



---





|32.1 | 18 U.S.C. Section 1350 Certification
      of Chairman of the Board, President of Duckwall-ALCO Stores, Inc. dated
      September 5, 2003, which is accompanying this Quarterly Report on Form 10-Q
      for the quarter ended August 3, 2003 and is treated as furnished rather
      filed in reliance on the SECs final rule dated June 5, 2003, Release
      No. 33-8238.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|32.2 | 18 U.S.C. Section 1350 Certification
      of Chief financial Officer of Duckwall-ALCO Stores, Inc. dated September
      5, 2003, which is accompanying this Quarterly Report on Form 10-Q for the
      quarter ended August 3, 2003 and is treated as furnished rather filed in
      reliance on the SECs final rule dated June 5, 2003, Release No. 33-8238
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| |  | 
| |  | 



---