UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C.  20549


                               FORM 10-K

 (Mark One)

 (X)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                For the fiscal year ended January 30, 2000

                                  OR

 (  ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      For the transition period from _____________ to ___________

                        Commission File Number 0-20269

                      DUCKWALL-ALCO STORES, INC.
       (Exact name of registrant as specified in its charter)

                          Kansas                           48-0201080
                (State or other jurisdiction of         (I.R.S. Employer
                incorporation or organization)         Identification No.)

                       401 Cottage Street
                        Abilene, Kansas                     67410-2832
          (Address of principal executive offices)          (Zip Code)


  Registrant's telephone number including area code: (785) 263-3350

    Securities registered pursuant to Section 12(b) of the Act:
                                NONE

    Securities registered pursuant to Section 12(g) of the Act:
               Common Stock, par value $.0001 per share
                           (Title of Class)

         Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.  Yes  [X]      No [  ]

         Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.  [X]

         Indicate by check mark whether the Registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15(d) of
the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.  Yes   [X]      No [  ]

         At March 17, 2000 there were 4,599,099 shares of Common Stock
outstanding, of which 3,320,495 shares were owned by affiliates.

         Documents incorporated by reference:  portions of the Registrant's
Proxy Statement for the 2000 Annual Meeting of Stockholders are incorporated
by reference in Part III hereof.

<PAGE 1>

                                            PART I

ITEM 1.    BUSINESS

History

         Duckwall-ALCO Stores, Inc., (the "Company" or "Registrant"), was
founded as a general merchandising operation at the turn of the century in
Abilene, Kansas by A. L. Duckwall.  From its founding until 1968, the Company
conducted its retail operations as small variety or "dime" stores.  In 1968,
the Company followed an emerging trend to discount retailing when it opened
its first ALCO discount store.   In 1991, the Company adopted its current
business strategy that focuses on under-served markets that have no direct
competition from another full-line discount retailer.  This strategy includes
opening either an ALCO discount store or a Duckwall variety store, depending
upon the market size.  As of April 28, 2000, the Company operates 266 retail
stores located in the central United States, consisting of 172 ALCO retail
discount stores and 94 Duckwall variety stores.

      The Company was incorporated on July 2, 1915 under the laws of Kansas.
The Company's executive offices are located at 401 Cottage Street, Abilene,
Kansas  67410-2832, and its telephone number is (785) 263-3350.

General

         The Company, which was established in 1901, is a regional retailer
operating 266 stores in 19 states in the central United States.  The Company's
strategy is to target smaller markets not served by other regional or national
full-line retail discount chains and to provide the most convenient access to
retail shopping within each market.  The Company's ALCO discount stores offer
a full line of merchandise consisting of approximately 35,000 items, including
automotive, candy, crafts, domestics, electronics, fabrics, furniture,
hardware, health and beauty aids, housewares, jewelry, ladies', men's and
children's apparel and shoes, pre-recorded music and video, sporting goods,
seasonal items, stationery and toys.  The Company's smaller Duckwall variety
stores offer a more limited selection of merchandise.

         Of the Company's 172 ALCO discount stores, 128 stores are located in
communities that do not have another full-line discounter.  The Company
intends to continue its strategy of opening ALCO stores in markets that do
not have other full-line discount retailers and where the opening of an ALCO
store is likely to be preemptive to the entry by other competitors in the
market.  The ALCO discount stores account for 91% of the Company's net sales.
While the current ALCO stores average 21,150 square feet of selling space,
the Company's store expansion program is primarily directed toward stores
with a design prototype of approximately 18,000 square feet of selling space
("Class 18 Stores"), which, based on the Company's experience, has been a
design that maximizes return on investment for newly-constructed stores.

         The Company's 94 Duckwall variety stores are primarily located in
communities of less than 2,500 residents and are designed to act as the
primary convenience retailer in these smaller communities.  These stores,
which account for the remaining 9% of the Company's net sales, average
approximately 5,700 square feet of selling space and offer approximately
12,000 items.  Operating Duckwall stores offers the Company the opportunity
to serve the needs of a community that would not support a full-line retail
discount store with a reduced investment per store and a higher return on
investment than the Company's average.

         All of the Company's discount and variety stores are serviced by
the Company's 352,000 square foot distribution center in Abilene, Kansas.

Business Strategy

         The Company believes that its improved operating performance and
financial condition over the last five fiscal years is the result of the
focused execution of a business strategy that includes the following key
components:

         Markets: The Company intends to open ALCO stores in towns with
populations of typically less than 5,000 that are in trade areas with
populations of less than 16,000 where:  (1) there is no direct competition
from national or regional full-line discount retailers; (2) economic and
demographic criteria indicate the market is able to commercially support
a discount retailer; and (3) the opening of an ALCO store would significantly
reduce the likelihood of the entry into such market by another full-line
discount retailer.  This key component of the Company's strategy has guided
the Company in both its opening of new stores and in the closing of existing
stores.  Since 1991, the Company has opened 114 ALCO discount stores (with
an approximate average size of 18,400 square feet of selling space) and 87
Duckwall variety stores.  Except for eight stores, each of the new ALCO and
Duckwall stores was opened in a primary market in which there was no direct
competition from a national or regional full-line discount retailer.

<PAGE 2>

         Market Selection:  The Company has a detailed process that it uses
to analyze under-served markets which includes examining factors such as
distance from competition, trade area, disposable income and retail sales
levels.  Markets that are determined to be sizable enough to support an ALCO
or a Duckwall store, and that have no direct competition from another
discount retailer, are examined closely and eventually selected or passed
over by the Company's experienced management team.

         Store Expansion:  The Company's expansion program is designed around
the prototype Class 18 Store.  This prototype details for each new store
plans for shelf space, merchandise presentation, store items to be offered,
parking, storage, as well as other store design considerations.  The 18,000
square feet of selling space is large enough to permit a full line of the
Company's merchandise, while minimizing capital expenditures, required labor
costs and general overhead costs.  The Company will also consider opportunities
in acceptable markets to open ALCO stores in available space in buildings
already constructed.  The Company's expansion strategy for its Duckwall
variety stores is based on opportunities presented to the Company in and by
smaller communities where there is a need and where existing premises are
available for lease with a relatively low cost and which provide the Company
with limited exposure.

         Technology:  The Company is continually improving its management
information technologies to support the operation of the Company.  In fiscal
1999, the Company implemented a new system for merchandise administration
and distribution.  In fiscal 2000, the Company completed the roll-out of new
point-of-sale (POS) store software that has extended the life and capabilities
of its POS hardware.  In conjunction with this, the stores  received radio
frequency hand held devices to allow for additional operating efficiencies.
The Company also devoted resources to identify and fix or replace software
and hardware that was not year 2000 compliant.

         Advertising and Promotion:  The Company utilizes full-color
photography advertising circulars of 8 to 28 pages distributed by insertion
into newspapers or by direct mail where newspaper service is inadequate.
During fiscal 2000, these circulars were distributed 35 times in ALCO markets.
In its Duckwall markets, the Company advertises approximately 13 times a year
during seasonal promotions.  The Company's marketing program is designed to
create an awareness, on the part of its identified target customer base, of
the Company's comprehensive selection of merchandise and its competitive
pricing.  During fiscal 1999, the Company began market research and planning
for the initial roll-out in Fiscal 2000, of its new pricing strategy "New Low
Prices Everyday" (NLPE).  This strategy has benefited customers by offering
sharper prices everyday on products that typically would have been subject to
promotional pricing and markdowns.  NLPE will also reduce the Company's
reliance on advertising circulars and promotions to drive traffic into its
stores.  During fiscal 2001, the Company will distribute approximately 36
circulars in ALCO markets plus four additional circulars for stores in
competitive markets.

         Store Environment:  The Company's stores are open, clean, bright and
offer a pleasant atmosphere with disciplined product presentation, attractive
displays and efficient check-out procedures.  The Company endeavors to staff
its stores with courteous, highly motivated, knowledgeable store associates
in order to provide a convenient, friendly and enjoyable shopping experience.

Store Development

         The Company plans to open approximately 5 ALCO stores during fiscal
year 2001, and a  minimum of 7 ALCO stores and no Duckwall stores during each
of the fiscal years 2002 and 2003.

         The Company's strategy regarding store development is to increase
sales and profitability at existing stores by continually refining the
merchandising mix and improving operating efficiencies, and through new
store openings in the Company's targeted base of under-served markets in the
central United States.  Since fiscal 1995, the Company has opened a total of
82 ALCO stores with an average selling area of approximately 18,600 square
feet, and 67 Duckwall stores. The following table summarizes the Company's
growth during the past three fiscal years:

<TABLE>
<CAPTION>

                                                                                     Year-to-Date
                        1998                 1999                  2000                  2001

                     ALCO  DUCKWALL       ALCO  DUCKWALL        ALCO  DUCKWALL        ALCO  DUCKWALL
<S>              <C>       <C>        <C>       <C>         <C>       <C>         <C>       <C>
Stores Opened          25        15         16        20          12         9           1         0
Stores Closed           0         0          2         2           5         4           2         2
Net New Stores         25        15         14        18           7         5          -1        -2

</TABLE>
<PAGE 3>

         The Company intends to utilize the 18,000 square foot store profile
for new ALCO store openings.  Currently, the Company owns 16 ALCO and 2
Duckwall locations, and leases 156 ALCO and 92 Duckwall store locations.
The Company's present intention is to lease all new Duckwall stores.  The
Company may own some of the ALCO locations, but will, in general try to
lease those store locations.

         Before entering a new market with an ALCO store, the Company
analyzes available competitive, market, and demographic data to evaluate
the suitability and attractiveness of the potential market as part of a
screening process.  The process involves an objective review of selection
criteria including, among other factors, distance and drive time to discount
retail competitors, demographics, retail sales levels, existence and
stability of major employers, location of county government and distance
from the Company's warehouse.  The screening process also involves a visit
by officers of the Company to more subjectively evaluate the potential new
site.  There are currently approximately 150 communities known by the
Company to have met the Company's market selection process.  The Company is
in the site selection and/or procurement process in approximately 14 of those
markets, each of which has been approved by the Company for a new ALCO
location.  The Company performs a similar site selection process with new
Duckwall stores.  However, the process is condensed given the low opening
and closing costs of a Duckwall location.

         The estimated investment to open a new Class 18 Store is
approximately $1.25 million for the land, building, equipment, inventory and
pre-opening costs.

Store Environment and Merchandising

         The Company manages its stores to attractively and conveniently
display a full line of merchandise within the confines of the stores'
available square footage.  Corporate merchandising direction is provided to
each ALCO and Duckwall store to ensure a consistent company-wide store
presentation.  To facilitate long-term merchandising planning, the Company
divides its merchandise into three core categories driven by the Company's
customer profile:  primary, secondary, and convenience.  The primary core
receives management's primary focus, with a wide assortment of merchandise
being placed in the most accessible locations within the stores and receiving
significant promotional consideration.  The secondary core consists of
categories of merchandise for which the Company maintains a strong assortment
that is easily and readily identifiable by its customers.  The convenience
core consists of categories of merchandise for which ALCO will maintain
convenient, but limited, assortments, focusing on key items that are in
keeping with customers' expectations for a discount store.  Secondary and
convenience cores include merchandise that the Company feels is important
to carry as the target customer expects to find them within a discount store
and they ensure a high level of customer traffic.  The Company continually
evaluates and ranks all product lines, shifting product classifications
when necessary to reflect the changing demand for products.

Purchasing

         Procurement and merchandising of products is directed by the
Company's Vice President - Merchandise, who reports to the Company's
President.  The Vice President - Merchandise is supported by a staff of
four divisional merchandise managers who are each responsible for specific
product categories.  The Company employs 22 merchandise buyers and one
assistant buyer  who each report to a divisional merchandise manager.
Buyers are assisted by a management information system that provides them
with current price and volume information by SKU, thus allowing them to
react quickly with buying and pricing adjustments dictated by customer
buying patterns.

         The Company purchases its merchandise from approximately 2,400
suppliers.  The Company generally does not utilize long-term supply contracts.
No single supplier accounted for more than 6% of the Company's total purchases
in fiscal 2000 and competing brand name and private label products are
available from other suppliers at competitive prices.  The Company believes
that its relationships with its suppliers are good and that the loss of any
one or more of its suppliers would not have a material adverse effect on the
Company.

Pricing

         Merchandise pricing is done at the corporate level and is essentially
the same for all of the ALCO stores, regardless of the level of local
competition.  This pricing strategy, with its promotional activities, is
designed to bring consistent value to the customer.  In fiscal 2001,
promotions on various items will be offered approximately 35 times through
advertising circulars.   Even though the same general pricing and advertising
activities are carried out for all ALCO stores, the impact of such activities
is significantly different depending upon the level of competition in the
market.

