| Kansas                                                         | 48-0201080                                |
|---------------------------------------------------------------------|-------------------------------------------|
| (State      or other jurisdiction of incorporation or organization) | (I.R.S.      Employer Identification No.) |
|                                                                |                                      |
| 401      Cottage StreetAbilene,      Kansas                    |   67410-2832                    |
| (Address      of principal executive offices)                       | (Zip      Code)                           |

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| TABLE      OF CONTENTS |
|------------------------|
|                   |   |   |   |
| PART      I            | FINANCIAL      INFORMATION |   |
|                   | Item      1. | Financial Statements | 3 |
|                   | Item      2. | Management's Discussion and Analysis of Financial Condition      and Results of Operations | 9 |
|                   | Item      3. | Quantitative and Qualitative Disclosure About Market      Risk | 15 |
|                   | Item      4. | Controls and Procedures | 15 |
|                   |   |   |   |
| PART      II           | OTHER      INFORMATION |   |
|                   | Item      1. | Legal Proceedings | 16 |
|                   | Item      1A. | Risk Factors | 16 |
|                   | Item      2. | Unregistered Sales of Equity Securities and Use      of Proceeds | 16 |
|                   | Item      3. | Defaults Upon Senior    Securities | 16 |
|                   | Item      4. | Submissions of Matters to a Vote of Security      Holders | 17 |
|                   | Item      5. | Other Information | 17 |
|                   | Item      6. | Exhibits | 17 |
|                   |   |   |   |
| Signature              |   |   | 18 |

----

FINANCIAL INFORMATION

FINANCIAL STATEMENTS

| Duckwall-ALCO      Stores, Inc. and Subsidiaries                                                            |   |
|-------------------------------------------------------------------------------------------------------------|--------|
| Consolidated      Balance Sheets                                                                            |   |
| (in      thousands, except share amounts)                                                                   |   |
|                                                                                                        |   |   |   |   |   |   |
| Assets                                                                                                      |   |
|                                                                                                        |   | November      2, |   |   | February      3, |   |
|                                                                                                        |   | 2008 |   |   | 2008 |   |
|                                                                                                        |   | (Unaudited) |   |   |   |   |
| Current      assets:                                                                                        |   |   |   |   |   |   |
|    Cash      and cash equivalents                                                            |   | $ | 5,320 |   |   |   | 5,501 |   |
|    Receivables                                                                               |   |   | 3,520 |   |   |   | 4,905 |   |
|    Prepaid      income taxes                                                                 |   |   | 4,731 |   |   |   | 768 |   |
|    Prepaid      expenses                                                                     |   |   | 3,871 |   |   |   | 3,101 |   |
|    Inventories                                                                               |   |   | 166,404 |   |   |   | 128,545 |   |
|    Deferred      income taxes                                                                |   |   | 5,430 |   |   |   | 7,094 |   |
|           Total      current assets                       |   |   | 189,276 |   |   |   | 149,914 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Property      and equipment, at cost:                                                                       |   |   |   |   |   |   |   |   |
|    Land      and land improvements                                                           |   |   | 2,758 |   |   |   | 2,205 |   |
|    Buildings      and building improvements                                                  |   |   | 12,121 |   |   |   | 11,931 |   |
|    Furniture,      fixtures and equipment                                                    |   |   | 62,485 |   |   |   | 58,911 |   |
|    Transportation      equipment                                                             |   |   | 1,322 |   |   |   | 1,310 |   |
|    Leasehold      improvements                                                               |   |   | 13,843 |   |   |   | 15,419 |   |
|    Construction      work in progress                                                        |   |   | 1,078 |   |   |   | 1,282 |   |
|           Total      property and equipment               |   |   | 93,607 |   |   |   | 91,058 |   |
|    Less      accumulated depreciation                                                        |   |   | 63,605 |   |   |   | 64,019 |   |
|           Net      property and equipment                 |   |   | 30,002 |   |   |   | 27,039 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Property      under capital leases                                                                          |   |   | 11,622 |   |   |   | 13,571 |   |
|    Less      accumulated amortization                                                        |   |   | 8,109 |   |   |   | 8,654 |   |
|           Net      property under capital leases          |   |   | 3,513 |   |   |   | 4,917 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Other      non-current assets                                                                               |   |   | 227 |   |   |   | 262 |   |
| Deferred      income taxes                                                                                  |   |   | 1,181 |   |   |   | 3,254 |   |
|           Total      assets                               |   | $ | 224,199 |   |   |   | 185,386 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Liabilities      and Stockholders' Equity                                                                   |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Current      liabilities:                                                                                   |   |   |   |   |   |   |   |   |
|    Current      maturities of long-term debt                                                 |   | $ | 1,340 |   |   |   | 1,278 |   |
|    Current      maturities of capital lease obligations                                      |   |   | 1,833 |   |   |   | 1,860 |   |
|    Accounts      payable                                                                     |   |   | 37,513 |   |   |   | 19,134 |   |
|    Accrued      salaries and commissions                                                     |   |   | 5,589 |   |   |   | 3,711 |   |
|    Accrued      taxes other than income                                                      |   |   | 4,844 |   |   |   | 4,301 |   |
|    Self-insurance      claim reserves                                                        |   |   | 4,318 |   |   |   | 4,571 |   |
|    Other      current liabilities                                                            |   |   | 4,618 |   |   |   | 7,360 |   |
|           Total      current liabilities                  |   |   | 60,055 |   |   |   | 42,215 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Long      term debt, less current maturities                                                                |   |   | 3,214 |   |   |   | 4,227 |   |
| Notes      payable under revolving loan                                                                     |   |   | 48,388 |   |   |   | 20,715 |   |
| Capital      lease obligations - less current maturities                                                    |   |   | 3,528 |   |   |   | 4,933 |   |
| Deferred      gain on leases                                                                                |   |   | 4,695 |   |   |   | 4,985 |   |
| Other      noncurrent liabilities                                                                           |   |   | 1,617 |   |   |   | 1,139 |   |
|           Total      liabilities                          |   |   | 121,497 |   |   |   | 78,214 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Stockholders'      equity:                                                                                  |   |   |   |   |   |   |   |   |
|   Common      stock, $.0001 par value, authorized 20,000,000 shares; issued and      outstanding  |   |   |   |   |   |   |   |   |
|     3,806,113      shares and 3,810,591 shares respectively                             |   |   | 1 |   |   |   | 1 |   |
|    Additional      paid-in capital                                                           |   |   | 38,557 |   |   |   | 38,766 |   |
|    Retained      earnings                                                                    |   |   | 64,144 |   |   |   | 68,405 |   |
|           Total      stockholders' equity                 |   |   | 102,702 |   |   |   | 107,172 |   |
|           Total      liabilities and stockholders' equity |   | $ | 224,199 |   |   |   | 185,386 |   |
| See      accompanying notes to unaudited consolidated financial      statements.                            |   |

