DUCKWALL ALCO STORES INC, DEF 14A, 1998-04-30

DUCKWALL ALCO STORES INC
DEF 14A, 1998-04-30
VARIETY STORES

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14 (a) of the Securities
Exchange Act of 1934

[ X ] Filed by Registrant
[ ] Filed by Party other than the Registrant

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a- (6)e (2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to rule 14a-11
or Rule 14a-12

DUCKWALL-ALCO STORES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box) :

[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(I) (4) and 0-11.

1) Title of each class of securities to which
transaction applies:

2) Aggregate number of securities to which
transaction applies:

3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11 (Set forth the amount on which the
filling fee is calculated and stat how it was
determined):

4) Proposed maximum aggregate value of
transaction:

5) Total fee paid:

[ ] Fee paid previously with preliminary materials

[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11 (a) (2) and identify the
filing for which the offset fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing

1) Amount Previously Paid:

2) Form, Schedule or Registration Statement No.:

3) Filing Party:

4) Date Filed:

_____________________________________________________________________________

<PAGE>

DUCKWALL-ALCO STORES, INC.
401 Cottage Street
Abilene, Kansas 67410
(785) 263-3350

May 1, 1998

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders
of Duckwall-ALCO Stores, Inc., to be held at the principal offices of the
Company, located at 401 Cottage Street, Abilene, Kansas on Thursday,
May 21, 1998, commencing at 10:00 a.m., local time. The business to be
conducted at the meeting is described in the attached Notice of Annual
Meeting and Proxy Statement. In addition, there will be an opportunity
to meet with members of senior management and review the business and
operations of the Company.

Your Board of Directors joins with me in urging you to attend the
meeting. Whether or not you plan to attend the meeting, however, please
sign, date and return the enclosed proxy card promptly. A prepaid return
envelope is provided for this purpose. You may revoke your proxy at any
time before it is exercised and it will not be used if you attend the
meeting and prefer to vote in person.

Sincerely yours,

/s/ Glen L. Shank

Glen L. Shank
Chairman of the Board

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1998

NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders
of Duckwall-ALCO Stores, Inc., a Kansas corporation ("Duckwall" or the
"Company"), will be held at the principal executive offices of Duckwall
located at 401 Cottage Street, Abilene, Kansas, on Thursday, May 21, 1998,
commencing at 10:00 a.m., local time, and thereafter as it may from time
to time be adjourned, for the following purposes:

1. To elect six directors to hold office for a one-year term until
the 1999 Annual Meeting of the Stockholders of Duckwall and
until their respective successors are duly elected and qualified
or until their respective earlier resignation or removal;

2. To consider and act upon ratification and approval of the
selection of the accounting firm of KPMG Peat Marwick LLP as
the independent auditors of Duckwall for the fiscal year ending
February 1, 1998;

3. To consider and act upon any other matters which may properly
come before the Annual Meeting of the Stockholders or any
adjournment or adjournments thereof.

In accordance with the provisions of the Bylaws of the Company, the
Board of Directors has fixed the close of business on April 3, 1998 as
the record date for determination of the stockholders entitled to notice
of, and to vote at, the Annual Meeting of the Stockholders and any
adjournment or adjournments thereof.

All stockholders are cordially invited to attend the meeting.
Whether or not you intend to be present at the meeting, the Board of
Directors of Duckwall solicits you to sign, date and return the enclosed
proxy card promptly. A prepaid return envelope is provided for this
purpose. You may revoke your proxy at any time before it is exercised and
it will not be used if you attend the meeting and prefer to vote in
person. Your vote is important and all stockholders are urged to be
present in person or by proxy.

By Order of the Board of Directors

/s/ Charles E. Bogan

Charles E. Bogan
Vice President, Secretary
and General Counsel

May 1, 1998
Abilene, Kansas

DUCKWALL-ALCO STORES, INC.
401 Cottage Street
Abilene, Kansas, 67410-0129

__________________

PROXY STATEMENT
__________________

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD May 21, 1998

__________________

INTRODUCTION

This Proxy Statement is being furnished to the stockholders of
Duckwall-ALCO Stores, Inc., a Kansas corporation ("Duckwall" or the "Company"),
in connection with the solicitation of proxies by the Board of Directors of
Duckwall for use at the Annual Meeting of Stockholders to be held on Thursday,
May 21, 1998, and at any adjournment or adjournments thereof (the "Annual
Meeting"). The Annual Meeting will commence at 10:00 a.m., local time, and
will be held at the principal offices of the Company, located at 401 Cottage
Street, Abilene, Kansas, 67410-0129.