<PAGE 4>

Distribution and Transportation

         The Company operates a 352,000 square foot distribution center in
Abilene, Kansas, from which it services each of the 172 ALCO discount stores
and 94 Duckwall variety stores.  This distribution center is responsible for
distributing approximately 80% of the Company's merchandise, with the balance
being delivered directly to the Company's stores by its vendors.  This
distribution center ships to each of the Company's stores once a week,
primarily through irregular route common carriers. The Company also utilizes
its wholly owned subsidiary, SPD Truck Line, Inc. (the "Subsidiary") for
delivery to the stores.  The distribution center is fully integrated into
the Company's management information system, allowing the Company to utilize
such cost cutting efficiencies as perpetual inventories, safety programs,
and employee productivity software.

         The Subsidiary acts as a contract carrier for the Company in
transporting goods to and from its stores.  The Subsidiary leases and uses
five tractors and 24 trailers for such deliveries.

Management Information Systems

         Commencing in fiscal 1989, the Company committed significant resources
to the purchase and application of available computer hardware and software
to its discount retailing operations with the intent to lower costs, improve
customer service and enhance general business planning.

         In general, the Company's merchandising systems are designed to
integrate the key retailing functions of seasonal merchandise planning,
purchase order management, merchandise distribution, sales information and
inventory maintenance and replenishment.  All of the Company's discount
stores have point-of-sale computer terminals that record certain sales data
in a format that can be transmitted nightly to the Company's data processing
facility where it is used to produce daily and weekly management reports.
In fiscal 1999, the Company implemented a new system for merchandise
administration and distribution.  In fiscal 2000, the Company completed the
roll-out of new point-of-sale (POS) store software that has extended the life
and capabilities of its POS hardware.  In conjunction with this, the stores
received radio frequency hand held devices to allow for additional operating
efficiencies.

         Approximately 650 of the Company's merchandise suppliers currently
participate in the Company's electronic data interchanges ("EDI") system,
which makes it possible for the Company to place purchase orders
electronically.  When fully implemented, EDI will permit these and additional
vendors to transmit invoices and advance shipment notices to the Company and
receive sales history and purchase orders from the Company.

Store Locations

         As of April 28, 2000, the Company operated 172 ALCO stores in 19
states located in smaller communities in the central United States.  Of the
ALCO stores, 16 are owned and 156 are operated under real estate leases.
The ALCO stores average approximately 21,150 square feet of selling space,
with an additional 5,000 square feet utilized for merchandise processing,
temporary storage and administration.  The Company also operates 94 Duckwall
stores in 11 states, two of which are owned, and 92 are leased.  The
geographic distribution of the Company's stores is as follows:

<TABLE>
<CAPTION>

Duckwall Stores (94)
<S>               <S>               <S>             <S>                 <S>               <S>
Arkansas (1)      Colorado (6)      Iowa (6)        Kansas (38)         Missouri (1)      Nebraska (8)
New Mexico (1)    North Dakota (1)  Oklahoma (8)    South Dakota (3)    Texas (21)

</TABLE>

<TABLE>
<CAPTION>

ALCO Stores (172)
<S>               <S>               <S>             <S>                 <S>               <S>
Arizona (5)       Arkansas (6)      Colorado (9)    Idaho (2)           Illinois (8)      Indiana (15)
Iowa (9)          Kansas (25)       Minnesota (7)   Missouri (3)        Nebraska (17)     New Mexico (7)
North Dakota (7)  Oklahoma (8)      Ohio (6)        South Dakota (8)    Texas (25)        Utah (2)
Wyoming (3)

</TABLE>

<PAGE 5>

Competition

         While the discount retail business in general is highly competitive,
the Company's business strategy is to locate its ALCO discount stores in
smaller markets where there is no direct competition with larger national
or regional full-line discount chains, and where it is believed no such
competition is likely to develop.  Accordingly, the Company's primary
method of competing is to offer its customers a conveniently located store
with a wide range of merchandise at discount prices in a primary trade area
population under 16,000 that does not have a large national or regional
full-line discount store.  The Company believes that trade area size is a
significant deterrent to larger national and regional full-line discount
chains.  Duckwall variety stores, being located in very small markets, face
limited competition and, like the ALCO stores, emphasize the convenience of
location to the primary customer base.

         In the discount retail business in general, price, merchandise
selection, merchandise quality, advertising and customer service are all
important aspects of competing.  The Company encounters direct competition
with national full-line discount stores in 31 of its ALCO markets, and
another 13 ALCO stores are in direct competition with regional full-line
discount stores.  The competing regional and national full-line discount
retailers are generally larger than the Company and the stores of such
competitors in the Company's markets are substantially larger, have a
somewhat wider selection of merchandise and are very price competitive
in some lines of merchandise.  Where there are no discount retail stores
directly competing with the Company's ALCO stores, the Company's customers
nevertheless shop at retail discount stores and other retailers located in
regional trade centers, and to that extent the Company competes with such
discount stores and retailers.  The Company also competes for retail sales
with mail order companies, specialty retailers, mass merchandisers,
manufacturers outlets, and the internet.  In the 115 Class 18 markets in
which the Company operates a store, there is no direct competition from a
national or regional full-line discount retailer.

Employees

         As of April 1, 2000, the Company employed approximately 5,050 people,
of whom approximately 520 were employed in the general office and distribution
center in Abilene, 3,920 in the ALCO stores and 610 in the Duckwall stores.
Approximately 3,000 additional employees are hired on a seasonal basis, most
of whom are sales personnel.   There is no collective bargaining agent for
any of the Company's employees.  The Company considers its relations with its
employees to be excellent.

ITEM 2.     PROPERTIES.

         The Company owns facilities in Abilene, Kansas that consist of a
general office (approximately 35,000 square feet), the Distribution Center
(approximately 352,000 square feet) and additional warehouse space adjacent
to the general office.

         Sixteen of the ALCO stores and two of the Duckwall stores operate
in buildings owned by the Company.  The remainder of the stores operate in
leased properties.  Such ALCO leases expire as follows: approximately 156,841
square feet (3.4%) expire between April 28, 2000 and January 31, 2001;
approximately 581,535 square feet (12.7%) expire between February 1, 2001 and
January 31, 2002; and approximately 410,612 square feet (9.0%) expire between
February 1, 2002 and January 31, 2003.  The remainder expire through 2020.
All Duckwall store leases have terms remaining of five years or less.

ITEM 3.     LEGAL PROCEEDINGS.

         The Company has been a party to various legal proceedings which have
been reported in this Item 3 of Form 10-K for certain prior fiscal years.
The Company's legal proceedings have been resolved sufficiently to render
outstanding matters immaterial, in management's opinion, for purposes of
disclosure pursuant to this Item 3.

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         No matters were submitted to a vote of the stockholders of the
Company during the fourth quarter of the fiscal year ended January 30, 2000.

<PAGE 6>

ITEM 4A.    EXECUTIVE OFFICERS OF THE COMPANY.

         The following table sets forth the names, ages, positions and
certain other information regarding the executive officers of the Company as
of April 28, 2000.

       Name                      Age  Position
       _______________________  ____  ____________________________________
       Glen L. Shank              55  Chairman of the Board and President

       James E. Schoenbeck        56  Vice President - Operations and
                                        Advertising

       James R. Fennema           49  Vice President - Merchandise

       Richard A. Mansfield       44  Vice President - Finance and Treasurer

       Charles E. Bogan           64  Vice President, Secretary and General
                                        Counsel
__________

Except as set forth below, all of the executive officers have been associated
with the Company in their present position or other capacity for more than
the past five years.  There are no family relationships among the executive
officers of the Company.

         Glen L. Shank has served as President of the Company since June 1988
and as Chairman of the Board since May 1991. Between 1982 and 1988, Mr. Shank
served as Vice President of Merchandising of the Company.  Prior to 1982,
Mr. Shank served as a Buyer and as a Merchandise Manager for the Company.
Mr. Shank has approximately 33 years of experience in the retail industry.

         James E. Schoenbeck has served as Vice President of Store Operations
and Advertising since 1988.  From 1979 to 1988, Mr. Schoenbeck served as the
Vice President of Administration.  Mr. Schoenbeck has approximately 26 years
of experience in the retail industry.

         James R. Fennema has served as Vice President-Merchandise of the
Company since March 1993.  For the four years prior to that he served as Vice
President and a divisional merchandise manager with Caldor, Inc., a chain of
regional discount stores in New England and the mid-Atlantic states of the
United States.  For more than the four years prior to that he served as a
divisional merchandise manager of Fishers Big Wheel, a regional chain discount
retailer.  Mr. Fennema has approximately 27 years of experience in the retail
industry.

         Richard A. Mansfield has served as Vice President-Finance and
Treasurer of the Company since May 1997.  For the two years prior to that he
served as Chief Financial Officer of Country General Stores, Inc., a regional
chain of specialty farm and ranch stores located in the midwest.  For the
three years prior to that he served as Chief Financial Officer of American
Laminates, Inc. and Relco, Inc.  Mr. Mansfield has approximately 19 years of
experience in the retail industry.

         Charles E. Bogan has been the Secretary of the Company since 1972.
He has served as Vice President and General Counsel since 1984, and was
Secretary and a member of the Board of Directors during the period from
1972 to 1985.  Prior to becoming the Company's General Counsel, he served
as a partner in private practice with the law firm of Bogan & Johnson,
beginning in 1970.

<PAGE 7>

                                PART II

ITEM 5.     MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
            STOCKHOLDER MATTERS.

         The Common Stock of the Company is quoted on the Nasdaq National
Market under the symbol "DUCK."  The following table sets forth the range of
high and low bid information for the Company's Common Stock for each quarter
of fiscal 2000, 1999, 1998, 1997 and 1996 and  for the fourth quarter of
fiscal 1995, (the only full quarter period during that fiscal year for which
the Common Stock was so quoted).

       <TABLE>
                                                 High             Low
       _____________  _______________         _______          ______
       <C>            <C>                     <C>              <C>
       Fiscal 1995    Fourth quarter           $ 9.75          $ 9.00

       Fiscal 1996    First quarter            $ 9.75          $ 8.75
                      Second quarter            10.75            8.75
                      Third quarter             11.88           10.38
                      Fourth quarter            11.25            9.50

       Fiscal 1997    First quarter            $11.63          $ 8.75
                      Second quarter            15.50           12.88
                      Third quarter             14.50           12.25
                      Fourth quarter            16.75           12.25

       Fiscal 1998    First quarter            $14.50          $13.00
                      Second quarter            13.88           11.50
                      Third quarter             17.50           12.75
                      Fourth quarter            15.88           14.50

       Fiscal 1999    First quarter            $18.50          $13.25
                      Second quarter            19.38           16.75
                      Third quarter             17.88           10.13
                      Fourth quarter            13.75           11.25

       Fiscal 2000    First quarter            $13.25           $8.88
                      Second quarter            11.00            9.25
                      Third quarter             10.13            7.75
                      Fourth quarter             9.25            5.63

</TABLE>
         As of April 7, 2000, there were approximately 1,320 holders of
record of the Common Stock of the Company. The Company has not paid cash
dividends on its Common Stock during the last five fiscal years, and is
currently prohibited from paying such dividends by the terms of the Third
Amended and Restated Loan Agreement dated as of December 31, 1998, among
the Company, BA Business Credit, Inc., and Transamerica Business Credit
Corporation.

<PAGE 8>

ITEM 6.     SELECTED FINANCIAL DATA.

            SELECTED CONSOLIDATED FINANCIAL DATA
           (dollars in thousands, except per share and store data)

         The selected consolidated financial data presented below for, and
as of the end of, each of the last five fiscal years under the captions
Statements of Operations Data and Balance Sheet Data have been derived from
the audited consolidated financial statements of the Company.  This data
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" (Item 7) and the consolidated
financial statements, related notes, and other financial information included
herein.

