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 ....... November 2, 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:  
     (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:                                     
                                                                          
     5,098,261 shares of common stock, $.0001 par value (the issuer's  
     only class of common stock), were outstanding as of November 2, 1997. 
 
<PAGE>  
<TABLE>  
             
PART I.  Financial Information.

         ITEM 1.  Financial Statements.

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

                            (Dollars in Thousands)                                                   
<CAPTION>                                                                      
  

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

Current assets:                                                          
     Cash on deposit and on hand                  $668            $7,538 
     Receivables                                 3,881             3,160 
     Inventories                               111,857            80,359                                
     Other current assets                        1,536             1,785
                                                                         
          Total current assets                 117,942            92,842
                                                                         
Property and equipment:                                                  
     Land                                        2,664             2,658
     Buildings                                  21,163            20,991
     Furniture, fixtures and equipment          33,081            26,215
     Transportation equipment                    1,719             1,688
     Leasehold improvements                      5,533             4,623
     Construction in progress                    4,686             2,931
                                                                         
          Total property and equipment          68,846            59,106
                                                                         
     Less accumulated depreciation              29,441            26,527
                                                                         
          Net property and equipment            39,405            32,579
                                                                         
     Property under capital leases              20,407            20,407 
     Less accumulated amortization              13,634            13,100
                                                                         
          Net property under capital leases      6,773             7,307
                                                                         
     Debt financing cost                            93                80
                                                                         
                                                                         
               Total assets                   $164,213          $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>

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



Current liabilities:
   Current maturities of:
     Long term debt                             $1,341            $1,242 
     Capital lease obligations                     518               607
        Accounts payable                        26,368            17,127
   Income taxes payable                              0             2,345 
   Accrued salaries and commissions              3,008             3,876 
   Accrued taxes other than income               3,297             2,929 
   Other current liabilities                     1,740             1,670 
   Deferred taxes                                2,612             2,612 

          Total current liabilities             38,884            32,408 

Notes payable under revolving loan              33,153            12,095 
Long term debt                                                            
     less current maturities                     3,873             3,193 

Capital lease obligations                                                 
     less current maturities                     8,781             9,148 

Other noncurrent liabilities                       989               793 

Deferred income taxes                            2,346             2,346

          Total liabilities                     88,026            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            21,717            18,428 

          Total stockholders' equity            76,187            72,825 

          Total liabilities and
               stockholders' equity           $164,213          $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 Thirty-Nine
                                                     Week Periods                    Weeks Periods
                               
                                           November 2,      October 27,        November 2,   October 27,
                                              1997            1996                1977         1996
                                          ____________      ____________       __________    __________
<S>                                                <C>               <C>              <C>          <C>   
Net sales ...............................      $76,163           $64,857        $225,898     $192,631
Cost of sales ...........................       49,449            43,201         148,781      129,013

          Gross margin ..................       26,714            21,656          77,117       63,618

Selling, general
     and administrative .................       23,020            18,661          65,801       54,119

Depreciation
     and amortization ...................        1,233               943           3,447        2,732


          Total operating expenses ......       24,253            19,604          69,248       56,851


Income from operations ..................        2,461             2,052           7,869        6,767

Interest expense.........................          980               912           2,483        2,504

Earnings
    before income taxes .................        1,481             1,140           5,386        4,263

Income tax expense ......................          578               439           2,099        1,635


     Net earnings .......................         $903              $701          $3,287       $2,628



Earnings per common and
 common equivalent share ................        $0.18             $0.17           $0.64        $0.65

<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
                                        November 2, 1997    October 27, 1996
                                       -----------------    ----------------
<S>                                                <C>                 <C>

Cash flows from operating activities:

     Net Earnings                               $3,287             $2,628
     Adjustments to reconcile                                           
       net earnings to net cash                                           
       used in operating activities                                       