This Proxy Statement and the enclosed form of proxy were first mailed to
the Company's stockholders on or about May 1, 1998.

Proxies

You are requested to complete, date and sign the enclosed form of proxy
and return it promptly in the enclosed postage prepaid envelope. Shares
represented by properly executed proxies will, unless such proxies previously
have been revoked, be voted in accordance with the stockholders' instructions
indicated in the proxies. If no instructions are indicated, such shares will
be voted in favor of the election of the nominees for director named in this
Proxy Statement, in favor of ratifying the selection of the accounting firm of
KPMG Peat Marwick LLP as Duckwall's independent auditors for the current
fiscal year, and, as to any other matter that properly may be brought before
the Annual Meeting, in accordance with the discretion and judgment of the
appointed attorneys-in-fact. A stockholder who has given a proxy may revoke
it at any time before it is exercised at the Annual Meeting by filing written
notice of revocation with the Secretary of the Company, by executing and
delivering to the Secretary of the Company a proxy bearing a later date, or
by appearing at the Annual Meeting and voting in person.

Voting at the Meeting

For purposes of voting on the proposals described herein, the presence
in person or by proxy of stockholders holding a majority of the total
outstanding shares of the Company's common stock, par value $0.0001 per share
("Common Stock"), shall constitute a quorum at the Annual Meeting. Only
holders of record of shares of the Company's Common Stock as of the close of
business on April 3, 1998 (the "Record Date"), are entitled to notice of, and
to vote at, the Annual Meeting or any adjournment or adjournments thereof.
As of the Record Date, 5,098,761 shares of the Company's Common Stock were
outstanding and entitled to be voted at the Annual Meeting. Each share of
Common Stock is entitled to one vote on each matter properly to come before
the Annual Meeting.

Directors are elected by a plurality (a number greater than those
cast for any other candidates) of the votes cast by the stockholders
present in person or represented by proxy and entitled to vote at the
Annual Meeting for that purpose. The affirmative vote of a majority
of the shares of the Company's Common Stock present in person or

represented by proxy and entitled to vote at the Annual Meeting, provided a
quorum is present, is required to (i) ratify the selection of KPMG Peat
Marwick LLP as the Company's independent auditors, and (ii) approve such
other matters as properly may come before the Annual Meeting or any
adjournment thereof.

Abstentions and broker non-votes are counted for purposes of determining
the presence or absence of a quorum for the transaction of business.
Abstentions are counted in tabulations of the votes cast on proposals presented
to stockholders, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved.

Solicitation of Proxies

This solicitation of proxies for the Annual Meeting is being made by the
Company's Board of Directors. The Company will bear all costs of such
solicitation, including the cost of preparing and mailing this Proxy Statement
and the enclosed form of proxy. After the initial mailing of this Proxy
Statement, proxies may be solicited by mail, telephone, telegram, facsimile
transmission or personally by directors, officers, employees or agents of the
Company. Brokerage houses and other custodians, nominees and fiduciaries will
be requested to forward soliciting materials to beneficial owners of shares
held of record by them, and their reasonable out-of-pocket expenses, together
with those of Duckwall's transfer agent, will be paid by Duckwall.

A list of stockholders entitled to vote at the Annual Meeting will be
available for examination at least ten days prior to the date of the Annual
Meeting during normal business hours at the principal executive offices of
Duckwall located at 401 Cottage Street, Abilene, Kansas. The list also will
be available at the Annual Meeting.