<TABLE>
<CAPTION>
                                                                     Fiscal Year Ended
                                      ---------------------------------------------------------------------------
                                      January 30,      January 31,    February 1,     February 2,     January 28,
                                             2000             1999           1998            1997            1996
                                      -----------     -----------     -----------     -----------     -----------
<S>                                   <C>             <C>             <C>             <C>             <C>
Statements of Operations Data
  Net sales                           $  380,504      $  363,509      $  323,254      $  278,819      $  256,454
  Cost of sales                          252,691         239,442         212,982         186,531         173,296
  Gross margin                           127,813         124,067         110,272          92,288          83,158
  Selling, general and administrative
    expenses                             107,168         102,357          89,661          75,630          69,018
  Depreciation and amortization            6,396           5,974           4,805           3,773           3,093
  Income from operations                  14,249          15,736          15,806          12,885          11,047
  Interest expense                         3,672           4,234           3,525           3,033           2,958
  Other expense, net                           0               0               0               0            (185)
  Earnings before income taxes            10,577          11,502          12,281           9,852           8,274
  Income tax expense                       4,019           4,287           4,790           3,794           3,144
  Earnings before cumulative effect
    of accounting change                   6,558           7,215           7,491           6,058           5,130
  Cumulative effect of accounting
    change, net of income
    tax benefit of $611(1)                     0            (956)              0               0               0
  Net earnings                        $    6,558           6,259      $    7,491      $    6,058      $    5,130

  Per Share Information:
    Earnings per share - basic:(2)
      Earnings before cumulative
        effect of accounting change   $     1.32      $     1.41      $     1.47      $     1.41      $     1.28
      Cumulative effect of
        accounting change                   0.00           (0.19)           0.00            0.00            0.00
      Net earnings                    $     1.32      $     1.22      $     1.47      $     1.41      $     1.28

    Earnings per share - diluted:(2)
      Earnings before cumulative
        effect of accounting change   $     1.32      $     1.40      $     1.46      $     1.40      $     1.28
      Cumulative effect of accounting
        change                              0.00           (0.19)           0.00            0.00            0.00
      Net earnings                    $     1.32      $     1.21      $     1.46      $     1.40      $     1.28

  Weighted average shares
    outstanding:(2)
      Basic                            4,967,332       5,111,461       5,096,322       4,299,502       3,999,488
      Diluted                          4,967,332       5,154,860       5,148,818       4,399,822       4,014,351

  Operating Data
    Stores open at year-end                  269             257             225             185             156
  Stores in non-competitive markets
    at year-end (3)                          220             206             176             137             110
  Percentage of total stores in
    non-competitive markets (3)            81.78%          80.20%          78.20%          74.10%          70.50%
  Net sales of stores in
    non-competitive markets (3)       $  271,804      $  259,524      $  224,117      $  177,939      $  151,733
  Percentage of net sales
    from stores in
    non-competitive markets (3)            73.90%          71.40%          69.30%          63.80%          59.20%
  Comparable store sales
    for all stores (4)                    (0.10%)           0.90%           0.60%         (2.90%)         (3.20%)
  Comparable store sales
    for stores in
    non-competitive markets (3)(4)          1.80%           1.40%           1.60%         (1.30%)         (1.00%)

  Balance Sheet Data
    Total assets                      $  178,179      $  172,474      $  158,114      $  132,808      $  107,723
    Total debt (includes capital
      lease obligation and current
      maturities)                         41,761          45,608          39,718          26,285          24,551
    Stockholders' equity                  90,218          86,426          80,394          72,825          53,061

</TABLE>



(1)      Effective November 1, 1998, the Company adopted AICPA Statement of
         Position 98-5, Reporting on the Costs of Start up Activities,
         retroactive to the beginning of the year.  Under the new method,
         the Company expenses store preopening costs as incurred rather than
         over the initial 12-months of a store's operation.

<PAGE 9>

(2)      The Company has adopted SFAS No. 128, Earnings Per Share which
         requires a dual presentation of basic earnings per share (based on
         the weighted average number of common shares outstanding) and diluted
         earnings per share which reflects the potential dilution that could
         occur if contracts to issue securities (such as stock options) were
         exercised.

(3)      "Non-competitive" markets refer to those markets where there is not
         a national or regional full-line discount store located in the primary
         market served by the Company.  The Company's stores in such non-
         competitive markets nevertheless face competition from various
         sources.  See Item 1 "Business-Competition."

(4)      Percentages, as adjusted to a comparable 52 week year, reflect the
         increase or decrease based upon a comparison of the applicable fiscal
         year with the immediately preceding fiscal year for stores open during
         the entirety of both years.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

         EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE STATEMENTS
MADE IN THIS REPORT ON FORM 10-K ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES.  THE COMPANY'S ACTUAL RESULTS, FINANCIAL CONDITION
OR BUSINESS COULD DIFFER MATERIALLY FROM ITS HISTORICAL RESULTS, FINANCIAL
CONDITION OR BUSINESS, OR THE RESULTS OF OPERATIONS, FINANCIAL CONDITION OR
BUSINESS CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS.  FACTORS THAT
COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED
TO, THOSE DISCUSSED BELOW UNDER THE CAPTION "FACTORS THAT MAY AFFECT FUTURE
RESULTS OF OPERATIONS, FINANCIAL CONDITION OR BUSINESS," AS WELL AS THOSE
DISCUSSED ELSEWHERE IN THE COMPANY'S REPORTS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.

         Reference is hereby made to the description of the Company's business
appearing in Item 1.

         The Company's fiscal year ends on the Sunday closest to January 31.
Fiscal 2000, 1999 and 1998 each  consisted of 52 weeks.

         As used below, the term "competitive market" refers to any market in
which there is one or more national or regional full-line discount stores
located in the primary market served by the Company.  The term "non-competitive
market" refers to any market in which there is no national or regional full-
line discount store located in the primary market served by the Company.
Even in a non-competitive market, the Company faces competition from a
variety of sources.  See Item 1.

Results of Operations

         The following table sets forth, for the fiscal years indicated, the
components of the Company's consolidated statements of operations expressed
as a percentage of net sales:

<TABLE>
<CAPTION>
                                                          Fiscal Year Ended
                                              _______________________________________
                                              January 30,   January 31,   February 1,
                                                     2000          1999          1998
____________________________________________  ___________   ___________   ___________
<S>                                           <C>           <C>           <C>
  Net sales.................................       100.0%        100.0%        100.0%
  Cost of sales.............................        66.4          65.9          65.9
  Gross margin..............................        33.6          34.1          34.1
  Selling, general and
    administrative expenses.................        28.2          28.2          27.7
  Depreciation and amortization.............         1.7           1.6           1.5
  Total operating expenses..................        29.9          29.8          29.2
  Income from operations....................         3.7           4.3           4.9
  Interest expense..........................         1.0           1.1           1.1
  Earnings before income taxes..............         2.7           3.2           3.8
  Income tax expense........................         1.0           1.2           1.5
  Earnings before cumulative effect
    of accounting change....................         1.7           2.0           2.3
  Cumulative effect of accounting change,
    net of tax..............................          .0            .3            .0
  Net earnings..............................         1.7%          1.7%          2.3

</TABLE>

<PAGE 10>

Fiscal 2000 Compared to Fiscal 1999

         Net sales for fiscal 2000 increased $17.0 million or 4.7% to $380.5
million compared to $363.5 million for fiscal 1999.  During fiscal 2000, the
Company opened 21 stores, all of which were in new non-competitive markets.
Nine stores were closed, resulting in a year end total of 269 stores.
Substantially all of the increase in net sales was due to new stores opened
over the last two fiscal years. Net sales for all stores open the full year
in both fiscal 2000 and 1999 (comparable stores), decreased by $.4 million
or .1% in fiscal 2000 compared to fiscal 1999.  Sales in the 18,000 square
foot ALCO stores, the main focus of the Company's expansion efforts,
increased $1.3 million, or 1.0%.  Sales were impacted by the implementation
of the Company's New Low Prices Everyday (NLPE) pricing strategy, which was
launched in February 1999 in the Company's ALCO discount stores.  This
strategy eliminated eight advertising circulars and other promotional
activity while instituting a consistent, competitively advantageous, pricing
strategy designed to generate increased sales over the long term.

         Gross margin for fiscal 2000 increased $3.7 million or 3.0% to
$127.8 million compared to $124.1 million in fiscal 1999.  As a percentage
of net sales, gross margin decreased to 33.6% in fiscal 2000 compared to
34.1% in  fiscal 1999. Although promotional markdowns decreased as a
percentage of sales due to the implementation of NLPE, the gross margin
percentage was  negatively impacted in fiscal 2000 by reduced LIFO income
in the amount of $2.4 million.  Excluding the LIFO impact, gross margin as
a percent of sales improved to 33.6% in fiscal 2000 compared to 33.5% in
fiscal 1999.

         Selling, general and administrative expenses increased $4.8 million
or 4.7% to $107.2 million in fiscal 2000 compared to $102.4 million in fiscal
1999, primarily due to the increase in total stores.  As a percentage of
net sales, selling, general and administrative expenses was 28.2% in both
fiscal 2000 and fiscal 1999.  Although advertising expenses declined due to
the implementation of everyday low pricing, selling, general and administrative
expense was unfavorably impacted by the sale-leaseback that was completed at
the end of fiscal 1999.  The sale-leaseback impacts selling, general and
administrative expense through higher store rent expense, with a corresponding
reduction in depreciation and interest expense.

         Income from operations decreased $1.5 million, or 9.4% to $14.2
million in fiscal 2000 compared to $15.7 million in fiscal 1999. Income from
operations as a percentage of net sales decreased to 3.7% in fiscal 2000
from 4.3% in fiscal 1999. Excluding the impact of LIFO, income from operations
increased $962,000, or 7.2% in fiscal 2000 compared to fiscal 1999.

         Interest expense decreased $562,000 or 13.2% in fiscal 2000 compared
to fiscal 1999. The reduction in interest expense is due primarily to the
reduction in borrowing due to the sale-leaseback transaction for $6.2 million
that was completed at the end of fiscal 1999.

         Income taxes were $4.0 million in fiscal 2000 compared to $4.3
million in fiscal 1999.  The Company's effective tax rate was 38.0% in
fiscal 2000, and 37.3% in fiscal 1999.

         Earnings before the cumulative effect of accounting change for
fiscal 2000 decreased by $657,000 or 9.1% to $6.6 million compared to $7.2
million in fiscal 1999.  Excluding the impact of LIFO, net income increased
by $878,000, or 15.5% in fiscal 2000 compared to fiscal 1999.

Fiscal 1999 Compared to Fiscal 1998

         Net sales for fiscal 1999 increased $40.3 million or 12.5% to $363.5
million compared to $323.3 million for fiscal 1998.  During fiscal 1999, the
Company opened 36 stores, 34 of which were in new non-competitive markets.
Four stores were closed, resulting in a year end total of 257 stores.
Substantially all of the increase in net sales was due to new stores opened
over the last two fiscal years. Net sales for all stores open the full year
in both fiscal 1999 and 1998 (comparable stores), increased by $2.5 million
or .9% in fiscal 1999 compared to fiscal 1998.  Sales in non-competitive
ALCO stores increased $2.1 million, or 1.3%  and the Duckwall variety stores
produced an increase of $418,000, or 2.3%.

         Gross margin for fiscal 1999 increased $13.8 million or 12.5% to
$124.1 million compared to $110.3 million in fiscal 1998.  As a percentage
of net sales, gross margin remained the same at 34.1% in both fiscal years.
Although initial markon on purchases was higher in fiscal 1999, this was
offset by higher markdowns (primarily in the fourth quarter).  The gross
margin percentage was also favorably impacted in fiscal 1999 by a larger
LIFO income than in fiscal 1998.  The Company anticipates that pre-LIFO
gross margin as a percentage of net sales should improve in future periods
as the new stores opened in non-competitive markets contribute an increasing
percentage of total sales. This improvement should occur because stores in
non-competitive markets have a higher gross margin percetage (due to a lower
percentage of net sales at promotional pricing and with a lower promotional
markdown rate), than the average of all stores (including those stores in
competitive markets), and because the Company expects to continue to focus
its store expansion in additional non-competitive markets.  Management does
not anticipate LIFO income to be a general trend for future years, in as much
as there is a general expectation for moderate inflation in the cost of
merchandise, a factor that generally yields LIFO expense.

         Selling, general and administrative expenses increased $12.7
million or 14.2% to $102.4 million in fiscal 1999 compared to $89.7
million in fiscal 1998, primarily due to the increase in total
stores.  As a percentage of net sales, selling, general and

<PAGE 11>

administrative expenses increased to 28.2% in fiscal 1999 from 27.7% in fiscal
1998.  The increase in the percentage was due to operating expenses rising
faster than the overall same store sales growth.  Expense increases included
the partial year impact of the minimum wage increase that went into effect
September 1, 1997.

         Income from operations decreased $70,000, or .4% to $15.7 million
in fiscal 1999 compared to $15.8 million in fiscal 1998. Income from operations
as a percentage of net sales decreased to 4.3% in fiscal 1999 from 4.9% in
fiscal 1998.

         Interest expense increased $709,000 or 20.1% in fiscal 1999 compared
to fiscal 1998.  The increase results from higher borrowing levels to fund
the purchases of merchandise, fixtures, and owned store buildings for the
store expansion program.

         Income taxes were $4.3 million in fiscal 1999 compared to $4.8
million in fiscal 1998.  The Company's effective tax rate was 37.3% in fiscal
1999, and 39.0% in fiscal 1998.

         Earnings before the cumulative effect of the accounting change for
fiscal 1999 decreased by $276,000 or 3.7% to $7.2 million compared to $7.5
million in fiscal 1998.

