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, 1997

     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 CORPORATE ISSUERS:                                     
                                                                          
     5,098,261 shares of common stock, $.0001 par value (the issuer's  
     only class of common stock), were outstanding as of August 3, 1997. 
 
<PAGE>  
<TABLE>  
             
PART I.  Financial Information.

         ITEM 1.  Financial Statements.

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

                            (Dollars in Thousands)                                                   
<CAPTION>                                                                      
  

                                           August 3,         February 2,
                                               1997                1997
                                           (Unaudited)
                                           ___________      __________
<S>                                                <C>               <C>
ASSETS

Current assets:                                                          
     Cash on deposit and on hand                $3,143            $7,538 
     Receivables                                 3,184             3,160 
     Inventories                                94,141            80,359                                         
     Other current assets                        1,973             1,785
                                                                         
          Total current assets                 102,441            92,842 
                                                                         
Property and equipment:                                                  
     Land                                        2,658             2,658
     Buildings                                  20,997            20,991 
     Furniture, fixtures and equipment          31,803            26,215 
     Transportation equipment                    1,703             1,688 
     Leasehold improvements                      5,624             4,623 
     Construction in progress                    1,922             2,931 
                                                                         
          Total property and equipment          64,707            59,106
                                                                         
     Less accumulated depreciation              28,386            26,527 
                                                                         
          Net property and equipment            36,321            32,579 
                                                                         
     Property under capital leases              20,407            20,407 
     Less accumulated amortization              13,456            13,100 
                                                                         
          Net property under capital leases      6,951             7,307 
                                                                         
     Debt financing cost                           104                80 
                                                                         
                                                                         
               Total assets                   $145,817          $132,808 
                                                                         
<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>

                                           August 3,         February 2,
                                               1997                1997
                                           (Unaudited)                  
                                          ___________       ____________
<S>                                                <C>               <C>
LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:
   Current maturities of:
     Long term debt                             $1,347            $1,242 
     Capital lease obligations                     607               607 
   Accounts payable                             20,457            17,127 
   Income taxes payable                             32             2,345 
   Accrued salaries and commissions              3,028             3,876 
   Accrued taxes other than income               2,975             2,929 
   Other current liabilities                     1,630             1,670 
   Deferred taxes                                2,612             2,612 

          Total current liabilities             32,688            32,408 

Notes payable under revolving loan              21,520            12,095 
Long term debt                                                            
     less current maturities                     4,110             3,193 

Capital lease obligations                                                 
     less current maturities                     8,844             9,148 

Other noncurrent liabilities                     1,026               793 

Deferred income taxes                            2,346             2,346

          Total liabilities                     70,534            59,983 

Stockholders' equity:
Common stock, $.0001 par value, authorized
  20,000,000 shares; issued and outstanding
  5,098,261 shares and 5,089,823 shares
  respectively                                       1                 1
Additional paid-in capital                      54,469            54,396 

Retained earnings since June 2, 1991            20,813            18,428 

          Total stockholders' equity            75,283            72,825 

          Total liabilities and
               stockholders' equity           $145,817          $132,808

<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 Twenty-Six
                                                     Week Periods                    Weeks Periods
                               
                                              August 3,          July 28,       August 3,     July 28,
                                                  1997              1996            1977         1996
                                          ____________      ____________       __________    __________
<S>                                                <C>               <C>              <C>          <C>   
Net sales ...............................      $80,463           $68,426        $149,735     $127,774
Cost of sales ...........................       53,795            46,106          99,332       85,812

          Gross margin ..................       26,668            22,320          50,403       41,962

Selling, general
     and administrative .................       22,170            18,546          42,781       35,458

Depreciation
     and amortization ...................        1,152               925           2,214        1,789


          Total operating expenses ......       23,322            19,471          44,995       37,247


Income from operations ..................        3,346             2,849           5,408        4,715

Interest expense.........................          821               860           1,503        1,592

Earnings
    before income taxes .................        2,525             1,989           3,905        3,123

Income tax expense ......................          990               765           1,521        1,196


     Net earnings .......................       $1,535            $1,224          $2,384       $1,927



Earnings per common and
 common equivalent share ................        $0.30             $0.30           $0.46        $0.48

<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 Twenty-Six Week
                                                    Periods Ended
                                        August 3, 1997      July 28, 1996
                                       ---------------    ---------------
<S>                                                <C>                 <C>

Cash flows from operating activities:

     Net Earnings                               $2,384             $1,927
     Adjustments to reconcile                                           
       net earnings to net cash                                           
       used in operating activities                                       

