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 ....... May 03, 1998

     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:  
     (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 [ ]  
  
                   
     APPLICABLE ONLY TO CORPORATE ISSUERS:                                     
                                                                          
     5,119,761 shares of common stock, $.0001 par value (the issuer's  
     only class of common stock), were outstanding as of May 3, 1998. 
 
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<TABLE>  
             
PART I.  Financial Information.

         ITEM 1.  Financial Statements.

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

                            (Dollars in Thousands)                                                   
<CAPTION>                                                                      
  

                                              May 3,         February 1,
                                               1998             1998
                                           (Unaudited)
                                           ___________      __________
<S>                                                <C>               <C>
ASSETS

Current assets:                                                          
     Cash on deposit and on hand                $6,620            $2,555 
     Receivables                                 4,086             3,158 
     Inventories                               114,149           103,445                                
     Other current assets                        2,154             2,131
                                                                         
          Total current assets                 127,009           111,289
                                                                         
Property and equipment                          73,923            70,774                             
Less accumulated depreciation                   31,861            30,627
                                                                         
          Net property and equipment            42,062            40,147
                                                                         
Property under capital leases                   20,407            20,407 
Less accumulated amortization                   13,966            13,811
                                                                         
          Net property under capital leases      6,441             6,596
                                                                         
Debt financing cost                                351                82
                                                                         
                                                                         
               Total assets                   $175,863          $158,114
                                                                         
<FN>                                                                         
See accompanying notes to unaudited consolidated financial statements.   
</TABLE>
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<TABLE>  
  
                          Duckwall-ALCO Stores, Inc.
                                And Subsidiary
                         Consolidated Balance Sheets

                            (Dollars in Thousands)                                                   
<CAPTION>

                                              May 3,         February 1, 
                                               1998             1998
                                           (Unaudited)                  
                                          ___________       ____________
<S>                                                <C>               <C>
LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:
   Current maturities of:
     Long term debt                             $1,336            $1,333 
     Capital lease obligations                     540               518
   Accounts payable                             28,418            19,009
   Income taxes payable                            847             2,272 
   Accrued salaries and commissions              2,956             4,884 
   Accrued taxes other than income               3,624             3,159 
   Other current liabilities                     1,292             1,804 
   Deferred taxes                                2,324             2,324 

          Total current liabilities             41,337            35,303 

Notes payable under revolving loan              36,509            25,591 
Long term debt                                                            
     less current maturities                     3,443             3,646 

Capital lease obligations                                                 
     less current maturities                     8,478             8,630 

Other noncurrent liabilities                       833               782
Deferred revenue                                 1,210             1,272
Deferred income taxes                            2,496             2,496

          Total liabilities                     94,306            77,720 

Stockholders' equity:
Common stock, $.0001 par value, authorized
  20,000,000 shares; issued and outstanding
  5,119,761 shares and 5,098,761 shares
  respectively                                       1                 1
Additional paid-in capital                      54,631            54,474 

Retained earnings since June 2, 1991            26,925            25,919 

          Total stockholders' equity            81,557            80,394 

          Total liabilities and
               stockholders' equity           $175,863          $158,114

<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
                                                     Week Periods
                               
                                               May 3,            May 4,       
                                                1998               1997       
                                          ____________      ____________     
<S>                                                <C>               <C>     
Net sales ...............................      $81,052           $69,272     
Cost of sales ...........................       52,902            45,537     

          Gross margin ..................       28,150            23,735     

Selling, general
     and administrative .................       24,130            20,611     

Depreciation
     and amortization ...................        1,389             1,062     


          Total operating expenses ......       25,519            21,673     


Income from operations ..................        2,631             2,062     

Interest expense.........................        1,026               682     

Earnings
    before income taxes .................        1,605             1,380     

Income tax expense ......................          599               531     


     Net earnings .......................       $1,006              $849     



Earnings per share:
     Basic  .............................        $0.20             $0.17
     Diluted ............................        $0.20             $0.17
                                                       
<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 Thirteen Week
                                                    Periods Ended
                                            May 3, 1998        May 4, 1997
                                       -----------------    ----------------
<S>                                                <C>                 <C>

Cash flows from operating activities:

     Net Earnings                               $1,006               $849 
     Adjustments to reconcile                                           
       net earnings to net cash                                           
       used in operating activities                                       