Seasonality and Quarterly Results

         The following table sets forth the Company's net sales, gross margin,
income from operations, and net earnings during each quarter of fiscal 1997,
1998, and 1999.


<TABLE>
                                 First         Second          Third         Fourth
                               Quarter        Quarter        Quarter     Quarter(1)
                                                 (dollars in millions)
<CAPTION>
--------------------------  ----------     ----------     ----------     ----------
<S>                         <C>            <C>            <C>            <C>
Fiscal 1998
  Net Sales                 $    69.3      $    80.5      $    76.2      $    97.3
  Gross Margin                   23.7           26.7           26.7           33.2
  Income from operations          2.1            3.3            2.5            7.9
  Net Earnings                    0.9            1.5            0.9            4.2

Fiscal 1999
  Net Sales                 $    81.1      $    90.4      $    85.3      $   106.8
  Gross Margin                   28.2           30.6           29.3           36.0
  Income from operations          2.6            3.6            2.9            6.6
  Net Earnings (2)                1.0            1.8            1.1            3.3

Fiscal 2000
  Net Sales                 $    87.0      $    94.2      $    87.6      $   111.7
  Gross Margin                   29.1           31.9           30.7           36.1
  Income from operations          2.0            3.9            2.6            5.7
  Net Earnings (2)                0.7            1.9            1.0            3.0

          (1)  See Note 10 to Consolidated Financial Statements regarding
               certain Fourth Quarter Adjustments
          (2)  Represents earnings before the cumulative effect of accounting
               change

</TABLE>


         The Company's business is subject to seasonal fluctuations.  The
Company's highest sales levels occur in the fourth quarter of its fiscal
year which includes the holiday selling season.  The Company's results of
operations in any one quarter are not necessarily indicative of the results
of operations that can be expected for any other quarter or for the full
fiscal year.

         The Company's results of operations may also fluctuate from quarter
to quarter as a result of the amount and timing of net sales contributed by
new stores and the integration of the new stores into the operations of the
Company, as well as other factors.  The addition of a large number of new
stores can, therefore, significantly affect the quarterly results of
operations.

Inflation

         Management does not believe that its operations have been materially
affected by inflation over the past few years. The Company will continue to
monitor costs, take advantage of vendor incentive programs, selectively buy
from competitive vendors and adjust merchandise prices based on market
conditions.

<PAGE 12>

Liquidity and Capital Resources

         At the end of fiscal 2000, working capital (defined as current
assets less current liabilities) was $95.9 million compared to $90.1 million
at the end of fiscal 1999 and $76.0 million at the end of fiscal 1998.

         The Company's primary sources of funds are cash flow from operations,
borrowings under its revolving loan credit facility, vendor trade credit
financing and lease financing.  In both fiscal 2000 and fiscal 1999, the
Company completed a sale-leaseback of ten of its owned stores.  The proceeds
from these transactions amounted to $6.1 million in fiscal 2000 and $6.2
million in fiscal 1999.

         Cash provided by (used in) operating activities aggregated $10.5
million, $6.6 million, and($6.8) million in fiscal 2000, 1999 and 1998,
respectively.  The increase in cash provided in fiscal 2000 relative to
fiscal 1999 resulted primarily from a larger increase in accounts payable
and increased earnings before considering the non-cash impact of LIFO.
The decrease in cash provided in fiscal 1998 resulted primarily from an
increase in inventory needed to support the 40 new store openings.

         The Company uses its revolving loan credit facility and vendor
trade credit financing to fund the build up of inventories periodically
during the year for its peak selling periods and to meet other short-term
cash requirements.  The revolving loan credit facility, which provides up
to $85 million of financing in the form of notes payable and letters of
credit, was executed in April, 1998 and will expire in April 2001.  In
February 2000, the Company elected to reduce the facility to $70 million.
The Company had borrowings available at January 30, 2000 under the revolving
loan credit facility amounting to $42.9 million.  Short-term trade credit
represents a significant source of financing for inventory to the Company.
Trade credit arises from the willingness of the Company's vendors to grant
payment terms for inventory purchases.

         In fiscal 2000, the Company made net cash payments on its revolving
credit facility of $178,000, made cash payments of $3.7 million to reduce its
long-term debt and capital lease obligations, and repurchased $2.8 million of
Company stock. In fiscal 1999 and 1998, the Company made net cash borrowings
of $5.9 million and $13.4 million, respectively.  The Company executed
operating leases for 88 additional stores during the three year period
ending in fiscal 2000.  The Company's long-range plan assumes growth in the
number of stores in smaller markets where there is less competition, and, in
accordance with this plan, 21 new stores were opened in fiscal 2000 and at
least 5 new stores are scheduled to be opened in fiscal 2001.  The Company
believes that with the $70 million line of credit, sufficient capital is
available to fund the Company's planned expansion.

         Cash used for acquisition of property and equipment in fiscal 2000,
1999 and 1998 totaled $6.4 million, $10.3 million, and $11.7 million,
respectively.  Anticipated cash payments for acquisition of property and
equipment in fiscal 2001, principally for store buildings and fixtures, are
$7.6 million.

         During fiscal 1999, the Company's Board of Directors approved a
plan to repurchase up to 411,000 shares of the Company's Common Stock (the
"Stock Repurchase Program").  During fiscal 2000, the Company's Board of
Directors approved the repurchase of an additional 1,000,000 shares.
Purchases pursuant to the Stock Repurchase Program are to be made from
time to time in the open market or directly from stockholders at prevailing
market prices.  The Stock Repurchase Program is anticipated to be funded
with internally generated cash and borrowing under the Credit Facility.
As of January 30, 2000, the Company had purchased 387,600 shares of Common
Stock for $3.5 million.  During the period from January 31, 2000 to April 7,
2000, the Company purchased and retired 287,200 shares of its common stock
for an aggregate purchase price of $2.4 million.  Since the first buyback
was announced in fiscal 1999, the Company has repurchased a total of 674,800
shares, which represents  13% of its outstanding shares.


FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS, FINANCIAL CONDITION OR
BUSINESS

         In order to take advantage of the safe harbor provisions for
forward-looking statements contained in Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, added to those Acts by the Private Securities Litigation Reform Act
of 1995, the Company is hereby identifying important risks and uncertainties
that could affect the Company's actual results of operations, financial
condition or business and could cause the Company's actual results of
operations, financial condition or business to differ materially from its
historical results of operations, financial condition or business, or the
results of operations, financial condition or business contemplated by
forward-looking statements made herein or elsewhere orally or in writing,
by, or on behalf of, the Company.  Factors that could cause or contribute
to such differences include, but are not limited to, those factors described
below.

Expansion Plans

         The continued growth of the Company is dependent, in large part,
upon the Company's ability to open and operate new stores on a timely and
profitable basis. The Company plans to open approximately 5 ALCO stores in
the current fiscal year and at least  7 ALCO stores in both fiscal 2002 and
2003.  While the Company believes that adequate sites are currently available,
the rate of new store openings is subject to various contingencies, many of
which are beyond the Company's control.  These contingencies include the
availability of acceptable communities for store locations, the Company's
ability to secure suitable store sites on a timely basis and on satisfactory
terms, the Company's ability to hire, train and retain qualified personnel,
the availability  of adequate capital  resources and the successful
integration of new stores into existing operations.  There can be no assurance

<PAGE 13>

that the Company will be able to continue to successfully identify and
obtain new store sites or that once obtained, the new stores will achieve
satisfactory sales or profitability.

Competition

         The Company's strategy is to locate its ALCO stores in smaller
retail markets where there is no competing full-line discount retail store
within the primary trade area and where the Company believes the opening of
a store would significantly reduce the likelihood of such a competitor
entering the market.  No assurance can be given, however, that competition
will not emerge in such markets which, if developed, could seriously reduce
the prospect of a profitable store in such market.  In those markets in
which the Company has direct competition, it often competes with national
or regional full-line discount stores which often have substantially greater
financial and other resources than the Company.

Government Regulation

         The Company is subject to numerous federal, state and local government
laws and regulations, including those relating to the development,
construction and operation of the Company's stores.  The Company is also
subject to laws governing its relationship with employees, including minimum
wage requirements, laws and regulations relating to overtime, working and
safety conditions, and citizenship requirements.  Material increases in the
cost of compliance with any applicable law or regulation and similar matters
could materially and adversely affect the Company.

         In 1996, Congress enacted The Small Business Job Protection Act of
1996 (the "Act"), raising the hourly minimum wage from $4.25 to $4.75 effective
as of October 1, 1996 and to $5.15 effective as of September 1, 1997.  The
majority of the Company's store employees were paid hourly wages below these
increased minimum wage rates.  As a result, the Act increased the Company's
payroll expense.  Additional increases in the minimum wage could have a
material impact on the results  of the Company's operations if it were not able
to pass those increased costs on to customers or if sales were not increasing
at a rate large enough to offset the impact.

Control by Significant Stockholder

         Kansas Public Employees Retirement System ("KPERS") is a principal
stockholder of the Company, beneficially owning approximately 15% of the
outstanding shares of Common Stock of the Company as of March 17, 2000.

Quarterly Fluctuations

         Quarterly results of operations have historically fluctuated as a
result of retail consumers' purchasing patterns, with the highest quarter in
terms of sales and profitability being the fourth quarter.  Quarterly results
of operations will likely continue to fluctuate significantly as a result of
such patterns and may fluctuate due to the timing of new store openings.

Economic Conditions

         Similar to other retail businesses, the Company's operations may be
affected adversely by general economic conditions and events which result in
reduced consumer spending in the markets served by its stores.  Also, smaller
communities where the Company's stores are located may be dependent upon a
few large employers or may be significantly affected by economic conditions
in the industry upon which the community relies for its economic viability,
such as the agricultural industry.  This may make the Company's stores more
vulnerable to a downturn in a particular segment of the economy than the
Company's competitors, which operate in markets which are larger metropolitan
areas where the local economy is more diverse.

Dependence on Officers

         The development of the Company's business has been largely dependent
on the efforts of its current management team headed by Glen L. Shank and
fourteen other officers.  The loss of the services of one or more of these
officers could have a material adverse effect on the Company.

No Recent Dividend Payments; Restrictions on Payment of Dividends

         The Company has not paid a cash dividend on the Common Stock for
more than five years, and it has no plans to commence paying cash dividends
on the Common Stock.  The Company's current revolving loan credit facility
prohibits the payment of dividends.

<PAGE 14>

The Year 2000 Issue

         The Company has not experienced any significant disruptions to
its financial or operating activities caused by failure of its computerized
systems resulting from Year 2000 issues.  The Company has no information
that indicates a significant vendor or service provider may be unable to
sell goods or provide services to the Company or that any significant
customer may be unable to purchase from the Company because of Year 2000
issues.  The Company does not expect Year 2000 issues to have a material
adverse effect on its operations or financial results in fiscal 2001.


Impact of change in Accounting Principle

         Effective November 1, 1998, the Company adopted AICPA Statement of
Position 98-5, Reporting on the Costs of Start up Activities (SOP 98-5),
retroactive to the beginning of the year.  Previously, the Company initially
capitalized and then amortized preopening costs over the initial 12-months of
a store's operation.  Under the new method, the Company expenses such store
preopening costs as incurred.  The effect of adopting the accounting change
on earnings before cumulative effect of accounting change, net earnings, and
net earnings per share for fiscal 1999 is to increase (decrease) such amounts
$529, ($427), and ($0.08), respectively.  The change is considered a
cumulative effect-type accounting change and, accordingly, the cumulative
effect as of February 1, 1998 has been reported in the accompanying audited
financial statements.  Financial statements for fiscal 1998 and prior periods
have not been restated but net earnings and earnings per share computed on a
pro forma basis have been reflected in the accompanying audited financial
statements for all periods presented as if the accounting change had been
applied consistently during all periods affected.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company does not invest in any market risk sensitive instruments.

<PAGE 15>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
             AND FINANCIAL STATEMENT SCHEDULES

                                                              Page
         DUCKWALL-ALCO STORES, INC. AND SUBSIDIARY

         Independent Auditors' Report.......................... 17
         Financial Statements:

              Consolidated Balance Sheets --
              January 30, 2000 and January 31, 1999  .......... 18

              Consolidated Statements of Operations--
              Fiscal Years Ended January 30, 2000,
              January 31, 1999, and February 1, 1998  ......... 20

              Consolidated Statements of Stockholders'
              Equity --Fiscal Years Ended January 30, 2000,
              January 31, 1999, and February 1, 1998  ......... 22

              Consolidated Statements of Cash Flows --
              Fiscal Years Ended January 30, 2000,
              January 31, 1999, and February 1, 1998  ......... 23


              Notes to Consolidated Financial Statements ...... 25


          Financial Statement Schedules:

              No financial statement schedules are included as they are
              not applicable to the Company.