          Amortization of                                               
            debt financing costs                    20                 20 
          Deferred income tax benefit                0                 51
          Depreciation and amortization          2,214              1,789
          LIFO expense                             110                 90
          Increase in inventories              (13,892)            (8,574)
          Increase in accounts payable           3,330              3,680
          Increase in receivables                  (24)              (283) 
          Decrease (increase)
            in other current assets               (188)              (658)
          Increase in accrued taxes
            other than income                       46                227
          Increase (decrease) in accrued
            salaries and commissions              (848)            (1,518)
          (Decrease) in income taxes payable    (2,313)               177                 
          Decrease in other liabilities            193               (468)

        Net cash used in
          operating activities                  (8,968)            (3,540)

Cash flow from investing activities:

        Capital expenditures                    (5,601)            (5,991)
        Net cash used in
          investing activities                  (5,601)            (5,991)


Cash flow from financing activities:

        Proceeds from exercise of 
          outstanding stock options                 74                  0
        Increase in revolving loan               9,425              9,338
        Principal payments on
          long term notes                         (848)              (520)
                                 
        Principal payments on
          capital leases                          (304)              (318)

        Increase in long term notes              1,870              2,668 

        Debt issue costs                           (43)               (10)

        Net cash provided by
          financing activities                  10,174             11,158


        Net increase (decrease) in cash         (4,395)             1,627 
        Cash at beginning of period              7,538                177 
        Cash at end of period                   $3,143             $1,804 

<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 1997 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.

              Certain prior year cash flow amounts have been reclassified
         to conform with the current year presentation.

(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

                    August 3, 1997                              5,136,261
                    July 28, 1996                               4,049,620

                    Twenty-Six Weeks Ending

                    August 3, 1997                              5,135,714
                    July 28, 1996                               4,033,522

                  


<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 August 3, 1997 and  July 28, 1996 are referred to
herein as the second quarter of fiscal 1998 and 1997, 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

     Net earnings increased 25.4% for the second quarter of fiscal 1998 to
$1,535, an increase of $311 over the net earnings of $1,224 for the second
quarter of fiscal 1997.  The Company has had 18 consecutive quarters of
earnings growth (where current quarter earnings have exceeded prior year
earnings for the same quarter).  Gross margins improved for the second
quarter of fiscal 1998 to 33.1%, compared to 32.6% in the prior year's
second 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 second quarter of fiscal 1998, the
Company opened 2 stores, both of which were in new, non-competitive markets,
resulting in a quarter end total of 204 stores.  For the twenty-six week
period ending August 3, 1997, the Company opened 19 stores.  As of August 3,
1997, 76% of the stores are in non-competitive markets.

     Net sales for the second quarter of fiscal 1998 increased $12,037 or
17.6% to $80,463  compared to $68,426 for the second quarter of fiscal 1997.
Net sales for the prototype Class 18 ALCO stores open the full period in both 
the second quarter of fiscal 1998 and fiscal 1997 (comparable stores)
increased $268 or 1.2%.  The  Duckwall variety stores produced an increase of
$151 or 4.4% compared to the second quarter of the prior fiscal year.  Net
sales for all stores open the full period decreased $602 or 1.9% compared to
the second quarter of the prior fiscal year.  The same store sales decease 
was primarily attributable to a reduction in promotional advertising compared
to the second quarter of the prior fiscal year.

     Net sales for the twenty-six week period ending August 3, 1997 increased
$21,961 or 17.2% to $149,735 compared to $127,774 in  the comparable twenty-six
week period of the prior fiscal year.  Net sales of comparable stores increased
by $833, or .7% for the twenty-six week period ending August 3, 1997 compared
to the twenty-six week period of the prior fiscal year.

     Gross margin for the second quarter of fiscal 1998 increased $4,348 or
19.5% to $26,668 compared to $22,320 in the second quarter of fiscal 1997.
Gross margin as a percentage of sales was 33.1% for the second quarter of
fiscal 1998 compared to 32.6% in the second quarter of fiscal 1997. The
improvement in the gross margin percentage was due to a higher markup on
purchases and lower markdowns.

     Gross margin for the twenty-six week period ended August 3, 1997 was
$50,403, which was $8,441 or 20.1% higher than last year's twenty-six week
gross margin of $41,962.  As a percent of net sales, gross margin for the
twenty-six week period ended August 3, 1997 was 33.7% compared to 32.8% in
the twenty-six week period of the prior fiscal year.
  