          Amortization of                                               
            debt financing costs                    51                  7 
          Depreciation and amortization          1,389              1,062
          Increase in inventories              (10,704)           (15,888)
          Increase in accounts payable           9,409              8,376
          Decrease (increase) in receivables      (928)              (286) 
          Decrease (increase)
            in other current assets               ( 23)              (228)
          Decrease in accrued expenses          (1,463)            (1,507)
          (Decrease) in income taxes payable    (1,425)            (1,841)                
          Increase (decrease)in other
            liabilities                           (523)               158
          Net cash used in
            operating activities                (3,211)            (9,298)

Cash flow from investing activities:

        Capital expenditures                    (3,149)            (3,429)
        Net cash used in
          investing activities                  (3,149)            (3,429)


Cash flow from financing activities:

        Proceeds from exercise of
          outstanding stock options                157                 62
        Increase in revolving loan              10,918              7,124    
        Principal payments on
          long term notes                         (200)              (218)
                                 
        Principal payments on
          capital leases                          (130)              (152)

        Increase in long term notes                  0              1,870 

        Debt issue costs                          (320)                 0

        Net cash provided by
          financing activities                  10,425              8,686


        Net increase (decrease) in cash          4,065             (4,041) 
        Cash at beginning of period              2,555              7,538 
        Cash at end of period                   $6,620             $3,497 

<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 1998 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 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          Basic       Diluted

                    May 3, 1998                  5,100,974    5,156,695
                    May 4, 1997                  5,090,845    5,135,168
                  


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

(Dollars in thousands)

The thirteen weeks ended May 3, 1998 and May 4, 1997 are referred to herein
as the first quarter of fiscal 1999 and 1998, 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 Weeks Ended May 3, 1998 Compared to Thirteen Weeks ended May 4,
1997.

	Net earnings increased 18.4% for the first quarter of fiscal 1999 to
        $1,006, an increase of $157 over the net earnings of $849 for the
        first quarter of fiscal 1998.  The Company has had 21 consecutive
        quarters of earnings growth (where current quarter earnings have
        exceeded prior year earnings for the same quarter).

	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 first quarter of
        fiscal 1999, the Company opened 21 stores and closed 3 stores,
        resulting in a quarter end total of 243 stores.  Nineteen of the
        stores opened were in new, non-competitive markets.  The 2 ALCO
        stores closed were in competitive markets, and the Duckwall store
        closed was replaced by an ALCO store in an existing non-competitive
        market.  At quarter end, 195 stores, or 80% of the total stores,
        were located in non-competitive markets. Thirteen of the new store
        openings were Duckwall stores in locations acquired from Perry
        Brothers, Inc.

	Net sales for the first quarter of fiscal 1999 increased $11,780 or
        17.0% to $81,052 compared to $69,272 for the first quarter of fiscal
        1998.  Net sales for all stores open the full period in both the
        first quarter of fiscal 1999 and fiscal 1998 (comparable stores)
        increased $862 or 1.3%.  Net sales for these comparable stores in
        the prototype class 18 ALCO stores increased $698 or 3.0%.  Net sales
        for non-comparable stores increased $10,918 for the first quarter of
        fiscal 1999 compared to the first quarter of fiscal 1998.  The same
        store sales increase was attributable to increases in a broad spectrum
        of departments, including housewares, ladies wear and outdoor living.

	Gross margin for the first quarter of fiscal 1999 increased $4,415 or
        18.6% to $28,150 compared to $23,735 in the first quarter of fiscal
        1998.  Gross margin as a percentage of sales was 34.7% for the first
        quarter of fiscal 1999 compared to 34.3% in the first quarter of
        fiscal 1998.  The increase in the margin percentage was due to an
        increase in vendor partnerships.
  
	Selling, general and administrative  expense increased $3,519 or
        17.1% to $24,130 in the first quarter of fiscal 1999 compared to
        $20,611 in the first quarter of fiscal 1998, primarily due to the
        increase in total stores.  As a percentage of net sales, selling,
        general and administrative expenses were 29.8% in the first quarter
        of both fiscal years.

	Depreciation and amortization expense increased $327 or 30.8% to
        $1,389 in the first quarter of fiscal 1999 compared to $1,062 in the
        first quarter of fiscal 1998.  The increase is due to additional
        buildings and equipment associated with the store expansion program.

