UNITED STATES  
  
               SECURITIES AND EXCHANGE COMMISSION  
  
                     Washington, D.C. 20549  
  
                            FORM 10-Q

(Mark One)
  
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the   
Securities Exchange Act of 1934  

For the quarterly period ended       October 27, 1996

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    (I.R.S. Employer  
incorporation or organization)     Identification No.)  

401 Cottage Street  
Abilene, Kansas                              67410-2832       
(Address of principal executive offices      (Zip Code)  
  
Registrant's telephone number, including area code:  
(913) 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 [ ]  
  
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY                         
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:                              
                                                                          
     Indicate by check mark whether the registrant has filed all 
documents and reports required to be filed by Sections 12, 13 or  
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.   
           
                         YES [X]        NO [ ]  
                                                                          
APPLICABLE ONLY TO CORPORATE ISSUERS:                                     
                                                                          
4,900,823 shares of common stock, $.0001 par value (the issuer's  
only class of common stock), were outstanding as of October 27, 1996. 
 
<PAGE>  
<TABLE>  
  
PART I.  Financial Information.

         ITEM 1.  Financial Statements.

                          Duckwall-ALCO Stores, Inc.
                                And Subsidiary
                         Consolidated Balance Sheets

(Dollars in Thousands)                                                   
<CAPTION>                                                                      
  
                                                             
                                                                         
                                                                         
                                                                               
                                       October 27,1996   January 28,1996
                                           (Unaudited)                  
                                       _______________   _______________
<S>                                                <C>               <C>
ASSETS

Current assets:                                                          
     Cash on deposit and on hand                $1,685              $177 
     Receivables                                 3,824             2,545 
     Inventories                                89,812            71,635 
     Property held for resale                       41                41 
     Other current assets                        1,879             1,210 
                                                                         
          Total current assets                  97,241            75,608 
                                                                         
Property and equipment:                                                  
     Land                                        2,575             2,297 
     Buildings                                  20,053            16,867 
     Furniture, fixtures and equipment          25,189            22,354 
     Transportation equipment                    1,600             1,473 
     Leasehold improvements                      4,074             3,164 
     Construction in progress                    3,538             1,389 
                                                                         
          Total property and equipment          57,029            47,544 
                                                                         
     Less accumulated depreciation              25,736            23,676 
                                                                         
          Net property and equipment            31,293            23,868 
                                                                         
     Property under capital leases              20,407            20,541 
     Less accumulated for amortization          12,892            12,404 
                                                                         
          Net property under capital leases      7,515             8,137 
                                                                         
     Debt financing cost                            90               110 
                                                                         
                                                                         
               Total assets                   $136,139          $107,723 
                                                                         
<FN>                                                                         
See accompanying notes to unaudited consolidated financial statements.   
</TABLE>
<PAGE>
<TABLE>  
  
                          Duckwall-ALCO Stores, Inc.
                                And Subsidiary
                         Consolidated Balance Sheets

(Dollars in Thousands)                                                   
<CAPTION>

                                        October 27, 1996   January 28,1996
                                           (Unaudited)                  
                                         _______________   _______________
<S>                                                 <C>               <C>
LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:
Current maturities of:
     Long term debt                              $1,163              $545 
     Capital lease obligations                      607               637 
     Accounts payable                            24,618            16,335 
     Income taxes payable                           901               820 
     Accrued salaries and commissions             2,255             3,614 
     Accrued taxes other than income              2,721             2,203 
     Deferred taxes                               2,492             2,467 
     Other current liabilities                    1,504             1,598 

          Total current liabilities              36,261            28,219 

Notes payable under revolving loan               17,146            12,015 
Long term debt                                                            
     less current maturities                      3,170             1,599 

Capital lease obligations                                                 
     less current maturities                      9,307             9,755 

Deferred income taxes                             2,356             2,329 

Other non-current liabilities                       818               745 

Total liabilities                                69,058            54,662 

stockholders' equity:
Common stock, $.0001 par value, authorized
20,000,000 shares; issued and outstanding             1                 1
4,900,823 shares at October 27, 1996
3,999,510 shares at January 28, 1996
Additional paid-in capital                       52,082            40,690 