     Selling, general and administrative expense increased $3,624 or 19.5%
to $22,170 in the second quarter of fiscal 1998 compared to $18,546 in the
second quarter of fiscal 1997, primarily due to the increase in total stores.
As a percentage of net sales, selling, general and administrative expenses in 
the second  quarter of fiscal 1998 was 27.6%, compared to 27.1% in the second
quarter of fiscal 1997.   The increase was due to increased payroll costs, due
in part to an increase in the minimum wage.

     Selling, general and administrative expenses increased $7,323 or 20.7%
to $42,781 for the twenty-six week period ended August 3, 1997 compared to
$35,458 for the comparable twenty-six week period of the prior fiscal year.
Selling, general and administrative expense as a percent of net sales was
28.6% for the twenty-six week period ended August 3, 1997 compared to 27.8%
in the comparable twenty-six week period last year.   The increase in selling,
general and administrative expense in fiscal 1998 is primarily due to an
increase in the number of stores.

     Depreciation and amortization expense increased $227 or 24.5% to $1,152 in
the second quarter of fiscal 1998 compared to $925 in the second quarter of
fiscal 1997.  The increase is due to additional buildings and equipment
associated with the store expansion program.
 
     Income from operations increased $497 or 17.4% to $3,346 in the second
quarter of fiscal 1998 compared to $2,849 in the second quarter of fiscal
1997.  Income from operations as a percentage of net sales was 4.2% in the
second quarter of both fiscal years.

     Income from operations increased $693 or 14.7% to $5,408 for the
twenty-six week period ended August 3, 1997 compared to $4,715 in the
comparable twenty-six week period of the prior fiscal year.

     Interest expense decreased $39 or 4.5% in the second quarter of fiscal
1998 compared to the second quarter of fiscal 1997.

     Net earnings for the second quarter of fiscal 1998 were $1,535 an
increase of $311 or 25.4% over the net earnings of $1,224 for the second
quarter 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).

     The Company has temporarily increased its revolving loan credit facility
from $35,000 to $45,000 to meet its credit needs for the approaching holiday
season.  The increased line is available for the period September 1, 1997 to
December 31, 1997, and is under the same terms and conditions as the original
credit facility.  The Company expects this additional credit line to be
sufficient to meet all of its seasonal credit needs.

     At August 3, 1997 working capital (defined as current assets less current
liabilities) was $69,753 compared to $60,434 at the end of fiscal 1997.

     Cash used by operating activities in the second quarter of fiscal 1998
and 1997 was $8,968 and $3,540 respectively. The increase in the amount of
cash used by operating activities in the second quarter of fiscal 1998
compared to the second quarter of fiscal 1997 was primarily due to a smaller
increase in the trade accounts payable build up relative to the overall 
increase in inventory levels.

     The Company generated cash from financing activities in the second
quarter of fiscal 1998 and 1997 of $10,174 and $11,158, 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,
and a $1,000  mortgage secured by certain company fixed assets and a $1,668
leaseback of computer equipment in fiscal 1997.

     Cash used for acquisition of property and equipment in the second quarters
of fiscal 1998 and 1997 totaled $5,601 and $5,991, respectively.  Total
anticipated cash payments for acquisition of property and equipment in fiscal
1998, principally for store buildings and store and warehouse fixtures and
equipment, are $13,869.





IMPACT OF NEW ACCOUNTING PRONOUNCEMENT

The Financial Accounting Standards Board has issued SFAS No. 128, Earnings Per
Share ("Statement 128") which replaces the current accounting standard
regarding computation of earnings per share.  Statement 128 requires a dual
presentation of basic earnings per share (based on the weighted average number
of common shares outstanding) and diluted earnings per share which reflects
the potential dilution that could occur if contracts to issue securities
(such as stock options) were exercised.  Statement 128 is effective for
financial statements issued for periods ending after December 15, 1997.  If
Statement 128 had been adopted, on a pro-forma basis, for the 13 weeks and 26
weeks ended August 3, 1997 and July 28, 1996, there would have been no effect 
on the amount of earnings per share as presented in the accompanying financial
statements.

In April 1997, the American Institute of Certified Public Accountants issued
a proposed Statement of Position (SOP) REPORTING ON THE COSTS OF START-UP
ACTIVITIES.  The proposed SOP requires that entities expense costs of start-up
activities as they are incurred.  The proposed SOP, if approved, would be
effective for financial statements for fiscal years beginning after
December 15, 1997, 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 August 3, 1997 are $1,773.  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.

     
<PAGE>

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, 1997.


     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, September 16, 1997          /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>