ITEM 1

ELECTION OF DIRECTORS

The Company's Board of Directors currently consists of six directors.
One of the purposes of this Annual Meeting is to elect six directors to
serve for a one-year term expiring at the Annual Meeting of Stockholders
in 1999 and until their respective successors are duly elected and
qualified or until their respective earlier resignation or removal. The
Board of Directors has designated Glen L. Shank, Dennis A. Mullin,
Robert L. Barcum, William J. Morgan, Robert C. Amenta, and Lolan C. Mackey
as the six nominees proposed for election at the Annual Meeting. Unless
authority to vote for the nominees or a particular nominee is withheld, it
is intended that the shares represented by properly executed proxies in the
form enclosed will be voted for the election as directors of all nominees.
In the event that one or more of the nominees should become unavailable for
election, it is intended that the shares represented by the proxies will be
voted for the election of such substitute nominee or nominees as may be
designated by the Board of Directors, unless the authority to vote for both
nominees or for the particular nominee who has ceased to be a candidate has
been withheld. Each of the nominees has indicated his willingness to serve
as a director if elected, and the Board of Directors has no reason to
believe that any nominee will be unavailable for election.

The Board of Directors recommends that you vote for the election of
Glen L. Shank, Dennis A. Mullin, Robert L. Barcum, William J. Morgan,
Robert C. Amenta and Lolan C. Mackey as directors.

Nominees

The following table sets forth certain information with respect to
each person nominated by the Board of Directors for election as a director
at the Annual Meeting.

Present
Position
With Director
Name Age Duckwall Since
_________________________ ___ ______________________ ________
NOMINEES

Glen L. Shank 53 Chairman and President 1988
Dennis A. Mullin (1) 50 Director 1991
Robert L. Barcum (2) 49 Director 1991
William J. Morgan (1) (2) 43 Director 1991
Robert C. Amenta (1) (2) 31 Director 1991
Lolan C. Mackey (3) 52 Director 1998
_________________________ ___ _______________________ _______

(1) Member of Audit Committee
(2) Member of Compensation Committee
(3) Lolan C. Mackey was appointed to the Board of Directors on
March 19, 1998

The business experience of each of the directors of the Company during
the last five years is as follows:

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 31 years of experience in the retail industry.

Dennis A. Mullin is the President and Chief Operating Officer of
Steel & Pipe Supply Co., Inc., and has served in various capacities with that
company for more than the last five years. He serves as a director of
Commerce Bank, Kansas City.

Robert L. Barcum has been President of Applied Intelligence Group, Inc.,
computer consulting firm, since 1985.

William J. Morgan has been the President of Pacholder Associates, Inc.,
since December 1983. Pacholder oversees private and public investment funds
for institutional investors including certain investments of the Kansas Public
Employees Retirement System. He serves as a director of the following:
ICO, Inc., an oil field related service company; Kaiser Resources, Inc., a
land and environmental development company; USF&G Pacholder Fund, Inc., a
closed-end mutual fund; and Smith Corona Corporation, which manufactures and
markets business equipment.

Robert C. Amenta is a Senior Vice President of Pacholder Associates, Inc.,
and has been employed by Pacholder Associates, Inc. since 1990.

Lolan C. Mackey is currently a partner of Diversified Retail Solutions
LLC, a retail senior management advisory firm. From 1994 to 1997, he was
Vice President of International Operations for Wal-Mart Stores, Inc. Prior
to that, he was Vice President of Store Planning for Wal-Mart Stores, Inc.
from 1990 to 1994.

Compensation of Directors

Non-employee directors of the Company receive compensation of $1,000 for
each meeting of the Board of Directors attended and an additional $1,000 for
each committee meeting attended, plus reimbursement for expenses incurred in
connection with attendance at Board of Directors meetings. Employee directors
of the Company receive no compensation for serving on the Board or any
committee thereof.

On March 18, 1993, the Company entered into an employment agreement with
Glen L. Shank, President of the Company. The original term of the employment
agreement was to January 31, 1995. The current term of the employment
agreement expires on January 31, 2000, subject to certain termination
provisions provided in the agreement. The employment agreement provides that
Mr. Shank's minimum base salary shall be $144,000, subject to increase by the
Board of Directors. During the 1998 Fiscal Year, the employment agreement
provided for a base salary of $175,000. In the event of death or disability,
Mr. Shank or his representative shall be entitled to his salary through the
end of the month in which his death occurs or the last day of the sixth
consecutive month of his disability, as the case may be.

Meetings of the Board and Committees

During the fiscal year ended February 1, 1998, (the "1998 Fiscal Year"),
the Board of Directors of Duckwall held five meetings. All of the directors,
except Mr. Mullin, attended all of the meetings of the Board of Directors and
the committees of the Board of Directors on which they served which were held
during the 1998 Fiscal Year. Mr. Mullin attended three of the five meetings
of the Board of Directors and all of the committee meetings on which he served.