----

| Duckwall-ALCO      Stores, Inc. and Subsidiaries                                                |   |
|-------------------------------------------------------------------------------------------------|--------|
| Consolidated      Statements of Operations                                                      |   |
| (dollars      in thousands, except per share amounts)                                           |   |
| (Unaudited)                                                                                     |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   | For      the Thirteen Week |   |   | For      the Thirty-Nine Week |   |
|                                                                                            |   | Periods      Ended |   |   | Periods      Ended |   |
|                                                                                            |   | November      2, 2008 |   |   | October      28, 2007 |   |   | November      2, 2008 |   |   | October      28, 2007 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales                                                                                  |   | $ | 115,472 |   |   |   | 110,258 |   |   |   | 351,010 |   |   |   | 335,537 |   |
| Cost      of sales                                                                              |   |   | 78,234 |   |   |   | 74,447 |   |   |   | 238,504 |   |   |   | 227,459 |   |
| Gross      margin                                                                               |   |   | 37,238 |   |   |   | 35,811 |   |   |   | 112,506 |   |   |   | 108,078 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative                                                        |   |   | 38,217 |   |   |   | 35,487 |   |   |   | 110,315 |   |   |   | 100,785 |   |
| Depreciation      and amortization                                                              |   |   | 2,119 |   |   |   | 1,820 |   |   |   | 5,799 |   |   |   | 5,359 |   |
|            Total      operating expenses |   |   | 40,336 |   |   |   | 37,307 |   |   |   | 116,114 |   |   |   | 106,144 |   |
| Operating      income (loss) from continuing operations                                         |   |   | (3,098 | ) |   |   | (1,496 | ) |   |   | (3,608 | ) |   |   | 1,934 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense, net                                                                      |   |   | 63 |   |   |   | 929 |   |   |   | 1,219 |   |   |   | 2,526 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations before income taxes                                        |   |   | (3,161 | ) |   |   | (2,425 | ) |   |   | (4,827 | ) |   |   | (592 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      tax benefit                                                                    |   |   | (1,647 | ) |   |   | (979 | ) |   |   | (2,354 | ) |   |   | (249 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                                                            |   |   | (1,514 | ) |   |   | (1,446 | ) |   |   | (2,473 | ) |   |   | (343 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from discontinued operations, net of income tax benefit                               |   |   | (151 | ) |   |   | (189 | ) |   |   | (1,788 | ) |   |   | (930 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                   |   |   | (1,665 | ) |   |   | (1,635 | ) |   |   | (4,261 | ) |   |   | (1,273 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      per share                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Basic                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Continuing      operations                |   |   | (0.40 | ) |   |   | (0.38 | ) |   |   | (0.65 | ) |   |   | (0.09 | ) |
|          Discontinued      operations              |   |   | (0.04 | ) |   |   | (0.05 | ) |   |   | (0.47 | ) |   |   | (0.24 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Net loss      per share              |   |   | (0.44 | ) |   |   | (0.43 | ) |   |   | (1.12 | ) |   |   | (0.33 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      per share                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Diluted                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Continuing      operations                |   |   | (0.40 | ) |   |   | (0.38 | ) |   |   | (0.65 | ) |   |   | (0.09 | ) |
|          Discontinued      operations              |   |   | (0.04 | ) |   |   | (0.05 | ) |   |   | (0.47 | ) |   |   | (0.24 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Net loss      per share              |   |  $ | (0.44 | ) |   |   | (0.43 | ) |   |   | (1.12 | ) |   |   | (0.33 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See      accompanying notes to unaudited consolidated financial      statements.                |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Duckwall-ALCO      Stores, Inc. and Subsidiaries                                                |   |
|-------------------------------------------------------------------------------------------------|--------|
| Consolidated      Statements of Cash Flows                                                      |   |
| (dollars      in thousands)                                                                     |   |
| (Unaudited)                                                                                     |   |
|                                                                                            |   | For      the Thirty-Nine Week |   |
|                                                                                            |   | Periods      Ended |   |
|                                                                                            |   | November      2, 2008 |   |   | October      28, 2007 |   |
|                                                                                            |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                      |   |   |   |   |   |   |
| Net loss                                                                                   |   | $ | (4,261 | ) |   |   | (1,273 | ) |
| Adjustments      to reconcile net loss to net cash used in operating      activities: |   |
|                                                                                            |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                                                              |   |   | 5,836 |   |   |   | 5,652 |   |