<PAGE 16>

Independent Auditors' Report


The Board of Directors and Stockholders
Duckwall-ALCO Stores, Inc.:


We have audited the accompanying consolidated balance sheets of Duckwall-ALCO
Stores, Inc. and subsidiaries as of January 30, 2000 and January 31, 1999,
and the related consolidated statements of operations, stockholders' equity,
and cash flows for each of the years in the three-year period ended
January 30, 2000. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Duckwall-ALCO Stores, Inc. and subsidiaries as of January 30, 2000 and
January 31, 1999, and the results of their operations and their cash
flows for each of the years in the three-year period ended
January 30, 2000, in conformity with generally accepted accounting principles.

As discussed in note 1 of notes to consolidated financial statements,
the Company changed its method of accounting for store preopening costs
in the year ended January 31, 1999.


/s/KPMG LLP
   KPMG LLP

Wichita, Kansas
March 17, 2000

<PAGE 17>




DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

<TABLE>
Consolidated Balance Sheets
<CAPTION>
January 30, 2000 and January 31, 1999
(Dollars in thousands)


Assets                                                                   2000           1999
                                                                     __________     ___________
<S>                                                                  <C>            <C>

  Current assets:
    Cash and cash equivalents                                         $  14,002      $  10,423
    Receivables (note 3)                                                  2,370          3,557
    Inventories (notes 2 and 3)                                         121,863        113,225
    Prepaid expenses                                                        467            359

         Total current assets                                           138,702        127,564

  Property and equipment, at cost (note 3):
    Land and land improvements                                            2,773          2,847
    Buildings and building improvements                                  17,356         21,130
    Furniture, fixtures and equipment                                    40,859         37,879
    Transportation equipment                                              2,250          2,197
    Leasehold improvements                                                9,325          8,672
    Construction work in progress                                         1,085          1,242

         Total property and equipment                                    73,648         73,967

    Less accumulated depreciation and amortization                       39,729         35,340

         Net property and equipment                                      33,919         38,627

    Property under capital leases (note 5)                               20,407         20,407
    Less accumulated amortization                                        15,028         14,428

         Net property under capital leases                                5,379          5,979

    Other assets                                                            179            304




                                                                      $ 178,179      $ 172,474

</TABLE>


    See accompanying notes to consolidated financial statements.


<PAGE 18>



DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

<TABLE>
Consolidated Balance Sheets
<CAPTION>
January 30, 2000 and January 31, 1999
(Dollars in thousands)


Liabilities and Stockholders Equity                                    2000           1999
                                                                     __________     ___________
<S>                                                                  <C>            <C>
Current liabilities:
  Current maturities of long-term debt (note 3)                      $   1,187       $   1,556
  Current maturities of capital lease obligations (note 5)                 607             540
  Accounts payable                                                      26,781          20,488
  Income taxes payable                                                   1,843           1,780
  Accrued salaries and commissions                                       4,812           4,705
  Accrued taxes other than income                                        4,022           3,520
  Other current liabilities                                              1,907           2,643
  Deferred income taxes (note 6)                                         1,682           2,256

       Total current liabilities                                        42,841          37,488

  Notes payable under revolving loan credit facility (note 3)           30,420          30,598
  Long-term debt, less current maturities (note 3)                       2,065           4,825
  Capital lease obligations, less current maturities (note 5)            7,482           8,089
  Other noncurrent liabilities                                           2,143           1,484
  Deferred revenue                                                         852           1,075
  Deferred income taxes (note 6)                                         2,158           2,489

       Total liabilities                                                87,961          86,048


Stockholders equity (notes 4, 7 and 8):
  Common stock, $.0001 par value, authorized 20,000,000 shares in
    2000 and 1999; issued and outstanding 4,772,299 and 5,092,324
    shares in 2000 and 1999, respectively                                    1               1
  Additional paid-in capital                                            51,481          54,247
  Retained earnings since June 2, 1991                                  38,736          32,178

       Total stockholders equity                                        90,218          86,426

Commitments (note 5)

                                                                     $ 178,179       $ 172,474

</TABLE>

<PAGE 19>


DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

<TABLE>
Consolidated Statements of Operations
<CAPTION>
Fiscal years ended January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)




                                                                        2000           1999           1998
                                                                     __________     ___________    ___________
<S>                                                                  <C>            <C>            <C>
Net sales                                                            $ 380,504       $ 363,509        323,254
Cost of sales                                                          252,691         239,442        212,982

     Gross margin                                                      127,813         124,067        110,272

Selling, general and administrative (notes 4 and 5)                    107,168         102,357         89,661
Depreciation and amortization                                            6,396           5,974          4,805

     Total operating expenses                                          113,564         108,331         94,466

     Income from operations                                             14,249          15,736         15,806

Interest expense (notes 3 and 5)                                         3,672           4,234          3,525

     Earnings before income taxes and cumulative
       effect of accounting change                                      10,577          11,502         12,281

Income tax expense (note 6)                                              4,019           4,287          4,790

     Earnings before cumulative effect of accounting
       change                                                            6,558           7,215          7,491

Cumulative effect of accounting change, net of income
  tax benefit of $611 (note 1)                                             ---            (956)           ---

          Net earnings                                               $   6,558       $   6,259          7,491

Earnings per share - basic (note 9):
  Earnings before cumulative effect of accounting change             $    1.32            1.41           1.47
  Cumulative effect of accounting change                                   ---           (0.19)           ---

          Net earnings                                               $    1.32            1.22           1.47

Earnings per share - diluted (note 9):
  Earnings before cumulative effect of accounting change             $    1.32            1.40           1.46
  Cumulative effect of accounting change                                   ---           (0.19)           ---

          Net earnings                                               $    1.32            1.21           1.46



(Continued)

<PAGE 20>


DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES


</TABLE>
<TABLE>
Consolidated Statements of Operations
<CAPTION>
Fiscal years ended January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)





                                                                                        1999           1998
                                                                                    __________     ___________
<S>                                                                                 <C>            <C>
Pro forma amounts for effect of change in accounting
  principle:

          Net earnings                                                               $   7,215          7,190

          Basic earnings per share                                                   $    1.41           1.41

          Diluted earnings per share                                                 $    1.40           1.40

</TABLE>

 See accompanying notes to consolidated financial statements.

<PAGE 21>


DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

<TABLE>
Consolidated Statements of Stockholders' Equity
<CAPTION>
Fiscal years ended January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands)


                                                                                                      Retained
                                                                                                      earnings          Total
                                                                                     Additional          since         stock-
                                                                       Common           paid-in        June 2,       holders'
                                                                        stock           capital           1991         equity
                                                                     __________     ___________    ___________    ___________
<S>                                                                  <C>            <C>            <C>            <C>

Balance, February 2, 1997                                            $       1          54,396         18,428         72,825

Net earnings for the year ended February 1, 1998                           ---             ---          7,491          7,491
Exercise of outstanding options to pur-
        chase 8,938 common shares                                          ---              78            ---             78


Balance, February 1, 1998                                                    1          54,474         25,919         80,394

Net earnings for the year ended January 31, 1999                           ---             ---          6,259          6,259
Exercise of outstanding options to purchase
        53,563 common shares                                               ---             442            ---            442

Repurchase and retirement of 60,000 common shares                          ---            (669)           ---           (669)

Balance, January 31, 1999                                                    1          54,247         32,178         86,426

Net earnings for the year ended January 30, 2000                           ---             ---          6,558          6,558
Exercise of outstanding options to purchase
     7,575 common shares                                                   ---             ---             70             70

Repurchase and retirement of 327,600 common shares                         ---          (2,836)           ---         (2,836)

Balance, January 30, 2000                                             $      1           51,481        38,736         90,218

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE 22>


DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

<TABLE>
Consolidated Statements of Cash Flows
<CAPTION>
Fiscal years ended January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands)




                                                                        2000           1999           1998
                                                                     __________     ___________    ___________
<S>                                                                  <C>            <C>            <C>
Cash flows from operating activities:
  Net earnings                                                       $   6,558           6,259          7,491
  Adjustments to reconcile net earnings to net cash
    provided by operating activities:
      Cumulative effect of accounting change, net of
        income tax benefit                                                 ---             956            ---
      Depreciation and amortization                                      6,396           5,974          4,805
      Amortization of debt financing costs                                 118             137             43
      Deferred income taxes                                               (905)            (75)          (138)
      Loss on sale or disposition of property
        and equipment                                                      126             680            ---
      LIFO income                                                          ---          (2,449)          (950)
      Decrease (increase) in receivables                                 1,187            (399)             2
      Increase in inventories                                           (8,638)         (7,331)       (22,136)
      Decrease (increase) in prepaid expenses                              (53)            205           (346)
      Increase in other assets                                             (44)            ---            ---
      Increase in accounts payable                                       6,293           1,479          1,882
      Increase (decrease) in income taxes payable                           63             119            (73)
      Increase (decrease) in accrued salaries and commissions              107            (179)         1,008
      Increase in accrued taxes other than income                          502             361            230
      Increase (decrease) in other liabilities                            (986)          1,052            123
      Increase (decrease) in deferred revenue                             (223)           (197)         1,272

           Net cash provided by (used in) operating activities          10,501           6,592         (6,787)

  Cash flows from investing activities:
    Proceeds from sale of property and equipment                         6,104           6,232            ---
    Acquisition of:
      Buildings                                                         (1,797)         (1,616)        (4,112)
      Fixtures, equipment, and leasehold improvements                   (4,616)         (8,644)        (7,550)

           Net cash used in investing activities                          (309)         (4,028)       (11,662)

</TABLE>

(Continued)


<PAGE 23>


DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

<TABLE>
Consolidated Statements of Cash Flows, Continued
<CAPTION>
Fiscal years ended January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands)




                                                                        2000           1999           1998
                                                                     __________     ___________    ___________
<S>                                                                  <C>            <C>            <C>
Cash flows from financing activities:
  Increase (decrease) in notes payable under revolving
       loan credit facility                                          $    (178)          5,007         13,496
  Proceeds from exercise of outstanding stock options                       70             442             78
  Repurchase of stock                                                   (2,836)           (669)           ---
  Proceeds from issuance of long-term debt                                 ---           2,760          1,870
  Principal payments on long-term debt                                  (3,129)         (1,358)        (1,326)
  Principal payments under capital lease obligations                      (540)           (519)          (607)
  Debt financing costs                                                     ---            (359)           (45)

       Net cash provided by (used in) financing activities              (6,613)          5,304         13,466

       Net increase (decrease) in cash and cash equivalents              3,579           7,868         (4,983)

Cash and cash equivalents at beginning of year                          10,423           2,555          7,538

Cash and cash equivalents at end of year                             $  14,002          10,423          2,555

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE 24>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)


 	(1)	Summary of Significant Accounting Policies

            (a)  Nature of Business

                 Duckwall-ALCO Stores, Inc. and subsidiaries (the Company) is
                 engaged in the business of retailing general merchandise
                 throughout the midwestern and south central regions of the
                 United States through discount department and variety
                 store outlets. Merchandise is purchased for resale from many
                 vendors, and transactions with individual vendors and
                 customers do not represent a significant portion of total
                 purchases and sales.

            (b)  Principles of Consolidation

                 The consolidated financial statements include the accounts of
                 the Company and its wholly-owned subsidiaries. All significant
                 intercompany account balances have been eliminated in
                 consolidation.

            (c)  Basis of Presentation

                 The Company's fiscal year ends on the Sunday nearest to
                 January 31. Fiscal 2000, 1999 and 1998 consist of 52 weeks.

            (d)  Inventories

                 Store inventories are stated at the lower of cost or net
                 realizable value as estimated by the retail inventory method.
                 Warehouse inventories are stated at the lower of cost or net
                 realizable value. The Company utilizes the last-in,
                 first-out (LIFO) method of determining cost of store and
                 warehouse inventories.

            (e)  Property and Equipment

                 Depreciation is computed on a straight-line basis over the
                 estimated useful lives of the assets. Amortization of
                 capital leases is computed on a straight-line basis over
                 the terms of the lease agreements. Leasehold improvements
                 are amortized on a straight-line basis over the lesser of
                 the remaining lease term, or ten years. Estimated useful
                 lives are as follows:

                      Buildings                                25 years
                      Building improvements                    10 years
                      Furniture, fixtures and equipment       3-8 years
                      Transportation equipment	              3-5 years
                      Leasehold improvements	             5-10 years

                 Major improvements are capitalized while maintenance and
                 repairs, which do not extend the useful life of the asset,
                 are charged to expense as incurred.

(Continued)

<PAGE 25>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)


            (f)  Income Taxes

                 The Company accounts for income taxes under the asset and
                 liability method.  Deferred tax assets and liabilities are
                 recognized for the future tax consequences attributable to
                 differences between the financial statement carrying
                 amounts of existing assets and liabilities and their
                 respective tax bases and operating loss and tax credit
                 carryforwards. Deferred tax assets and liabilities are
                 measured using enacted tax rates expected to apply to
                 taxable income in the years in which those temporary
                 differences are expected to be recovered or settled. The
                 effect on deferred tax assets and liabilities of a change
                 in tax rates is recognized in income in the period that
                 includes the enactment date.