Retained earnings since June 2, 1991             14,998            12,370 

Total stockholders' equity                       67,081            53,061 

Total liabilities and stockholders' equity     $136,139          $107,723 

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
                          Duckwall-ALCO Stores, Inc.
                                And Subsidiary
                      Consolidated Statement of Operations

(Dollars in Thousands Except Per Share Amounts)
(Unaudited)                                        
<CAPTION>

                               For the Thirteen       For the Thirty-nine
                                 Week Periods            Week Periods
                               
                          October 27  October 29     October 27  October 29
                                1996        1995           1996        1995
                          ______________________     ______________________
<S>                              <C>         <C>            <C>         <C>
Net sales ................   $64,857     $60,795       $192,631    $178,327  
Cost of sales ............    43,201      41,115        129,013     120,254

     Gross margin ........    21,656      19,680         63,618      58,073

Selling, general
     and administrative ..    18,661      17,108         54,119      49,992

Depreciation
     and amortization ....       943         794          2,732       2,291


     Total operating exp..    19,604      17,902         56,851      52,283 


Income from operations ...     2,052       1,778          6,767       5,790

Interest expense..........       912         823          2,504       2,240

Earnings
    before income taxes ..     1,140         955          4,263       3,550         

Income tax expense .......       439         363          1,635       1,349


     Net earnings ........      $701        $592         $2,628      $2,201 



Earnings per common and
 common equivalent share .     $0.17       $0.15          $0.65       $0.55

<FN>
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
                          Duckwall-ALCO Stores, Inc.
                                And Subsidiary
                     Consolidated Statements of Cash Flow

(Dollars in Thousands)
(Unaudited)
<CAPTION>

                                     For the Thirty-nine Week Periods Ended
                                        October 27,1996   October 29, 1995
                                        _______________   ________________
<S>                                                 <C>                <C>

CASH FLOWS FROM OPERATING ACTIVITIES


     Net Earnings                                $2,628             $2,201

     Adjustments to reconcile                                           
     net earnings to net cash                                           
     used in operating activities                                       

          Amortization of                                               
          debt financing costs                       30                135 

          Deferred income tax benefit                52               (654)

          Depreciation and amortization           2,732              2,291

          LIFO Expense                              180                250 

          Increase in inventories               (18,357)           (20,572)

          Increase in accounts payable            8,283             11,955

          Increase in receivables                (1,279)              (864) 

          Decrease (Increase)
          in other current assets                  (669)              (255)
 
          Increase in accrued taxes
          other than income                         518                977

          Increase (Decrease) in accrued
          salaries and commissions               (1,359)            (1,259)

          (Decrease) in income taxes payable        717               (532)

          Decrease in other liabilities             (21)              (977)

          Net cash used in
          operating activities                   (6,545)            (7,304)

CASH FLOW FROM INVESTING ACTIVITIES

          Capital expenditures                   (9,537)            (6,818)

          Net cash used in
          investing activities                   (9,537)            (6,818)


CASH FLOW FROM FINANCING ACTIVIES

          Decrease in bank overdrafts                 0                (76)

          Increase in revolving loan              5,131             16,281

          Principal payments on
          long term notes                          (636)              (684)

          Principal payments on
          capital leases                           (478)              (472)

          Increase in long term notes             2,826                  0 

          Debt issue costs                          (10)              (110)

          Proceeds from stock issuance           10,757                  0

          Net cash provided by
          financing activities                   17,590             14,939


          Net increase in cash                    1,508                817 

          Cash at beginning of period               177                  0 

               Cash at end of period             $1,685               $817 

<FN>
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>

                          Duckwall-ALCO Stores, Inc.
                                And Subsidiary
             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 1996 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 accurals) necessary to present
          fairly the financial position of the Company and the results of
          its operations and cash flows for the interm periods.