| Gain      on sale of assets                                                                     |   |   | 14 |   |   |   | (118 | ) |
| Share-based      compensation                                                                   |   |   | 34 |   |   |   | 893 |   |
| Tax      benefit of stock options exercised                                                     |   |   | - |   |   |   | 11 |   |
| Deferred      income tax expense, net                                                           |   |   | 3,595 |   |   |   | (231 | ) |
| Changes      in:                                                                                |   |   |   |   |   |   |   |   |
|    Receivables                                                                   |   |   | 1,385 |   |   |   | (1,471 | ) |
|    Prepaid      income taxes                                                     |   |   | (3,963 | ) |   |   | (4,382 | ) |
|    Inventories                                                                   |   |   | (37,859 | ) |   |   | (26,905 | ) |
|    Prepaid      expenses                                                         |   |   | (770 | ) |   |   | (1,792 | ) |
|    Other      assets                                                             |   |   | 35 |   |   |   | 31 |   |
|    Accounts      payable                                                         |   |   | 18,379 |   |   |   | 12,383 |   |
|    Accrued      salaries and commissions                                         |   |   | 1,878 |   |   |   | (173 | ) |
|    Accrued      taxes other than income                                          |   |   | 543 |   |   |   | 1,647 |   |
|    Self-insurance      claim reserves                                            |   |   | (253 | ) |   |   | 997 |   |
|    Other      liabilities                                                        |   |   | (2,554 | ) |   |   | (568 | ) |
|       Net      cash used in operating activities             |   |   | (17,961 | ) |   |   | (15,299 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                      |   |   |   |   |   |   |   |   |
| Proceeds      from the sale of assets                                                           |   |   | 169 |   |   |   | 637 |   |
| Acquisition      of fixtures, equipment and leasehold improvements                              |   |   | (7,578 | ) |   |   | (9,854 | ) |
|       Net      cash used in investing activities                  |   |   | (7,409 | ) |   |   | (9,217 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                      |   |   |   |   |   |   |   |   |
|         Net borrowings under revolving loan credit agreement                          |   |   | 27,673 |   |   |   | 27,384 |   |
|         Repurchase of common stock                                                    |   |   | (191 | ) |   |   | - |   |
|         Proceeds for stock sale                                                       |   |   | 90 |   |   |   | - |   |
|         Proceeds from exercise of outstanding stock options                           |   |   | - |   |   |   | 276 |   |
|         Excess tax benefit on stock options exercised                                 |   |   | - |   |   |   | 11 |   |
|    Net      pay downs under term loan                                            |   |   | (951 | ) |   |   | - |   |
|         Principal payments under capital lease obligations                            |   |   | (1,432 | ) |   |   | (1,613 | ) |
|       Net      cash provided by financing activities              |   |   | 25,189 |   |   |   | 26,058 |   |
|                                                                                            |   |   |   |   |   |   |   |   |
|       Net      increase (decrease) in cash and cash equivalents   |   |   | (181 | ) |   |   | 1,542 |   |
| Cash      and cash equivalents at beginning of period                                           |   |   | 5,501 |   |   |   | 2,983 |   |
|                                                                                            |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents at end of period                                                 |   | $ | 5,320 |   |   |   | 4,525 |   |
|                                                                                            |   |   |   |   |   |   |   |   |
| Supplemental      disclosures of cash flow information:                                         |   |   |   |   |   |   |   |   |
| Cash      paid (received) during the period for:                                                |   |   |   |   |   |   |   |   |
|         Interest                                                                      |   | $ | 1,834 |   |   |   | 2,385 |   |
|         Income taxes                                                                  |   |   | (828 | ) |   |   | 3,784 |   |
|                                                                                            |   |   |   |   |   |   |   |   |
| See      accompanying notes to unaudited consolidated financial      statements.                |   |   |   |   |   |   |   |   |

----

----

|                                        |   |                  |   |   | For      the Thirteen Week |   |   | For      the Thirty-Nine Week |   |
|---------------------------------------------|--------|-----------------------|--------|--------|----------------------------|--------|--------|-------------------------------|--------|
|                                        |   |                  |   |   | Periods      Ended         |   |   | Periods      Ended            |   |
|                                        |   | February      3, 2008 |   |   | November      2, 2008      |   |   | October      28, 2007         |   |   | November      2, 2008 |   |   | October      28, 2007 |   |
| Stock      options granted                  |   |                  | 88,000 |   |                       |   | 10,000 |                          |   |   | 25,000 |   |   |   | 384,500 |   |   |   | 88,000 |   |
| Weighted      average exercise price        |   | $                     | 39.02  |   |                       |   | 14.08  |                          |   |   | 39.67 |   |   |   | 12.43 |   |   |   | 39.02 |   |
| Weighted      average grant date fair value |   | $                     | 10.93  |   |                       |   | 5.19   |                          |   |   | 10.72 |   |   |   | 4.18 |   |   |   | 10.93 |   |