            (g)  Net Sales

                 Sales are recorded in the period of sale. Sales returns, which
                 are not material, are recorded in the period of return as a
                 reduction of sales.

            (h)  Change in Accounting Principle

                 Effective November 1, 1998, the Company adopted AICPA
                 Statement of Position 98-5, Reporting on the Costs of Start up
                 Activities (SOP 98-5), retroactive to the beginning of the
                 year. Previously, the Company initially capitalized
                 and then amortized preopening costs over the initial 12-months
                 of a store's operation. Under the new method, the Company
                 expenses such store preopening costs as incurred. The effect
                 of adopting the accounting change on earnings before
                 cumulative effect of accounting change, net earnings, and net
                 earnings per share for fiscal 1999 is to increase (decrease)
                 such amounts $529, ($427), and ($.08), respectively. The
                 change is considered a cumulative effect-type accounting
                 change and, accordingly, the cumulative effect as of
                 February 1, 1998 has been reported in the accompanying
                 financial statements.  Financial statements for fiscal 1998
                 and prior periods have not been restated but net earnings and
                 earnings per share computed on a pro forma basis have been
                 reflected in the accompanying financial statements for
                 fiscal 1999 and 1998 as if the accounting change had been
                 applied consistently during such periods.

            (i)  Net Earnings Per Share

                 Basic net earnings per share is computed by dividing net
                 earnings by the weighted average number of shares outstanding.
                 Diluted net earnings per share reflects the potential dilution
                 that could occur if contracts to issue securities (such as
                 stock options) were exercised. See note 9.

(Continued)

<PAGE 26>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)


            (j)  Consolidated Statements of Cash Flows

                 For purposes of the consolidated statements of cash flows, the
                 Company considers cash and cash equivalents to include
                 currency on hand and money market funds.

                 During fiscal 2000, 1999, and 1998, the following amounts were
                 paid for interest and income taxes:
<TABLE>
<CAPTION>

                                                               2000        1999       1998
                                                             ________   ________   ________
                      <S>                                   <C>        <C>        <C>
                      Interest, excluding
                        interest on capital lease
                        obligations and amortization
                        of debt financing costs (net
                        of capitalized interest of
                        $48 in fiscal 2000, $46 in
                        fiscal 1999, and $72 in fiscal
                        1998)                               $  2,628      3,116      2,431
                      Income Taxes                             4,928      4,383      5,001
</TABLE>

            (k)  Use of Estimates

                 Management of the Company has made certain estimates and
                 assumptions in the reporting of assets and liabilities to
                 prepare these financial statements in conformity with
                 generally accepted accounting principles. Actual results
                 could differ from those estimates.

            (l)  Long-lived Assets

                 Long-lived assets and certain identifiable intangibles are
                 reviewed for impairment whenever events or changes in
                 circumstances indicate that the carrying amount of an asset
                 may not be recoverable. Recoverability of assets to be held
                 and used is measured by a comparison of the carrying amount of
                 an asset to estimated future net cash flows expected to be
                 generated by the asset. If such assets are considered to be
                 impaired, the impairment to be recognized is measured by the
                 amount by which the carrying amount of the assets exceed the
                 fair value of the assets. For purposes of determining
                 impairment, the Company groups assets at the store level.
                 Assets to be disposed of are reported at the lower of the
                 carrying amount or fair value less costs to sell.

(Continued)

<PAGE 27>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)


            (m)  Stock-based Compensation

                 The Company accounts for its stock options in accordance with
                 the provisions of Accounting Principles Board (APB) Opinion
                 No. 25, Accounting for Stock Issued to Employees. As such,
                 compensation expense would be recorded on the date of grant
                 only if the current market price of the underlying stock
                 exceeded the exercise price. In addition, SFAS No. 123,
                 Accounting for Stock-Based Compensation, requires that
                 pro forma net earnings and pro forma earnings per share
                 disclosures be provided for employee stock option grants
                 made in fiscal year 1996 and subsequent years as if the fair
                 value-based cost measurement method defined in SFAS No. 123
                 had been applied.

       (2)  Inventories

            Inventories at January 30, 2000 and January 31, 1999 are stated at
            the lower of cost or net realizable value as determined under the
            LIFO method of accounting. Inventories at January 30, 2000 and
            January 31, 1999 are summarized as follows:


                                                       2000            1999

                              FIFO cost         $   122,458         113,820
                              Less LIFO reserve        (595)           (595)

                                LIFO cost       $   121,863         113,225


            Earnings before income taxes for fiscal 2000, 1999, and 1998 would
            have decreased by $-0-, $2,449 and $950, respectively, if the FIFO
            method of valuing inventories had been utilized.

       (3)  Credit Arrangements, Notes Payable and Long-term Debt

            The Company's loan agreement with its lenders provides a revolving
            loan credit facility of up to $85,000 (the Company elected to
            reduce the facility to $70,000 effective February 5, 2000) of
            long-term financing.  The amount advanced (through a note or
            letters of credit) to the Company bears interest at the prime rate
            on the Revolving Rate Loan and LIBOR plus 1.50% on the LIBOR Rate
            Loan and is generally limited to 65% of eligible inventory, as
            defined. Advances are secured by a security interest in the
            Company's inventory, accounts receivable and intangible assets. The
            loan agreement contains various restrictions including limitations
            on additional indebtedness, sales of assets, and financial
            covenants related to the ratio of earnings to fixed charges and
            tangible net worth, all as defined. The loan agreement prohibits
            the payment of dividends. The loan agreement expires in April 2001
            and automatically renews for successive one-year terms thereafter
            unless terminated by the lenders or the Company.

            Under this agreement, the Company converted $30,000 from the
            Revolving Rate Loan to a 7.23% Fixed Rate Loan on April 15, 1998
            which is due in April 2001.


(Continued)

<PAGE 28>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)


             Notes payable outstanding at January 30, 2000 and January 31, 1999
             under the revolving loan credit facility aggregated $30,420 and
             $30,598, respectively.  The lender had also issued letters of
             credit aggregating $2,373 and $2,261, respectively, at such dates
             on behalf of the Company. The interest rate on outstanding
             borrowings at January 30, 2000 was 8.5% on the Revolving Rate
             Loan payable monthly. There were no borrowings outstanding under
             the LIBOR Rate Loan at January 30, 2000 and January 31, 1999. The
             Company had additional borrowings available at January 30, 2000
             under the revolving loan credit facility amounting to $42,850.

             Long-term debt, exclusive of notes payable under the revolving
             loan credit facility as described above, at January 30, 2000 and
             January 31, 1999 consisted of the following:

<TABLE>
<CAPTION>

                                                                       2000          1999
                <S>                                                <C>           <C>
                7.15% obligations for Industrial Revenue Bonds,
                  interest payable semiannually with principal
                  payments due annually until final
                  maturity in 1999                                  $   ---           175
                9.875% mortgage note payable due in monthly
                  installments, including interest, through
                  September 2001                                        203           310
                8.41% note payable due in monthly installments,
                  including interest, through March 2001,
                  secured by airplane                                   272           468
                8.77% note payable due in monthly installments,
                  including interest, through September 2000,
                  secured by certain equipment                          350           839
                8.27% note payable due in monthly installments,
                  including interest, through December 2000,
                  secured by certain equipment                           74           148
                9.2% note payable due in monthly installments,
                  including interest, through March 2009, secured
                  by buildings                                          ---         1,700
                6.4% note payable due in monthly installments,
                  including interest, through January 2005,
                  secured by equipment                                2,353         2,741


                                                                      3,252         6,381

                Less current maturities                               1,187         1,556

                     Long-term debt, less current maturities        $ 2,065         4,825
</TABLE>

             Interest expense on notes payable and long-term debt in fiscal
             2000, 1999, and 1998 aggregated $2,692, $3,193, and $2,418,
             respectively.

(Continued)

<Page 29>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)

             Maturities of long-term debt, including the notes payable under
             the revolving loan credit facility, in each of the next five
             years and thereafter in the aggregate as of January 30, 2000
             are as follows:


                                     Fiscal year

                                            2001         $     1,187
                                            2002              30,984
                                            2003                 469
                                            2004                 500
                                            2005                 532

                                                         $    33,672

	  (4)  Employee Benefits

               The Company has a trusteed Profit Sharing Plan (Plan) for the
               benefit of eligible employees. The Plan provides for an annual
               contribution of not more than 20% of earnings for the year
               before the profit sharing contribution and Federal and state
               income taxes, limited to 15% of the annual compensation of the
               participants in the Plan. Contributions by the Company vest with
               the participants over a seven-year period. The Company reserves
               the right to discontinue its contributions at any time. The
               Company made profit sharing contributions for fiscal 2000, 1999,
               and 1998 of $700, $775, and $800, respectively.

               At January 30, 2000 and January 31, 1999, the Plan owned 79,053
               shares of the Company's common stock. The Plan sold all such
               shares in February 2000.

          (5)  Leases

               The Company is lessee under long-term capital leases expiring
               at various dates. The components of property under capital
               leases as of January 30, 2000 and January 31, 1999 are as
               follows:

                                                            2000          1999

                    Buildings                          $  16,624        16,624
                    Fixtures                               3,783         3,783

                                                          20,407        20,407

                    Less accumulated amortization         15,028        14,428

                    Net property under capital leases  $   5,379         5,979



               The Company also has noncancelable operating leases, primarily
               for buildings and transportation equipment, that expire at
               various dates.

(Continued)

<PAGE 30>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)

               Future minimum lease payments under all non-cancelable leases
               together with the present value of the net minimum lease
               payments pursuant to capital leases as of January 30, 2000 are
               as follows:

                      Fiscal Year:            Capital         Operating

                      2001               $      1,521             9,006
                      2002                      1,521             7,907
                      2003                      1,457             6,728
                      2004                      1,384             5,597
                      2005                      1,384             4,263
                      Later years               6,589            28,336

                          Total minimum
                          lease payments       13,856         $  61,837

                      Less amount
                        representing
                        interest                5,767

                      Present value of
                        net minimum
                        lease payments          8,089

                      Less current
                        maturities                607

                      Capital lease
                        obligations,
                        less current
                        maturities       $      7,482




               Minimum payments have not been reduced by minimum sublease
               rentals of $118 under operating leases due in the future under
               noncancelable subleases.  They also do not include contingent
               rentals which may be paid under certain store leases on the
               basis of percentage of sales in excess of stipulated amounts.
               Contingent rentals applicable to capital leases amounted to
               $50, $53, and $59 for fiscal 2000, 1999, and 1998, respectively.

               Interest on capital lease obligations in fiscal 2000, 1999,
               and 1998 aggregated $980, $1,041, and $1,107, respectively.

               The following schedule presents the composition of total rent
               expense for all operating leases for fiscal 2000, 1999,
               and 1998:

 <TABLE>
                                                      2000            1999            1998
                       <S>                      <C>             <C>
                       Minimum rentals          $   9,397           8,216           7,545
                       Contingent rentals             320             415             316
                       Less sublease rentals         (107)           (109)           (104)

                                                $   9,610           8,522           7,757

</TABLE>

(Continued)

<PAGE 31>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)


               Sale-Leaseback Transaction

               The Company entered into agreements in January 2000 and
               December 1998 to sell and lease back ten stores (land and
               buildings) in each transaction. The net proceeds from the
               sale-leaseback transactions amounted to approximately $6,100
               and $6,200 for fiscal 2000 and 1999, respectively. As a result
               of the sale-leaseback transactions, the Company incurred gains
               of $909 and $489 in fiscal 2000 and 1999, respectively, which
               have been deferred for financial reporting purposes. Such
               deferred gains are included within other noncurrent liabilities
               and are being amortized over the term of the related leases
               (20 years).