(2)  Principles of Consolidation

               The consolidated financial statements include the accounts
          of Duckwall-ALCO Stores, Inc. and its wholly-owned subsidiary. 
          All significant intercompany transactions and balances have    
          been eliminated in consolidation.                              
                                                                         
(3)  Earnings Per Share                                                  
                                                                         
               Earnings per share has been computed based on the weighted
          average number of common shares outstanding during the period  
          plus common stock equivalents, when dilutive, consisting of    
          stock options.                                                 
                                                                         
               The average number of shares used in computing earnings   
          per share was as follows:                                      
                                                                         
                                                                         
                    Thirteen Weeks Ending
                    October 27, 1996                            4,147,651
                    October 29, 1995                            4,026,838

                    Thirty-nine Weeks Ending
                    October 27, 1996                            4,072,455
                    October 29, 1995                            4,015,598


<PAGE>
                          Duckwall-ALCO Stores, Inc.
                                And Subsidiary

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATION.

(Dollars in thousands)                                          
[CAPTION]

The thirteen weeks ended October 27, 1996 and October 29, 1995 are referred
to herein as the third quarter of fiscal 1997 and 1996, respectively.

As used below the term "competitive market" refers to any market wherein 
there is one or more national or regional 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 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

Net sales for the third quarter of fiscal 1997 increased $4,062 or 6.7% 
to $64,857 compared to $60,795 for the third quarter of fiscal 1996.
During the third quarter of fiscal 1997, the Company opened 6 stores and
closed one store, resulting in a quarter end total of 175 stores.  All of
the new store openings were in new non-competitive markets and the store
that was closed was in a competitive market.  This increased the 
percentage of stores in non-competitive markets at the end of the quarter
to 74%.  Net sales for all comparable stores (open the full thirty-nine
week period in both  fiscal 1997 and fiscal 1996) decreased $2,273 in the
third quarter, or 4.0%.  The same store sales decrease was primarily
attributable to decreases in sales in competitive ALCO markets.  The
prototype Class 18 stores and the Duckwall variety stores produced 
decreases of $120 or .7% and $37 or 1.4% respectively.

Net sales for the thirty-nine week period ending October 27, 1996,
increased $14,304 or 8.0% to $192,631 compared to $178,327 of the
comparable thirty-nine week period of the prior fiscal year.  Net sales of
comparable stores decreased by $3,965, or 2.4% for the thirty-nine week
period ending October 27, 1996 compared to the thirty-nine week period of
the prior fiscal year.

Gross margin for the third quarter of fiscal 1997 increased $1,976 or 10.0%
to $21,656 compared to $19,680 in the third quarter of fiscal 1996.  Gross
margin as a percentage of sales was 33.4% for the third quarter of  fiscal
1997 compared to 32.4% in the third quarter of fiscal 1996. The improvement
in the gross margin percentage was due to a higher markup on purchases and
lower shrinkage.

Gross margin for the thirty-nine week period ended October 27, 1996 was
$63,618, which was $5,545 or 9.6% higher than last year's thirty-nine week
gross margin of $58,073.  As a percent of net sales, gross margin for the
thirty-nine week period ended October 27, 1996 was 33.0% compared to 32.6%
in the thirty-nine week period of the prior fiscal year.
  
Selling, general and administrative expense increased $1,553 or 9.1% to
$18,661 in the third quarter of fiscal 1997 compared to $17,108 in the
third quarter of fiscal 1996, primarily due to the increase in total
stores.  As a percentage of net sales, selling, general and administrative
expenses in the third  quarter of fiscal 1997 was 28.8%, compared to 28.1%
in the third quarter of fiscal 1996.  Store operating expenses decreased 
on an average per store basis, but as a percent of sales, increased due to
the previously discussed comparable store sales decreases.  Store closing
expenses and insurance expenses also contributed to the .7% increase in
selling, general and administrative expenses.

Selling, general and administrative expenses increased $4,127 or 8.3% to
$54,119 for the thirty-nine week period ended October 27, 1996 compared to
$49,992 for the comparable thirty-nine week period of the prior fiscal year. 
Selling, general and administrative expense as a percent of net sales was
28.1% for the thirty-nine week period ended October 27, 1996
compared to 28.0% in the comparable thirty-nine week period last year.
The increase in selling, general and administrative expense in fiscal 1997
is primarily due to an increase in the number of stores.