|                                          |   |                  |   |   | For      the Thirteen Week |   |   | For      the Thirty-Nine Week |   |
|-----------------------------------------------|--------|-----------------------|--------|--------|----------------------------|--------|--------|-------------------------------|--------|
|                                          |   |                  |   |   | Periods      Ended         |   |   | Periods      Ended            |   |
|                                          |   | February      3, 2008 |   |   | November      2, 2008      |   |   | October      28, 2007         |   |   | November      2, 2008 |   |   | October      28, 2007 |   |
| Expected      price volatility                |   |                  | 25.6   | %      |                       |   | 38.0   | %                             |   |   | 25.3 | % |   |   | 36.1 | % |   |   | 25.6 | % |
| Risk-free      interest rate                  |   |                  | 4.8    | %      |                       |   | 2.9    | %                             |   |   | 4.8 | % |   |   | 2.6 | % |   |   | 4.8 | % |
| Weighted      average expected lives in years |   |                  | 3.8    |   |                       |   | 4.8    |                          |   |   | 3.8 |   |   |   | 4.5 |   |   |   | 3.8 |   |
| Dividend      yield                           |   |                  | 0.00   | %      |                       |   | 0.00   | %                             |   |   | 0.00 | % |   |   | 0.00 | % |   |   | 0.00 | % |

----

| The      average number of shares used in computing earnings per share was as      follows: |   |   |      |   |    |   |
|---------------------------------------------------------------------------------------------|--------|--------|-----------|--------|---------|--------|
|                                                                                        |   |   |      |   |    |   |
| Thirteen      Weeks Ended                                                                   |   | Basic  |      |   | Diluted |   |
|                                                                                        |   |   |      |   |    |   |
| November      2, 2008                                                                       |   |   | 3,811,943 |   |    |   | 3,811,943 |   |
| October      28, 2007                                                                       |   |   | 3,809,363 |   |    |   | 3,809,363 |   |
|                                                                                        |   |   |      |   |    |   |   |   |
|                                                                                        |   |   |      |   |    |   |   |   |
| Thirty-Nine      Weeks Ended                                                                |   |   |      |   |    |   |   |   |
|                                                                                        |   |   |      |   |    |   |   |   |
| November      2, 2008                                                                       |   |   | 3,812,249 |   |    |   | 3,812,249 |   |
| October      28, 2007                                                                       |   |   | 3,805,795 |   |    |   | 3,805,795 |   |

| Beginning      balances as of August 3, 2008 |   | $      | 369  |   |
|----------------------------------------------|--------|--------|------|--------|
| Lease      payments made                     |   |   | (152 | )      |
| Impact      of change in estimate            |   |   | 182  |   |
| Ending      balance as of November 2, 2008   |   | $      | 399  |   |

----

ITEM 2.    
MANAGEMENT'SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

| · | Marketing      initiative:  The Company is aggressively reviewing its fiscal      2009 marketing strategies to find the most effective and cost efficient      method to reach its customers.           |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Operational      initiative:  The Company is aggressively looking to improve its      operational effectiveness.  This includes both store operations      and corporate office expensestructures. |

| · | On      September 3, 2008, the Company entered into an agreement with Accenture,      LLP to provide the Company with consulting services to increase the      Company’s operating efficiency and reduce shrink ("store transformation      project"). |   |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|

----

| · | Net      sales increased 4.7% to $115.5 million.  Same store sales      decreased 6.3% compared to the prior year thirdquarter.                                                                                                                                                                                                                                                                                                                             |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Gross      margin percentage decreased to 32.2% of sales, when compared to 32.5% in      the prior year third quarter.                                                                                                                                                                                                                                                                                                                                                |
| · | Net      loss per share was $0.44 in the third quarter of fiscal 2009 compared to      $0.43 net loss per share in the prior year third  quarter.                                                                                                                                                                                                                                                                                                                     |
| · | The      Company’s earnings from continuing operations before interest, taxes,      depreciation and amortization, share-based compensation expense,      preopening store costs, inventory review initiative and      executive, staff severance and Accenture store transformation      project fees(“Adjusted EBITDA”) for the third quarter 2009 was $469      to the prior year third quarter of $1.8  million.  |