	Income from operations increased $569 or 27.6% to $2,631 in the first
        quarter of fiscal 1999 compared to $2,062 in the first quarter of
        fiscal 1998.  Income from operations as a percentage of net sales
        increased to 3.3% in the first quarter of fiscal 1999 compared to 3.0%
        in the first quarter of fiscal 1998.


LIQUIDITY AND CAPITAL RESOURCES	

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

	At May 3, 1998 working capital (defined as current assets less
        current liabilities) was $85,672 compared to $75,986 at the end of
        fiscal 1998.

	Cash used by operating activities in the first quarter of fiscal
        1999 and 1998 was $3,211 and $9,298 respectively.  The decrease in
        the amount of cash used by operating activities in the first quarter
        of fiscal 1999 compared to the first quarter of fiscal 1998 was
        primarily due to a smaller increase in the inventory build up
        relative to the overall increase in trade accounts payable levels.

	The Company generated cash from financing activities in the first
        quarter of fiscal 1999 and 1998 of $10,425  and $8,686, respectively.
        This was generated by borrowing under the revolving loan credit
        facility, as well as a $1,870 mortgage secured by certain company
        fixed assets in fiscal 1998.

	The Company's revolving loan credit facility was amended in April
        1998 to increase its available line of credit to $85 million from $45
        million.  The revolving loan credit facility, which has more
        favorable terms than the previous facility, provides financing in the
        form of notes payable and letters of credit, and will expire in April
        2001.  The Company's inventory, receivables, and intangible assets
        provide the security for this line of credit.

	Cash used for acquisition of property and equipment in the first
        quarters of fiscal 1999 and 1998 totaled $3,149 and $3,429,
        respectively.  Total anticipated cash payments for acquisition of
        property and equipment in fiscal 1999, principally for store buildings
        and store and warehouse fixtures and equipment, are $13,308.

IMPACT OF NEW ACCOUNTING PRONOUNCEMENT

	In April 1998, the American Institute of Certified Public Accountants
        adopted a Statement of Position (SOP) REPORTING ON THE COSTS OF
        START-UP ACTIVITIES.  The SOP requires that entities expense costs of
        start-up activities as they are incurred. The SOP is effective for
        financial statements for fiscal years beginning after December 15,
        1998, with earlier application encouraged. The initial application of
        the SOP is to be reported as a cumulative effect of a change in
        accounting principle.  The Company currently capitalizes store pre-
        opening costs and amortizes such costs over the initial twelve months
        of a store's operations.  Pre-opening costs capitalized, net of
        accumulated amortization, at May 3, 1998 and February 1, 1998 are
        $1,643 and $1,567, respectively.  While the one-time recording of the
        cumulative effect of the change in accounting principle could be
        material, the ongoing effect of the proposed new accounting principle
        would be dependent upon the number and timing of new stores opened.  
        Generally, pre-opening costs would be recognized during the two months
        prior to a store commencing operation under the proposed new accounting
        principle versus over the twelve months subsequent to commencing
        operation under the existing principle.

THE YEAR 2000 ISSUE

	The Company is aware of the issues associated with the programming
        code in existing computer systems as the year 2000 approaches.  The
        Company has commenced, for all of its systems, a year 2000 date
        conversion project to address all necessary code changes, testing and
        implementation.  The "Year 2000" problem is the result of computer
        programs being written using two digits rather than four to define
        the applicable year.  Any of the Company's programs that have time-
        sensitive software may recognize a date using "00" as the year 1900
        rather than the year 2000.  This could result in a major system
        failure or miscalculations.  The Company presently believes that,
        with modifications to existing software and converting to new
        software, the year 2000 problem will not pose significant operational
        problems for the Company's computer systems as so modified and
        converted.  However, if such modifications and conversions are not
        completed timely, the year 2000 problem may have a material impact on
        the operation of the Company.  At this time, the Company estimates
        that the total cost to modify or replace existing systems to solve
        the year 2000 problem will not exceed $1,000,000.

        <PAGE>


OTHER INFORMATION

PART II
   


     Item 1.   Legal Proceedings
          No legal proceedings except those covered by insurance occurred
          during the thirteen week period ended May 3, 1998.


     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, June 11, 1998               /s/Richard A. Mansfield
                                  Richard A. Mansfield
                                  Vice President - Finance
                                  Chief Financial Officer


                                  Signing on behalf of the
                                  registrant and as principal
                                  financial officer
                                 


<PAGE>