Pursuant to Duckwall's Bylaws, the Board of Directors has established
Audit and Compensation Committees of the Board of Directors. There currently
is no Nominating Committee or other committee of the Board of Directors
performing similar functions.

The Audit Committee assists the Board of Directors in fulfilling its
responsibilities with respect to Duckwall's accounting and financial reporting
practices and in addressing the scope and expense of audit and related
services provided by Duckwall's independent auditors. The Audit Committee is
responsible for recommending the appointment of Duckwall's independent
auditors and reviewing the terms of their engagement, reviewing Duckwall's
policies and procedures with respect to internal auditing, accounting and
financial controls and reviewing the scope and results of audits and any
auditor recommendations. The current members of the Audit Committee are
Robert C. Amenta, William J. Morgan and Dennis A. Mullin. The Audit Committee
met twice during the 1998 Fiscal Year.

The Compensation Committee makes recommendations to the Board of Directors
regarding the compensation and benefits of Duckwall's executive officers. The
Compensation Committee also administers the Company's Incentive Stock Option
Plan. The current members of the Compensation Committee are Robert L. Barcum,
William J. Morgan and Robert C. Amenta. The Compensation Committee met three
times during the 1998 Fiscal Year.

EXECUTIVE COMPENSATION AND OTHER INFORMATION

Executive Compensation

The following table sets forth for the fiscal years ending February 1,
1998, February 2, 1997, and January 28, 1996, respectively, the compensation
of the Company's chief executive officer and of each of the Company's four
other most highly compensated executive officers whose remuneration for the
1998 Fiscal Year was in excess of $100,000 for services to the Company in all
capacities:

<TABLE>

Summary Compensation Table
<CAPTION>

Long Term
Compensation
Annual Compensation Payouts
_____________________________________ ____________

Securities
Under- All
lying Other
Name and Fiscal Options/ Compen-
Principal Position Year Salary Bonus(1) SARs sation (2)
______________________________ ____ __________ __________ ________ _____________
<S> <C> <C> <C> <C> <C>

Glen L. Shank 1998 $175,474 85,000 7,800 $5,736(3)
Chairman and President 1997 162,650 75,000 4,000 5,110(4)
1996 157,925 49,250 4,750 5,890(5)

James E. Schoenbeck 1998 140,426 53,500 5,800 5,927(3)
Vice President-Operations 1997 130,100 46,500 3,000 5,301(4)
and Advertising 1996 126,276 39,000 3,300 6,081(5)

James R. Fennema 1998 135,150 51,000 5,800 5,770(3)
Vice President- 1997 124,625 44,000 2,800 5,144(4)
Merchandise 1996 120,900 37,500 3,000 5,924(5)

Charles E. Bogan 1998 120,275 30,000 3,800 7,519(3)
Vice President, Secretary 1997 117,250 28,000 1,800 6,912(4)
and General Counsel 1996 114,850 24,000 2,300 7,938(5)

Richard A. Mansfield 1998 98,459 30,000 9,600 0
Vice President-Finance 1997 -- -- 0 0
and Treasurer (6) 1996 -- -- 0 0
______________________________ ____ __________ __________ ________ _____________
</TABLE>

(1) Reflects bonus earned for the fiscal years ending February 1, 1998,
February 2, 1997, and January 28, 1996, respectively.

(2) Excludes perquisites and other benefits, unless the aggregate amount
of such compensation is the lesser of either $50,000 or 10% of the
total of annual salary and bonus reported for the named executive
officer.

(3) Includes contributions made by the Company for fiscal 1998 to the
named individual's account in the Duckwall-ALCO Stores, Inc. Profit
Sharing Plan and Trust (the "Profit Sharing Plan") (together with
forfeitures) in the amounts of $4,835 each for Mr. Shank,
Mr. Schoenbeck, and Mr. Fennema, and $4,570 for Mr. Bogan. Also
includes premiums paid by the Company with respect to whole life
insurance for each of the named individuals for fiscal 1998 in the
amounts of $901 for Mr. Shank, $1,092 for Mr. Schoenbeck, $935 for
Mr. Fennema and $2,949 for Mr. Bogan.