----

----

|                                                                                                                                                            |   | For      the Thirteen Week Periods Ended |   |   | For      the Thirty-Nine Week Periods Ended |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|--------|--------|---------------------------------------------|--------|
| SG&A      Expenses Breakout                                                                                                                                 |   | November      2, 2008                    |   |   | October      28, 2007                       |   |   | November      2, 2008 |   |   | October      28, 2007 |   |
| Store      support center (1)                                                                                                                              |   | $                                        | 6,609  |   |                                        |   | 5,612 |   |   |   | 19,501 |   |   |   | 16,404 |   |
| Distribution      center                                                                                                                                        |   |                                     | 2,608  |   |                                        |   | 2,506 |   |   |   | 7,186 |   |   |   | 6,947 |   |
| 401K      expense                                                                                                                                               |   |                                     | 115    |   |                                        |   | 118 |   |   |   | 359 |   |   |   | 356 |   |
| Same-store      SG&A                                                                                                                                        |   |                                     | 23,795 |   |                                        |   | 25,004 |   |   |   | 69,715 |   |   |   | 73,133 |   |
| Non      same-store SG&A (2)                                                                                                                                |   |                                     | 4,921  |   |                                        |   | 1,930 |   |   |   | 13,520 |   |   |   | 3,052 |   |
| Share-based      compensation expense                                                                                                                           |   |                                     | 169    |   |                                        |   | 317 |   |   |   | 34 |   |   |   | 893 |   |
| Final      SG&A as reported                                                                                                                                 |   |                                     | 38,217 |   |                                        |   | 35,487 |   |   |   | 110,315 |   |   |   | 100,785 |   |
| Less:                                                                                                                                                           |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Share-based      compensation expense                                                                                                                           |   |                                     | (169   | )      |                                        |   | (317 | ) |   |   | (34 | ) |   |   | (893 | ) |
| Preopening      store costs (2)                                                                                                                                 |   |                                     | (342   | )      |                                        |   | (1,169 | ) |   |   | (1,837 | ) |   |   | (1,520 | ) |
| Executive      and staff severance (1)                                                                                                                          |   |                                     | -      |   |                                        |   | - |   |   |   | (1,942 | ) |   |   | - |   |
| Accenture      store transformation project                                                                                                                     |   |                                     | (937   | )      |                                        |   | - |   |   |   | (937 | ) |   |   | - |   |
| Adjusted      SG&A                                                                                                                                          |   | $                                        | 36,769 |   |                                        |   | 34,001 |   |   |   | 105,565 |   |   |   | 98,372 |   |
|                                                                                                                                                            |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Adjusted      SG&A as % of sales                                                                                                                            |   |                                     | 31.8   | %      |                                        |   | 30.8 | % |   |   | 30.1 | % |   |   | 29.3 | % |
|                                                                                                                                                            |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Sales      per average selling square foot                                                                                                                      |   | $                                        | 25.59  |   |                                        |   | 27.98 |   |   |   | 79.86 |   |   |   | 80.50 |   |
|                                                                                                                                                            |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Adjusted      gross margin dollars per average selling square feet(3)(4)                                                                                        |   | $                                        | 8.25   |   |                                        |   | 9.09 |   |   |   | 25.90 |   |   |   | 25.93 |   |
|                                                                                                                                                            |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Adjusted      SG&A per average selling square foot (3)                                                                                                      |   | $                                        | 8.15   |   |                                        |   | 8.63 |   |   |   | 24.02 |   |   |   | 23.60 |   |
|                                                                                                                                                            |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Adjusted      EBITDA per average selling square foot (3)(5)                                                                                                     |   | $                                        | 0.10   |   |                                        |   | 0.46 |   |   |   | 1.88 |   |   |   | 2.33 |   |
|                                                                                                                                                            |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Average      inventory per average selling square feet (3)(6)(7)                                                                                                |   | $                                        | 28.63  |   |                                        |   | 32.86 |   |   |   | 28.43 |   |   |   | 28.38 |   |
|                                                                                                                                                            |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Average      selling square feet (3)                                                                                                                            |   |                                     | 4,513  |   |                                        |   | 3,941 |   |   |   | 4,395 |   |   |   | 4,168 |   |
|                                                                                                                                                            |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Total      stores operating beginning of period                                                                                                                 |   |                                     | 257    |   |                                        |   | 255 |   |   |   | 262 |   |   |   | 256 |   |
| Total      stores operating end of period                                                                                                                       |   |                                     | 259    |   |                                        |   | 256 |   |   |   | 259 |   |   |   | 256 |   |
| Total      stores less than twelve months old                                                                                                                   |   |                                     |   |   |                                        |   |   |   |   |   | 21 |   |   |   | 10 |   |
| Total      Non same-stores                                                                                                                                      |   |                                     |   |   |                                        |   |   |   |   |   | 33 |   |   |   | 15 |   |
|                                                                                                                                                            |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental      Data:                                                                                                                                         |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Same-store      sales change                                                                                                                                    |   |                                     | -6.3   | %      |                                        |   | 4.9 | % |   |   | -5.5 | % |   |   | 4.2 | % |
| Same-store      gross margin dollar change                                                                                                                      |   |                                     | -7.4   | %      |                                        |   | 9.0 | % |   |   | -6.3 | % |   |   | 10.1 | % |
| Same-store      SG&A dollar change                                                                                                                          |   |                                     | -5.8   | %      |                                        |   | 7.3 | % |   |   | -4.7 | % |   |   | 9.2 | % |
| Same-store      total customer count change                                                                                                                     |   |                                     | -10.5  | %      |                                        |   | -3.8 | % |   |   | -9.2 | % |   |   | -4.5 | % |
| Same-store      average sale per ticket change                                                                                                                  |   |                                     | 4.7    | %      |                                        |   | 9.0 | % |   |   | 4.1 | % |   |   | 9.1 | % |
|                                                                                                                                                            |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                            |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| (1)      General office includes executive and staff severance                                                                                                  |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| (2)      Non same-stores are those stores opened in Fiscal 2009 & Fiscal 2008      and includes preopening costs                                            |   |                                     |   |   |                                        |   |   |   |   |
| (3)      Average selling square feet is (beginning square feet plus ending square      feet) divided by 2.                                                      |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |
| (4)      Adjusted gross margin includes inventory review initiative                                                                                             |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| (5)      Adjusted EBITDA per selling square foot is a non-GAAP financial measure      and is calculated as Adjusted EBITDA divided by selling square      feet. |   |
| (6)      Average inventory is (beginning inventory plus ending inventory) divided      by 2. This includes only the merchandise inventory at store      level.  |   |
| (7)      Excludes inventory for unopened stores.                                                                                                                |   |                                     |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |

----

| Adjusted      EBITDA from net earnings (loss) from continuingoperations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |             |    |   |                                       |   |    |                               |   |   |                                     |   |   |                               |    |   |                  |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|---------|--------|--------------------------------------------|--------|---------|------------------------------------|--------|--------|------------------------------------------|--------|--------|------------------------------------|---------|--------|-----------------------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |             |    |   | For      the Twenty-Six Week Periods Ended |   |    | Trailing      Twelve Periods Ended |   |   | For      the Thirteen Week Periods Ended |   |   | Trailing      Twelve Periods Ended |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | Fiscal      2008 |    |   | August      3, 2008                        |   |    | July      29, 2007                 |   |   | August      3, 2008                      |   |   | November      2, 2008              |    |   | October      28, 2007 |   |   | November      2, 2008 |   |
| Net      income (loss) from continuing operations (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $                | 522     |   |                                       |   | (959    | )                                  |   |   | 1,103                                    |   |   |                               | (1,540  | )      |                  |   | (1,514 | ) |   |   | (1,446 | ) |   |   | (1,608 | ) |
| Plus:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |             |    |   |                                       |   |    |                               |   |   |                                     |   |   |                               |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |             | 3,382   |   |                                       |   | 1,156   |                               |   |   | 1,597                                    |   |   |                               | 2,941   |   |                  |   | 63     |   |   |   | 929 |   |   |   | 2,075 |   |
| Taxes      (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |             | 538     |   |                                       |   | (707    | )                                  |   |   | 730                                      |   |   |                               | (899    | )      |                  |   | (1,647 | ) |   |   | (979 | ) |   |   | (1,567 | ) |
| Depreciation      and amortization (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |             | 9,475   |   |                                       |   | 3,679   |                               |   |   | 3,539                                    |   |   |                               | 9,615   |   |                  |   | 2,119  |   |   |   | 1,820 |   |   |   | 9,914 |   |
| Share-based      compensation expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |             | 1,130   |   |                                       |   | (135    | )                                  |   |   | 576                                      |   |   |                               | 419     |   |                  |   | 169    |   |   |   | 317 |   |   |   | 271 |   |
| Preopening      store costs (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |             | 2,783   |   |                                       |   | 1,495   |                               |   |   | 352                                      |   |   |                               | 3,926   |   |                  |   | 342    |   |   |   | 1,169 |   |   |   | 3,099 |   |
| Inventory      review initiative                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |             | -       |   |                                       |   | 1,345   |                               |   |   | -                                        |   |   |                               | 1,345   |   |                  |   | -      |   |   |   | - |   |   |   | 1,345 |   |
| Executive      and staff severance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |             | -       |   |                                       |   | 1,942   |                               |   |   | -                                        |   |   |                               | 1,942   |   |                  |   | -      |   |   |   | - |   |   |   | 1,942 |   |
| Accenture      store transformation project                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |             | -       |   |                                       |   | -       |                               |   |   | -                                        |   |   |                               | -       |   |                  |   | 937    |   |   |   | - |   |   |   | 937 |   |
| =Adjusted      EBITDA (1)(3)(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |             | 17,830  |   |                                       |   | 7,816   |                               |   |   | 7,897                                    |   |   |                               | 17,749  |   |                  |   | 469    |   |   |   | 1,810 |   |   |   | 16,408 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |             |    |   |                                       |   |    |                               |   |   |                                     |   |   |                               |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Adjusted      EBITDA                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |             |    |   |                                       |   |    |                               |   |   |                                     |   |   |                               |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Same-stores      (5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |             | 47,623  |   |                                       |   | 22,585  |                               |   |   | 22,988                                   |   |   |                               | 47,220  |   |                  |   | 8,524  |   |   |   | 9,786 |   |   |   | 45,957 |   |
| Non      same-stores (3)(5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |             | 1,650   |   |                                       |   | 1,275   |                               |   |   | 381                                      |   |   |                               | 2,544   |   |                  |   | 340    |   |   |   | 260 |   |   |   | 2,624 |   |
| Store      support center (5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |             | (22,116 | )      |                                       |   | (11,279 | )                                  |   |   | (11,031                                  | )      |   |                               | (22,364 | )      |                  |   | (5,787 | ) |   |   | (5,730 | ) |   |   | (22,421 | ) |
| Warehouse                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |             | (9,327  | )      |                                       |   | (4,765  | )                                  |   |   | (4,441                                   | )      |   |                               | (9,651  | )      |                  |   | (2,608 | ) |   |   | (2,506 | ) |   |   | (9,753 | ) |
| Reconciled      Adjusted EBITDA (1)(3)(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 17,830           |    |   |                                       | 7,816  |    |                               |   | 7,897  |                                     |   |   | 17,749                             |    |   |                  | 469    |   |   |   | 1,810 |   |   |   | 16,408 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |             |    |   |                                       |   |    |                               |   |   |                                     |   |   |                               |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |             | 5,501   |   |                                       |   | 4,653   |                               |   |   | 4,217                                    |   |   |                               | 4,653   |   |                  |   | 5,320  |   |   |   | 4,525 |   |   |   | 5,320 |   |
| Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |             | 33,013  |   |                                       |   | 36,964  |                               |   |   | 37,698                                   |   |   |                               | 36,964  |   |                  |   | 58,303 |   |   |   | 55,759 |   |   |   | 58,303 |   |
| Debt,      net of cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                | 27,512  |   |                                       |   | 32,311  |                               |   |   | 33,481                                   |   |   |                               | 32,311  |   |                  |   | 52,983 |   |   |   | 51,234 |   |   |   | 52,983 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |             |    |   |                                       |   |    |                               |   |   |                                     |   |   |                               |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| (1)      These amounts will not agree with the 2008 fiscal 2008 10-K filing due to      the 14 stores the Company closed in the first quarter of fiscal      2009. These stores are now shown in discontinued      operations.                                                                                                                                                                                                                                                                                                                                                                 |   |
| (2) These      costs are not consistent quarter to quarter as the Company does not open      the same number of stores in each quarter of each fiscal year. These      costs are directly associated with the number of stores that have or will      be opened and are incurred prior to the grand opening of each      store.                                                                                                                                                                                                                                                      |   |
| (3) For      the trailing twelve periods ended November 2, 2008 the average open weeks      for the Company's 33 non same-stores is 41 weeks.                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (4) During      fiscal year 2009, the Company made a change in its Executive Management      team and Board of Directors resulting in several initiatives to reduce      SG&A expense. For the thirty-nine weeks ended November 2, 2008,      the Company has reduced SG&A approximately $4.6 million when compared      to the same period for the previous fiscal year.  The initiatives      include, but are not limited to, executive and staff      reduction, reduced floor care services, professional service      providers' expense and travel expense. |   |
| (5)      Adjusted EBITDA amount of $321 was reclassified for an internal allocation      for the thirteen week period ended October 28, 2007 and the      twenty-six week period ended July 29, 2007.                                                                                                                                                                                                                                                                                                                                                                                          |   |