          Amortization of                                               
            debt financing costs                    30                 30 
          Deferred income tax benefit                0                 52
          Depreciation and amortization          3,448              2,732
          LIFO expense                             170                180
          Increase in inventories              (31,668)           (18,357)
          Increase in accounts payable           9,241              8,283
          Increase in receivables                 (721)            (1,279) 
          Decrease (increase)
            in other current assets                249               (669)
          Increase in accrued taxes
            other than income                      368                518
          Increase (decrease) in accrued
            salaries and commissions              (868)            (1,359)
          (Decrease) in income taxes payable    (2,345)               717                 
          Decrease (increase)in other
            liabilities                            266                (21)
          Net cash used in
            operating activities               (18,543)            (6,545)

Cash flow from investing activities:

        Capital expenditures                    (9,740)            (9,537)
        Net cash used in
          investing activities                  (9,740)            (9,537)


Cash flow from financing activities:

       Proceeds from stock issuance                  0             10,757
        Proceeds from exercise of
          outstanding stock options                 75                  0
        Increase in revolving loan              21,058              5,131    
        Principal payments on
          long term notes                       (1,091)              (636)
                                 
        Principal payments on
          capital leases                          (456)              (478)

        Increase in long term notes              1,870              2,826 

        Debt issue costs                           (43)               (10)

        Net cash provided by
          financing activities                  21,413             17,590


        Net increase (decrease) in cash         (6,870)             1,508 
        Cash at beginning of period              7,538                177 
        Cash at end of period                     $668             $1,685 

<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

                    November 2, 1997              5,158,828
                    October 27, 1996              4,147,651

                    Thirty-Nine Weeks Ending

                    November 2, 1997              5,143,419
                    October 27, 1996              4,072,455             
                  


<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 November 2, 1997 and October 27, 1996 are referred
to herein as the third 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 28.9% for the third quarter of fiscal 1998 to
        $903, an increase of $202 over the net earnings of $701 for the third
        quarter of fiscal 1997.  The Company has had 19 consecutive quarters of
        earnings growth (where current quarter earnings have exceeded prior
        year earnings for the same quarter).  Gross margins improved for the
        third quarter of fiscal 1998 to 35.1%, compared to 33.4% in the prior
        year's third 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 third quarter of
        fiscal 1998, the Company opened 5 stores, all of which were in new,
        non-competitive markets, resulting in a quarter end total of 209 stores.
        For the thirty-nine week period ending November 2, 1997, the Company
        opened 24 stores.  As of November 2, 1997, 76% of the stores are in
        non-competitive markets.

	Net sales for the third quarter of fiscal 1998 increased $11,306 or
        17.4% to $76,163  compared to $64,857 for the third quarter of fiscal
        1997.  Net sales for the prototype Class 18 ALCO stores open the full
        period in both the third quarter of fiscal 1998 and fiscal 1997
        (comparable stores) increased $450 or 2.2%.  The  Duckwall variety
        stores produced an increase of $226 or 7.2% compared to the third
        quarter of the prior fiscal year.  Net sales for all stores open the
        full period increased $692 or 1.2% compared to the third quarter of
        the prior fiscal year.

	Net sales for the thirty-nine week period ending November 2, 1997
        increased $33,267 or 17.3% to $225,898 compared to $192,631 in  the
        comparable thirty-nine week period of the prior fiscal year.  Net
        sales of comparable stores increased by $1,525, or .8% for the thirty-
        nine week period ending November 2, 1997 compared to the thirty-nine
        week period of the prior fiscal year.

	Gross margin for the third quarter of fiscal 1998 increased $5,058 or
        23.4% to $26,714 compared to $21,656 in the third quarter of fiscal
        1997.  Gross margin as a percentage of sales was 35.1% for the third
        quarter of  fiscal 1998 compared to 33.3% in the third quarter of
        fiscal 1997. The improvement in the gross margin percentage was
        primarily  due to a higher markup on purchases and lower markdowns.