          (6)  Income Taxes

               Income tax expense (benefit) for fiscal 2000, 1999, and 1998
               consists of:

                                      Current        Deferred           Total
                                  ___________    ____________    ____________
                       2000:
                         Federal  $    4,135            (727)          3,408
                         State           789            (178)            611

                                  $    4,924            (905)          4,019

                       1999:
                         Federal  $    3,669             (63)          3,606
                         State           693             (12)            681

                                  $    4,362             (75)          4,287

                       1998:
                         Federal  $    4,163            (116)          4,047
                         State           765             (22)            743

                                  $    4,928            (138)          4,790




               Income tax expense was $4,019, $4,287, and $4,790 for fiscal
               2000, 1999, and 1998, respectively, and differs from the
               amounts computed by applying the Federal income tax rate of
               35% in 2000, 1999, and 1998 as a result of the following:
<TABLE>
<CAPTION>

                                                    2000           1999          1998
                                                 _______        _______       _______
                       <S>                       <C>            <C>           <C>
                       Computed "expected"
                         tax expense             $ 3,702          4,026         4,298
                       Reduction in income
                         taxes resulting from:
                           State income taxes,
                             net of the Federal
                             income tax benefit      397            501           483
                           Other, net                (80)          (240)            9

                                                 $ 4,019          4,287         4,790

</TABLE>

(Continued)

<PAGE 32>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)


               The tax effects of temporary differences that give rise to
               significant portions of deferred tax assets and liabilities
               at January 30, 2000 and January 31, 1999 are presented below:
<TABLE>
<CAPTION>

                                                                   2000            1999
                       <S>                                  <C>             <C>
                       Deferred tax assets:
                         Capital leases                     $     1,036           1,018
                         Other assets                               136             244
                         Other liabilities                        1,268             920
                         Net operating loss and
                           tax credit carryforwards                  31              43

                              Total gross deferred
                                tax assets                        2,471           2,225

                       Less - valuation allowance                   (31)            (43)

                              Net deferred tax assets             2,440           2,182


                       Deferred tax liabilities:
                         Inventories, principally
                           due to differences in
                           the LIFO reserve arising
                           from a prior business
                           combination accounted for
                           as a purchase                          2,518           2,911
                         Property and equipment, due
                           to differences in deprecia-
                           tion and a prior business
                           combination accounted for
                           as a purchase                          3,762           4,016

                              Total gross deferred
                                tax liabilities                   6,280           6,927

                              Net deferred tax
                                liability                   $     3,840           4,745

</TABLE>


               At January 30, 2000, the Company has net operating loss
               carryforwards for state income tax purposes in various states
               aggregating $1,463 which are available to offset future state
               taxable income in those states, if any, expiring at various
               dates through fiscal 2006. The valuation allowance relates to
               the net operating loss (NOL) and tax credit carryforwards.

(Continued)

<PAGE 33>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)


          (7)  Stock Option Plan

               During fiscal 1994, the Company adopted a stock option plan
               under which options to purchase 125,000 shares of common stock
               may be granted to key employees. The stock option plan was
               amended in June 1994 to increase the number of options which may
               be granted under the plan to 200,000, was amended in
               March 1997 to increase to 450,000 and was further amended in
               May 1999 to increase to 650,000. The plan provides that the
               option price shall not be less than the fair market value of the
               shares on the date of grant and that unexercised options
               expire five years from that date. The options become exercisable
               in equal amounts over a four-year period from the grant date.
               Information regarding options which were outstanding at
               January 30, 2000, January 31, 1999, and February 1, 1998 is
               presented below:


<TABLE>
<CAPTION>

                                                                                               Weighted
                                                                                                average
                                                                       Number of               exercise
                                                                          shares                  price
                       <S>                                            <C>                  <C>
                       Options outstanding, February 2, 1997            187,525            $     10.06

                       Issued                                            82,750            $     12.75
                       Exercised                                         (8,938)           $      8.73
                       Canceled                                         (14,262)           $     10.79

                       Options outstanding, February 1, 1998            247,075            $     10.97

                       Issued                                            45,250            $     18.50
                       Exercised                                        (53,563)           $      8.25
                       Canceled                                          (3,200)           $     12.84

                       Options outstanding, January 31, 1999            235,562            $     13.00

                       Issued                                           375,550            $      7.98
                       Exercised                                         (7,575)           $      9.20
                       Canceled                                         (54,550)           $     10.64

                       Options outstanding, January 30, 2000            548,987            $      9.86

</TABLE>

(Continued)

<PAGE 34>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)


             The Company has chosen to account for stock-based compensation
             using the intrinsic value method prescribed in APB 25 and related
             interpretations.  Accordingly, compensation cost for stock options
             is measured as the excess, if any, of the quoted market price of
             the Company's stock at the date of the grant over the amount an
             employee must pay to acquire the stock. If the Company had elected
             to recognize compensation cost based on the fair value of the
             options granted at grant date as prescribed by Statement 123, net
             earnings and net earnings per share would have been decreased to
             the pro forma amounts indicated in the table below:


                                                           2000            1999

                   Net earnings, as reported           $  6,558           7,215
                   Net earnings, pro forma                6,407           7,087
                   Net earnings per share,
                     as reported:
                       Basic                               1.32            1.41
                       Diluted                             1.32            1.40
                   Net earnings per share,
                     pro forma:
                       Basic                               1.29            1.39
                       Diluted                             1.29            1.38


             The fair value of each option grant is estimated on the date of
             grant using the Black-Scholes option-pricing model with the
             following assumptions:


                                                           2000          1999

                   Expected dividend yield                    0%            0%
                   Expected stock price volatility         36.3          34.6
                   Risk-free interest rate                  6.2           5.6
                   Expected life of options             5 years       5 years


             The weighted average grant date fair value of options granted
             during 2000 and 1999 is $3.37 and $7.42 per share, respectively.


<TABLE>
<CAPTION>
                                                      Options outstanding             Options exercisable
                                          ________________________________________  ________________________
                                               Number      Weighted                      Number
                       Range              outstanding       average       Weighted  exercisable     Weighted
                       of                          at     remaining        average           at      average
                       exercise           January 30,   contractual       exercise  January 30,     exercise
                       price                     2000          life          price         2000        price
                       _________________  ____________  ____________  ____________  ____________  ___________
                       <S>                <C>           <C>           <C>           <C>           <C>
                        $7.98 to $12.88       508,387          4.00       $  9.17        90,728     $ 12.29
                            $18.50             40,600          3.33       $ 18.50        10,150     $ 18.50

                        $7.98 to $18.50       548,987                                   100,878

</TABLE>

(Continued)

<PAGE 35>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)


          (8)  Stockholders' Equity

               During 1998, the Company's Board of Directors approved a plan
               to repurchase up to 411,000 shares of the Company's Common
               Stock (the "Stock Repurchase Program"). During fiscal 2000, the
               Company's Board of Directors approved the repurchase of an
               additional 1,000,000 shares. Purchases pursuant to the Stock
               Repurchase Program are to be made from time to time in the open
               market or directly from stockholders at prevailing market
               prices. The Stock Repurchase Program is anticipated to be funded
               with internally generated cash and borrowings under the Credit
               Facility. As of January 30, 2000, the Company had purchased
               387,600 shares of Common Stock for $3,505. During the period
               from January 31, 2000 to March 17, 2000, the Company purchased
               and retired 173,200 shares of its common stock for an aggregate
               purchase price of $1,357.

               The Company has accounted for the confirmation of its plan of
               reorganization under Chapter 11 of the Federal bankruptcy laws
               which was confirmed by the Bankruptcy Court on May 17, 1991 as
               a quasi-reorganization. Accordingly, the accumulated deficit at
               June 2, 1991 was charged to additional paid-in capital and a new
               retained earnings account was established effective the same
               date. No adjustment was made to the carrying values of the
               Company's assets and liabilities because such amounts were not
               in excess of estimated fair values.

          (9)  Earnings Per Share

               The following is a reconciliation of the outstanding shares
               utilized in the computation of earnings per share:

<TABLE>
<CAPTION>
                                                      2000           1999          1998
                       <S>                        <C>           <C>           <C>
                       Outstanding shares:
                         Weighted average shares
                           outstanding (basic)    4,967,332     5,111,461     5,096,322
                         Effect of dilutive
                           options to purchase
                           common stock                 ---        43,399        52,496

                             As adjusted for
                               diluted
                               calculation        4,967,332     5,154,860     5,148,818

                       Net earnings -
                         basic and diluted       $    6,558         7,215         7,491

</TABLE>

               Earnings per share amounts have been computed on the absolute
               amount of net earnings whereas the above net earnings amounts
               have been rounded to the nearest thousand.

(Continued)

<PAGE 36>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)


         (10)  Quarterly Financial Information (Unaudited)

<TABLE>
             Financial results by quarter are as follows:
<CAPTION>

                                                            First       Second        Third       Fourth
                                                          quarter      quarter      quarter      quarter
                       _____________________________  ___________  ___________  ___________  ___________
                       <S>                            <C>          <C>          <C>          <C>
                       2000:
                         Net sales                    $   87,028       94,144       87,624      111,708
                         Gross margin (a)                 29,138       31,894       30,649       36,132
                         Net earnings                        701        1,845        1,014        2,998
                         Net earnings per share (b):
                           Basic                             .14          .37          .20          .63
                           Diluted                           .14          .37          .20          .63

                       1999:
                         Net sales                    $   81,052       90,360       85,308      106,789
                         Gross margin (a)                 28,150       30,610       29,290       36,017
                         Earnings before cumulative
                           effect of accounting
                           change                            954        1,833        1,119        3,309
                         Cumulative effect of
                           accounting change                (956)         ---          ---          ---
                         Net earnings                         (2)       1,833        1,119        3,309
                         Net earnings per share
                           before cumulative effect of
                           accounting change (b)
                           and (c):
                             Basic                           .19          .36          .22          .65
                             Diluted                         .18          .35          .22          .65


</TABLE>


                    (a)  The pretax LIFO inventory provision for the fiscal
                         year ended January 30, 2000 was estimated to be
                         expense of $177, $197 and $-0- in each of the first
                         three quarters, respectively. The annual provision
                         amounted to $-0- resulting in a credit of $374 in the
                         fourth quarter.

                         The pretax LIFO inventory provision for the fiscal
                         year ended January 31, 1999 was estimated to be
                         expense of $-0- in each of the first three quarters.
                         The annual provision amounted to $2,449 income
                         resulting in a credit of $2,449 in the fourth quarter.

                    (b)  Earnings per share amounts are computed independently
                         for each of the quarters presented. Therefore, the sum
                         of the quarterly earnings per share in fiscal 2000 and
                         fiscal 1999 does not equal the total computed for the
                         year.

                    (c)  The cumulative effect of adopting the accounting
                         change for store preopening costs was $(.19) in the
                         first quarter of fiscal 1999.

(Continued)

<PAGE 37>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)


         (11)  Fair Value of Financial Instruments

               The Company has determined the fair value of its financial
               instruments in accordance with Statement of Financial
               Accounting Standards No. 107, Disclosures About Fair Value of
               Financial Instruments. For long-term debt, the fair value is
               estimated by discounting the future cash flows at rates
               currently available for similar types of debt instruments.
               Such fair value approximated the carrying value of long-term
               debt at January 30, 2000 and January 31, 1999. For notes
               payable under revolving loan credit facility, fair value
               approximates the carrying value due to the variable interest
               rate.

               For all other financial instruments including cash, receivables,
               accounts payable, and accrued expenses, the carrying amounts
               approximate fair value due to the short maturity of those
               instruments.

         (12)  Related Party Transactions

               Lease payments to related parties amounted to approximately
               $660, $657, and $655 in fiscal 2000, 1999, and 1998,
               respectively.

               During fiscal 2000 and 1999, the Company paid a computer
               consulting firm, whose president or chairman is a director of
               the Company, $230 and $260, respectively, for point-of-sale
               software and related services.

         (13)  Business Operations and Segment Information

               The Company's business activities include operation of ALCO
               Discount Stores in towns with populations which are typically
               less than 5,000 not served by other regional or national
               retail discount chains and Duckwall variety stores that offer
               a more limited selection of merchandise which are primarily
               located in communities of less than 2,500 residents.

               For financial reporting purposes, the Company has established
               two operating segments: "ALCO Discount Stores", and "All
               Other", which includes the Duckwall variety stores and other
               business activities, such as general office, warehouse and
               distribution activities.

(Continued)

<PAGE 38>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)


<TABLE>
               Segment Information
<CAPTION>
                                                         2000             1999            1998
                                                    __________      ___________     ___________
                <S>                                 <C>             <C>             <C>
                Net Sales:
                  ALCO Discount Stores              $ 346,135          330,705         302,040
                  All Other:
                    External                           34,369           32,804          21,214
                    Intercompany                      204,043          200,465         189,330

                                                    $ 584,547          563,974         512,584

                Depreciation and Amortization:
                  ALCO Discount Stores              $   4,111            3,300           2,554
                  All Other                             2,285            2,674           2,251

                                                    $   6,396            5,974           4,805


                Income (expense) from Operations:
                  ALCO Discount Stores              $  31,490           29,241          28,086
                  All Other                           (17,299)         (16,771)        (14,037)

                                                    $  14,191           12,470          14,049

                Capital Expenditures:
                  ALCO Discount Stores              $   5,149            8,203          10,081
                  All Other                             1,264            2,057           1,581

                                                    $   6,413           10,260          11,662

                Identifiable Assets:
                  ALCO Discount Stores              $ 127,478          128,078         122,263
                  All Other                            50,055           43,733          33,638

                                                    $ 177,533          171,811         155,901


</TABLE>

(Continued)

<PAGE 39>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)


               Income from operations as reflected in the above segment
               information has been determined differently than income from
               operations in the accompanying consolidated statements of
               operations as follows:

                  Intercompany Sales

                    Intercompany sales represent transfers of merchandise from
                    the warehouse to ALCO Discount Stores and Duckwall variety
                    stores.