----

|                                                                     |   | For      the Thirteen Weeks Ended |   |   | For      the Thirty-Nine Weeks Ended |   |
|--------------------------------------------------------------------------|--------|-----------------------------------|--------|--------|--------------------------------------|--------|
|                                                                     |   | November      2, 2008             |   |   | October      28, 2007                |   |   | November      2, 2008 |   |   | October      28, 2007 |   |
| Merchandise      Category:                                               |   |                              |   |   |                                 |   |   |   |   |   |   |   |
| Consumables      and commodities                                         |   |                              | 34     | %      |                                 |   | 32 | % |   |   | 32 | % |   |   | 31 | % |
| Electronics,      entertainment, sporting goods, toys and outdoor living |   |                              | 21     | %      |                                 |   | 20 | % |   |   | 25 | % |   |   | 24 | % |
| Apparel      and accessories                                             |   |                              | 20     | %      |                                 |   | 22 | % |   |   | 19 | % |   |   | 20 | % |
| Home      furnishings and décor                                     |   |                              | 14     | %      |                                 |   | 14 | % |   |   | 13 | % |   |   | 14 | % |
| Other                                                                    |   |                              | 11     | %      |                                 |   | 12 | % |   |   | 11 | % |   |   | 11 | % |
|                                                                     |   |                              |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                    |   |                              | 100    | %      |                                 |   | 100 | % |   |   | 100 | % |   |   | 100 | % |

| NEW ACCOUNTING      PRONOUNCEMENTS |
|------------------------------------|

|   |   |
|--------|--------|

----

ITEM 3.  QUANTITATIVE AND QUALITATIVEDISCLOSURE ABOUT MARKET RISK

ITEM 4.  CONTROLS ANDPROCEDURES

----

| · | The      Company did not have adequate transition plans to address turnover in      finance and accounting personnel.  As a result, due to      significant changes in these personnel that occurred around the Company’s      February 3, 2008 year-end closing process, the Company did not have      sufficient trained resources to effectively operate the year-end closing      process controls.  This resulted in misstatements that were      corrected prior to the issuance of the consolidated financial      statements.  As a result of this material weakness, there is more      than a reasonable possibility that a material misstatement of the      Company’s annual or interim financial statements will not be prevented or      detected on a timely basis. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

PART II - OTHER INFORMATION

ITEM 1.  LEGALPROCEEDINGS

ITEM 1A.  RISKFACTORS

ITEM 2.  UNREGISTERED SALES OF EQUITYSECURITIES AND USE OF PROCEEDS

|                                     |                  |   |                |   |                       |   | Maximum      Number         |   |
|------------------------------------------|-----------------------|--------|---------------------|--------|----------------------------|--------|-----------------------------|--------|
|                                     |                  |   |                |   | Total      Number of       |   | (or      Approximate Dollar |   |
|                                     |                  |   |                |   | shares      (or Units)     |   | Value)      of Shares (or   |   |
|                                     | Total      Number     |   | Average      Price  |   | Purchased      as Part     |   | Units)      that May Yet    |   |
|                                     | Of      Shares (or    |   | Paid      per Share |   | of      Publicly Announced |   | Be      Purchased Under     |   |
| Period                                   | Units)      Purchased |   | (or      Unit)      |   | Plans      or Programs     |   | the      Plans or Programs  |   |
| August      4, 2008 - August 31, 2008    |                  |   | 7,501               |   |                       |   | 14.22                       |   |   |   | 7,501 |   |   |   | 189,162 |   |
| September      1, 2008 - October 5, 2008 |                  |   | 3,020               |   |                       |   | 13.42                       |   |   |   | 3,020 |   |   |   | 186,142 |   |
| October      6, 2008 - November 2, 2008  |                  |   | 3,510               |   |                       |   | 12.61                       |   |   |   | 3,510 |   |   |   | 182,632 |   |