        Gross margin for the thirty-nine week period ended November 2, 1997
        was $77,117, which was $13,499 or 21.2% higher than last year's
        thirty-nine week gross margin of $63,618.  As a percent of net sales,
        gross margin for the thirty-nine week period ended November 2, 1997
        was 34.1% compared to 33.0% in the thirty-nine week period of the
        prior fiscal year.
  
	Selling, general and administrative expense increased $4,359 or 21.6%
        to $23,020 in the third quarter of fiscal 1998 compared to $18,661 in
        the third 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 third  quarter of fiscal 1998 was 30.2%,
        compared to 28.8% in the third quarter of fiscal 1997.   The increase
        was due to increased payroll costs, due in part to an increase in the
        minimum wage.


<PAGE>
	Selling, general and administrative expenses increased $11,681 or 21.5%
        to $65,800 for the thirty-nine week period ended November 2, 1997
        compared to $54,119 for the comparable thirty-nine week period of the
        prior fiscal year.  Selling, general and administrative expense as a
        percent of net sales was 29.1% for the thirty-nine week period ended
        November 2, 1997 compared to 28.1% in the comparable thirty-nine 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 and the impact of the minimum wage increase.

	Depreciation and amortization expense increased $290 or 30.7% to $1,233
        in the third quarter of fiscal 1998 compared to $943 in the third
        quarter of fiscal 1997.  The increase is due to additional buildings
        and equipment associated with the store expansion program.

	Income from operations increased $409 or 20.0% to $2,461  in the third
        quarter of fiscal 1998 compared to $2,052 in the third quarter of
        fiscal 1997.  Income from operations as a percentage of net sales was
        3.2% in the third quarter of both fiscal years.

	Income from operations increased $1,102 or 16.3% to $7,869 for the
        thirty-nine week period ended November 2, 1997 compared to $6,767 in
        the comparable thirty-nine week period of the prior fiscal year.

	Interest expense increased $68 or 7.5% in the third quarter of fiscal
        1998 compared to the third quarter of fiscal 1997.

	Net earnings for the third quarter of fiscal 1998 were $903, an
        increase of $202 or 28.9% over the net earnings of $701 for the third
        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
        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 November 2, 1997 working capital (defined as current assets less
        current liabilities) was $79,058 compared to $60,434 at the end of
        fiscal 1997.

	Cash used by operating activities in the first three quarters of fiscal
        1998 and 1997 was $18,543 and $6,545 respectively.  The increase in the
        amount of cash used by operating activities in the first three quarters
        of fiscal 1998 in relation to the comparable period of fiscal 1997 was
        primarily due to purchases of inventory for a larger number of store
        openings and 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 first
        three quarters of fiscal 1998 and 1997 of $21,413 and $17,590,
        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 1997, cash generated from financing
        activities included $10,757 from a secondary offering of stock, a
        $1,000  mortgage secured by certain company fixed assets and a $1,668
        leaseback of computer equipment.

	Cash used for acquisition of property and equipment in the first three
        quarters of fiscal 1998 and 1997 totaled $9,740 and $9,537,
        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 approximately
        $14,000.

<PAGE>

IMPACT OF NEW ACCOUNTING PRONOUNCEMENT

[CAPTION]

	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 39 weeks ended November 2, 1997 and October 27, 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, 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 November 2, 1997 are
        $1,195.  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 Company is aware of the issues associated with the programming code
        in existing computer systems as the year 2000 approaches.  In 1998,
        the Company will commence, 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 operations of the
        Company.  Until the Company has undertaken this year 2000 project, the
        Company will not know the total cost of the conversion and whether it
        will be material to the future financial results or financial condition
        of the Company.
 

<PAGE>


OTHER INFORMATION

PART II
   


     Item 1.   Legal Proceedings
          No legal proceedings except those covered by insurance occurred
          during the thirteen week period ended November 2, 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, December 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>