Depreciation and amortization expense increased $149 or 18.8% to $943 in
the third quarter of fiscal 1997 compared to $794 in the third quarter of 
fiscal 1996.  The increase is due to additional buildings and equipment 
associated with the store expansion program.
 

<PAGE>

                          Duckwall-ALCO Stores, Inc.
                                And Subsidiary

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATION (continued).

(Dollars in thousands)                                          
[CAPTION]

	
Income from operations increased $274 or 15.4% to $2,052  in the third
quarter of fiscal 1997 compared to $1,778 in the third quarter of fiscal
1996.  Income from operations as a percentage of net sales increased to
3.2% in the third quarter of fiscal 1997 compared to 2.9% in the third
quarter of fiscal 1996.

Income from operations increased $977 or 16.9% to $6,767 for the
thirty-nine week period ended October 27, 1996 compared to $5,790 in the
comparable thirty-nine week period of the prior fiscal year.

Interest expense increased $89 or 10.8% in the third quarter of fiscal 1997
compared to the third quarter of fiscal 1996.  The increase is attributable
to higher borrowing levels due to purchases of inventory, buildings and
equipment to support the new store openings.

Net earnings for the third  quarter of fiscal 1997 were $701, an increase
of $109 or 18.4% over the net earnings of $592 for the third quarter of
fiscal 1996.

The Company has recorded a tax benefit of $626 in the first two quarters
of fiscal 1997 as an increase to additional paid in capital based on
utilization of $1,754 of the NOL carry forward arising prior to the 1991
reorganization. No tax benefit was recorded in the third quarter of fiscal
1997, as the full NOL carryover available had been used in the first two
quarters of fiscal 1997.

LIQUIDITY AND CAPITAL RESOURCES	

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

At October 27, 1996 working capital (defined as current assets less current
liabilities) was $60,980 compared to $47,389 at the end of fiscal 1996.

Cash used by operating activities for the thirty-nine week periods ended
October 27, 1996 and October 29, 1995  was $6,545 and $7,304 respectively.

The Company generated cash from financing activities for the thirty-nine
week periods ended October 27, 1996 and October 29, 1995  of  $17,590
and $14,939, respectively.  In fiscal 1997, cash was generated by borrowing
under the revolving loan credit facility in the amount of $5,131, new long
term notes on certain company fixed assets in the amount of $2,826, and
completion of a public offering of stock, net of expenses, in the amount
of $10,757.   Subsequent to the end of the third quarter of fiscal 1997,
the company sold additional shares of stock to the underwriters to cover
over-allotments, raising an additional $2,311.  In fiscal 1996, all of the
cash from financing activities was generated by borrowing under the
revolving loan credit facility.

Cash used for acquisition of property and equipment for the thirty-nine
week periods ended October 27, 1996 and October 29, 1995 totaled $9,537 and
$6,818, respectively.  Total anticipated cash payments for acquisition of
property and equipment in fiscal 1997, principally for store buildings and
store and warehouse fixtures and equipment, are $12,578.


<PAGE>



                          Duckwall-ALCO Stores, Inc.
                                And Subsidiary

PART II.  OTHER INFORMATION.

     Item 1.  Legal Proceedings                                          
                   No legal proceedings except those covered by insurance
                   occurred during the thirteen week period ended        
                   October 27, 1996.                                       
                                                                         
     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)  Reports on Form 8-K                              
                        No reports filed                                 
<PAGE>

                          Duckwall-ALCO Stores, Inc.
                                And Subsidiary

                                 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, December 6, 1996      /s/ Bryan M. DeCordova                      
                            Bryan M. DeCordova                                
                            Vice President - Finance                          
                            Chief Financial Officer                           
                                                                         
                            Signing on behalf of the                          
                            registrant and as principal                       
                            financial officer                                 


<PAGE>