ITEM 3.  DEFAULTS UPON SENIORSECURITIES

----

ITEM 4.  SUBMISSION OF MATTERS TO AVOTE OF SECURITY HOLDERS

ITEM 5.  OTHERINFORMATION

ITEM 6.  EXHIBITS

| 3.1    | Articles      of Incorporation of Duckwall-ALCO Stores, Inc., amended as of June 13,      1994 and restated solely for filing with the Securities and Exchange      Commission (filed as Exhibit 3.1 to Company's Quarterly Report on Form      10-Q for the fiscal quarter ended August 1, 2004 and incorporated herein      by reference). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                         |
| 3.2    | Bylaws      of Duckwall-ALCO Stores, Inc. (filed as Exhibit 3.2 to Company's Quarterly      Report on Form 10-Q for the fiscal quarter ended August 1, 2004 and      incorporated herein by reference).                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                         |
| 4.1    | Specimen      of Duckwall-ALCO Stores, Inc. Common Stock Certificate.  (filed      as Exhibit 4.1 to Company’s Quarterly Report on Form 10-Q for the fiscal      quarter ended August 3, 2008 and incorporated herein by      reference).                                                                                    |

| 4.2    | Reference      is made to the Amended and Restated Articles of Incorporation described      under 3.1 above and Bylaws described under 3.2 above.                                                                            |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                         |
| 10.1   | Employment      Agreement dated July 1, 2008 between the Company and Lawrence J.      Zigerelli is incorporated by reference to Exhibit 10.1 to the Current      Report on Form 8-K of the Company dated July 3,  2008. |

| 10.2   | Stock      Purchase Agreement dated July 1, 2008 between the Company and Lawrence J.      Zigerelli is incorporated by reference to Exhibit 10.2 to the Current      Report on Form 8-K of the Company dated July 3, 2008.              |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                    |
| 10.3   | Non-Qualified      Stock Option Agreement dated July 1, 2008 between the Company and Lawrence      J. Zigerelli is incorporated by reference to Exhibit 10.3 to the Current      Report on Form 8-K of the Company dated July 3,  2008. |

| 10.4 | Employment      Agreement dated July 24, 2008 between the Company and Jane F.      Gilmartin is incorporated by reference to Exhibit 10.4 to the Current      Report on Form 8-K of the Company dated July 24,  2008. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.5   | Employment      Agreement dated August 25, 2008 between the Company and Edmond C.      Beaith is incorporated by reference to Exhibit 10.5 to the Current Report      on Form 8-K of the Company dated August 25, 2008.                                                                                                                                                                                                       |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.6   | Separation      Agreement and Release, dated as of August 1, 2008, between the Company and      Anthony C. Corradi, including consulting agreement is incorporated by      reference to Exhibit 10.6 to the Current Report on Form 8-K of the Company      dated August 1, 2008.                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 31.1   | Certification      of Chief Executive Officer of Duckwall-ALCO Stores, Inc. dated December      11, 2008, pursuant to Rule 13a-4(a) under the Securities Exchange Act of      1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of      2002.                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 31.2   | Certification      of Chief Financial Officer of Duckwall-ALCO Stores, Inc. dated December      11, 2008, pursuant to Rule 13a-4(a) under the Securities Exchange Act of      1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of      2002.                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 32.1   | Certification      of Chief Executive Officer of Duckwall-ALCO Stores, Inc, dated December      11, 2008, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to      Section 906 of the Sarbanes-Oxley Act of 2002, which is furnished with      this Quarterly Report on Form 10-Q for the quarter ended November 2, 2008      and is not treated as filed in reliance upon § 601(b)(32) of      Regulations S-K.  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 32.2   | Certification      of Chief Financial Officer of Duckwall-ALCO Stores, Inc., dated December      11, 2008, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to      Section 906 of the Sarbanes-Oxley Act of 2002, which is furnished with      this Quarterly Report on Form 10-Q for the quarter ended November 2, 2008      and is not treated as filed in reliance upon § 601(b)(32) of      Regulations S-K. |

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| Signature      and Title                                |   |   | Date                   |
|---------------------------------------------------------|--------|--------|------------------------|
|                                                    |   |   |                   |
| /s/      Lawrence J. Zigerelli                          |   |   | December      11, 2008 |
| Lawrence      J. Zigerelli                              |   |   |                   |
| President      and Chief Executive Officer              |   |   |                   |
| (Principal      Executive Officer)                      |   |   |                   |
|                                                    |   |   |                   |
| /s/      Donny R. Johnson                               |   |   | December      11, 2008 |
| Donny      R. Johnson                                   |   |   |                   |
| Executive      Vice President - Chief Financial Officer |   |   |                   |
| (Principal      Financial and Accounting Officer)       |   |   |                   |
|                                                    |   |   |                   |
| /s/      Raymond A.D. French                            |   |   | December      11, 2008 |
| Raymond      A.D. French                                |   |   |                   |
| Director                                                |   |   |                   |
|                                                    |   |   |                   |
| /s/      James G. Hyde                                  |   |   | December      11, 2008 |
| James      G. Hyde                                      |   |   |                   |
| Director                                                |   |   |                   |
|                                                    |   |   |                   |
| /s/      Dennis E. Logue                                |   |   | December      11, 2008 |
| Dennis      E. Logue                                    |   |   |                   |
| Director                                                |   |   |                   |
|                                                    |   |   |                   |
| /s/      Lolan C. Mackey                                |   |   | December      11, 2008 |
| Lolan      C. Mackey                                    |   |   |                   |
| Director                                                |   |   |                   |
|                                                    |   |   |                   |
| /s/      Royce L. Winsten                               |   |   | December      11, 2008 |
| Royce      L. Winsten                                   |   |   |                   |
| Director      - Chairman of Board                       |   |   |                   |

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