                  Intercompany Expense Allocations

                    General and administrative expenses incurred at the general
                    office have not been allocated to the ALCO Discount Stores
                    for purposes of determining income from operations for the
                    segment information.

                    Warehousing and distribution costs including freight
                    applicable to merchandise purchases, have been allocated to
                    the ALCO Discount Stores segment based on the Company's
                    customary method of allocation for such costs (primarily as
                    a stipulated percentage of merchandise purchases).

                  Inventories

                    Inventories are based on the FIFO method for segment
                    information purposes and on the LIFO method for the
                    consolidated statements of operations.

                  Property Costs

                    In fiscal 1999, for ALCO Discount Stores for which the
                    Company owns the store building, rent expense was charged
                    to, and the applicable depreciation expense was excluded
                    from, income from operations for purposes of determining
                    the segment information for the ALCO Discount Stores. In
                    fiscal 2000, for most such ALCO Discount Stores, no rent
                    expense was charged to, and applicable depreciation
                    expense was included in income from operations. The effect
                    of this change in accounting method did not have a
                    significant affect on income from operations for the ALCO
                    Discount Store segment in fiscal 2000. The Company also
                    sold and leased back ten stores in December 1998 for which
                    rent expense was charged in fiscal 1999.

                  Leases

                    All leases are accounted for as operating leases for
                    purposes of determining income from operations for purposes
                    of determining the segment information for the ALCO
                    Discount Stores whereas capital leases are accounted for as
                    such in the consolidated statements of operations.

               Identifiable assets as reflected in the above segment information
               include cash and cash equivalents, receivables, inventory,
               property and equipment, and property under capital leases.

(Continued)

<PAGE 40>

DUCKWALL-ALCO STORES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

January 30, 2000, January 31, 1999, and February 1, 1998
(Dollars in thousands, except per share amounts)



               A reconciliation of the segment information to the amounts
               reported in  the consolidated financial statements is presented
               below:

<TABLE>
<CAPTION>


                                                                 2000         1999         1998
                  _______________________________________  ___________  ___________  ___________
                  <S>                                      <C>          <C>          <C>
                  Net sales per above segment information  $  584,547      563,974      512,584
                  Intercompany elimination                   (204,043)    (200,465)    (189,330)

                       Net sales per consolidated
                         statements of operations          $  380,504      363,509      323,254

                  Income from operations per above
                    segment information                    $   14,191       12,470       14,049
                  Inventory method                                ---        2,449          950
                  Property costs                                  117          916          911
                  Leases                                          (59)         (99)        (104)

                       Income from operations per
                         consolidated statements of
                         operations                        $   14,249       15,736       15,806

</TABLE>

<PAGE 41>


This page intentionally left blank.


<PAGE 42>


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         None


                              PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The Registrant's Proxy Statement to be used in connection with the
Annual Meeting of Stockholders to be held on May 25, 2000, contains under
the caption "Election of Directors" certain information required by Item 10
of Form 10-K, and such information is incorporated herein by this reference.
The information required by Item 10 of Form 10-K as to executive officers is
set forth in Item 4A of Part I hereof.

         The Registrant's Proxy Statement to be used in connection with the
Annual Meeting of Stockholders to be held on May 25, 2000, contains under
the caption "Compliance with Section 16(a) of the Securities Exchange Act
of 1934" certain information required by Item 10 of Form 10-K, and such
information is incorporated herein by this reference.

ITEM 11. EXECUTIVE COMPENSATION.

         The Registrant's Proxy Statement to be used in connection with the
Annual Meeting of Stockholders to be held on May 25, 2000, contains under
the caption "Executive Compensation and Other Information" the information
required by Item 11 of Form 10-K, and such information is incorporated herein
by this reference (except that the information set forth under the following
subcaptions is expressly excluded from such incorporation: "Compensation
Committee Report" and "Company Performance").

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The Registrant's Proxy Statement to be used in connection with the
Annual Meeting of Stockholders to be held on May 25, 2000, contains under
the caption "Ownership of Duckwall Common Stock" the information required by
Item 12 of Form 10-K and such information is incorporated herein by this
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The Registrant's Proxy Statement to be used in connection with the
Annual Meeting of Stockholders to be held on May 25, 2000, contains under
the caption "Insider Participation" the information required by Item 13 of
Form 10-K and such information is incorporated herein by this reference.


<PAGE 43>




                               PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

    (a)  Financial Statements, Financial Statement Schedules, and Exhibits

         (1)  Consolidated Financial Statements

              The financial statements are listed in the index for Item 8 of
              this Form 10-K.

         (2)  Financial Statement Schedules

              No financial statement  schedules are included  as they are
              not applicable to the Company.

         (3)  Exhibits

              The exhibits filed with or incorporated by reference in this
              report are listed below:

Number        Description


3(a)          Amended and Restated Articles of Incorporation (filed as
              Exhibit 3(a) to Registrant's Registration Statement on Form
              10 and hereby incorporated herein by reference).

3(b)          Certificate of Amendment to the Articles of Incorporation
              (filed as Exhibit 3(b) to Registrant's Annual Report on Form
              10-K for the fiscal year ended January 29, 1995, and
              incorporated herein by reference) (filed as Exhibit 3(b) to
              Registrant's Annual Report on Form 10-K for the fiscal year
              ended January 29, 1995, and incorporated herein by
              reference).

3(c)          Bylaws (filed as Exhibit 3(b) to Registrant's Registration
              Statement on Form 10 and hereby incorporated herein by
              reference).

4(a)          Specimen Common Stock Certificates (filed as Exhibit 4.1 to
              Registrant's Registration Statement on Form S-1 and
              incorporated herein by reference).

4(b)          Reference is made to the Amended and Restated Articles of
              Incorporation and Bylaws described above under 3(a) and
              3(c), respectively (filed as Exhibit 4(a) to Registrant's
              Registration Statement on Form 10 and hereby incorporated
              herein by reference).

4(c)          Reference is made to the Certificate of Amendment to the
              Articles of Incorporation described above under 3(b) (filed as
              Exhibit 3(b) to Registrant's Annual Report on Form 10-K for
              the fiscal year ended January 29, 1995, and incorporated
              herein by reference).

4(d)          Form of 10% Subordinated Notes (filed as Exhibit 4(c) to
              Registrant's Registration Statement on Form 10 and hereby
              incorporated herein by reference).

9(a)          Voting Agreement and Irrevocable Proxy, dated as of May 29,
              1991, among General Electric Capital Corporation, certain
              stockholders of the Registrant and the Registrant (filed as
              Exhibit 9 to Registrant's Registration Statement on Form 10
              and hereby incorporated herein by reference).

9(b)          Assignment, dated as of February 11, 1993, among General


<PAGE 44>

              Electric Credit Corporation, BA Business Credit, Inc. and
              Transamerica Business Credit Corporation (filed as Exhibit 9(b)
              to Registrant's Annual Report on Form 10-K for the fiscal year
              ended January 31, 1993 and hereby incorporated herein by
              reference).

10(a)         Assignment, dated as of February 11, 1993, among General
              Electric Credit Corporation, BA Business Credit, Inc. and
              Transamerica Business Credit Corporation (filed as Exhibit 9(b)
              to Registrant's Annual Report on Form 10-K for the fiscal year
              ended January 31, 1993 and hereby incorporated herein by
              reference).

10(b)         Amended and Restated Loan Agreement, dated as of February 11,
              1993 among the Registrant, BA Business Credit, Inc. and
              Transamerica Business Credit Corporation (filed as Exhibit 10(e)
              to Registrant's Annual Report on Form 10-K for the fiscal year
              ended January 31, 1993 and hereby incorporated herein by
              reference).

10(c)         First Amendment to Security Agreement, dated as of February 11,
              1993 among the Registrant, BA Business Credit, Inc. and
              Transamerica Business Credit Corporation (filed as Exhibit 10(f)
              to Registrant's Annual Report on Form 10-K for the fiscal year
              ended January 31, 1993 and hereby incorporated herein by
              reference).

10(d)         Amendment No. 1, dated as of June 10, 1994, to the Amended
              and Restated Loan Agreement, dated as of February 11, 1993,
              among the Registrant, BA Business Credit, Inc. and Transamerica
              Business Credit Corporation.

10(e)         Stock Pledge Agreement, dated as of February 11, 1993 among
              the Registrant, BA Business Credit, Inc. and Transamerica
              Business Credit Corporation (filed as Exhibit 10(g) to
              Registrant's Annual Report on Form 10-K for the fiscal year
              ended January 31, 1993 and hereby incorporated herein by
              reference).

10(f)         Mortgage, Security Agreement, and Assignment of Leases and
              Rents, dated as of February 11, 1993 among the Registrant, BA
              Business Credit, Inc. and Transamerica Business Credit
              Corporation (filed as Exhibit 10(h) to Registrant's Annual
              Report on Form 10-K for the fiscal year ended January 31, 1993
              and hereby incorporated herein by reference).

10(g)         Mortgage, Security Agreement, and Assignment of Leases and
              Rents, dated as of February 11, 1993 among the Registrant, BA
              Business Credit, Inc. and Transamerica Business Credit
              Corporation (filed as Exhibit 10(i) to Registrant's Annual
              Report on Form 10-K for the fiscal year ended January 31, 1993
              and hereby incorporated herein by reference).

10(h)         Mortgage, Security Agreement, and Assignment of Leases and
              Rents, dated as of February 11, 1993 among the Registrant, BA
              Business Credit, Inc. and Transamerica Business Credit
              Corporation (filed as Exhibit 10(j) to Registrant's Annual
              Report on Form 10-K for the fiscal year ended January 31, 1993
              and hereby incorporated herein by reference).

10(i)         Deed of Trust, Security Agreement, and Assignment of Leases
              and Rents, dated as of February 11, 1993 by the Registrant in
              favor of The Public Trustee for Morgan County, Colorado (filed
              as Exhibit 10(k) to Registrant's Annual Report on Form 10-K for
              the fiscal year ended January 31, 1993 and hereby incorporated
              herein by reference).

10(j)         Deed of Trust, Security Agreement, and Assignment of Leases and


<PAGE 45>

              Rents, dated as of February 11, 1993 by the Registrant in
              favor of The Public Trustee for Fremont County, Colorado (filed
              as Exhibit 10(l) to Registrant's Annual Report on Form 10-K for
              the fiscal year ended January 31, 1993 and hereby incorporated
              herein by reference).

10(n)         Employment Agreement, dated March 18, 1993 between the
              Registrant and Glen L. Shank (filed as Exhibit 10(o) to
              Registrant's Annual Report on Form 10-K for the fiscal year
              ended January 31, 1993 and hereby incorporated herein by
              reference). *

10(o)         Second Amended and Restated Loan Agreement, dated as of
              October 18, 1995, by and among the Registrant, BankAmerica
              Business Credit, Inc. and Transamerica Business Credit
              Corporation.

11            Computation of Company's Earnings Per Share.

22            Subsidiaries of the Registrant.

23            Consent of Independent Auditors.

27            Financial Data Schedule.
______________________

* Management contracts or compensation plans or arrangements required to be
  identified by Item 14(a)(3).

    (b)  Reports on Form 8-K.

         No reports on Form 8-K were filed by Registrant during the fourth
         quarter of the fiscal year ended January 30, 2000.

    (c)  Exhibits

         The exhibits filed with this report are identified above under
         Item 14(a)(3)

    (d)  Financial Statement Schedules.

         No financial statement  schedules are included  as they are not
         applicable to the Company.


<PAGE 46>



                             SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                            DUCKWALL-ALCO STORES, INC.

                            by /s/ Glen L. Shank
                            Glen L. Shank
                              Chairman of the Board
                              and President

Dated: April 28, 2000

     Pursuant to the requirement of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:


                Signature and Title                         Date



      /s/ Glen L. Shank                                    April 28, 2000
         Glen L. Shank
              Chairman of the Board
              and President
              (Principal Executive Officer)


      /s/ Richard A. Mansfield                             April 28, 2000
         Richard A. Mansfield
              Vice President - Finance and Treasurer
              (Principal Financial and Accounting Officer)


      /s/ Dennis A. Mullin                                 April 28, 2000
         Dennis A. Mullin
              Director


      /s/ Lolan C. Mackey                                  April 28, 2000
        Lolan C. Mackey
              Director


      /s/ Jeffrey Macke                                    April 28, 2000
         Jeffrey Macke
              Director


      /s/ Robert L. Woodard                                 April 28, 2000
        Robert L. Woodard
              Director


<PAGE 47>