(4) Includes contributions made by the Company for fiscal 1997 to the
named individual's account in the Duckwall-ALCO Stores, Inc. Profit
Sharing Plan and Trust (the "Profit Sharing Plan") (together with
forfeitures) in the amounts of $4,209 each for Mr. Shank,
Mr. Schoenbeck, and Mr. Fennema, and $3,963 for Mr. Bogan. Also
includes premiums paid by the Company with respect to whole life
insurance for each of the named individuals for fiscal 1997 in the
amounts of $901 for Mr. Shank, $1,092 for Mr. Schoenbeck, $935 for
Mr. Fennema and $2,949 for Mr. Bogan.

(5) Includes contributions made by the Company for fiscal 1996 to the
named individual's account in the Duckwall-ALCO Stores, Inc. Profit
Sharing Plan and Trust (the "Profit Sharing Plan") (together with
forfeitures) in the amounts of $4,989 each for Mr. Shank,
Mr. Schoenbeck, Mr. Fennema and Mr. Bogan. Also includes premiums
paid by the Company with respect to whole life insurance for each of
the named individuals for fiscal 1996 in the amounts of $901 for
Mr. Shank, $1,092 for Mr. Schoenbeck, $935 for Mr. Fennema and $2,949
for Mr. Bogan.

(6) Mr. Mansfield became Vice President-Finance and Treasurer on
May 29, 1997.

Option Grants, Exercises and Holdings

The following table provides further information concerning grants of
stock options pursuant to the Duckwall-ALCO Stores, Inc., Incentive Stock
Option Plan during the 1998 Fiscal Year to the named executive officers:

<TABLE>

Option Grants in Last Fiscal Year

Potential
Realized Value at
% of Assumed Annual
Number of Total Rates of Stock Price
Securities Options/ Appreciation
Underlying Granted to Exercise Individual Grants (1)
Options Employees or Base for Option Term
Granted in Fiscal Price Expiration _______________
Name (#) Year ($/Sh) Date 5%($) 10%($)
______________________ __________ __________ ________ ____________ ______ ______
<S> <C> <C> <C> <C> <C> <C>

Glen L. Shank 7,800 9.43% 12.75 May 22, 2002 27,476 60,715
James E. Schoenbeck 5,800 7.01% 12.75 May 22, 2002 20,431 45,147
James R. Fennema 5,800 7.01% 12.75 May 22, 2002 20,431 45,147
Richard A. Mansfield 9,600 11.6% 12.75 May 22, 2002 33,817 74,726
Charles E. Bogan 3,800 4.59% 12.75 May 22, 2002 13,386 29,579
______________________ __________ __________ ________ ____________ ______ ______

</TABLE>

(1) The options were granted with an exercise price equal to the fair market
value of the Company's Common Stock on May 23, 1997. Except in the event
of death, if an optionee ceases to be employed by the Company, his or her
option shall terminate on the earlier of (i) the expiration of the
option, or (ii) the thirtieth day following such termination of
employment. In the event of death of optionee, the option may be
exercised by his or her legal representatives on the earlier of (i) the
expiration of the option, or (ii) within twelve months of the date of
death. Upon a merger, consolidation, reorganization or liquidation of
the Company, the option may, in the discretion of the Compensation
Committee, become immediately exercisable until the day immediately prior
to the date the contemplated transaction is consummated. The options
granted were granted on May 23, 1997 and expire on May 22, 2002. The
options become exercisable in equal amounts over a four year period
beginning one year subsequent to their grant date.

No options were exercised by any of the named executive officers during
the 1998 Fiscal Year. The following table provides information with
respect to the named executive officers concerning unexercised options
held as of the end of the 1998 Fiscal Year.

<TABLE>

Last Fiscal Year End Option Values

<CAPTION>
_________________________________________________________________
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at FY-End (#) FY-End ($) (1)
_________________________ ___________ _____________ ___________ _____________
Name Exercisable Unexercisable Exercisable Unexercisable
_________________________ ___________ _____________ ___________ _____________
<S> <C> <C> <C> <C>
Glen L. Shank 18,875 13,175 102,697 25,947
James E. Schoenbeck 13,775 9,700 75,413 18,963
James R. Fennema 9,700 9,400 50,708 18,250
Richard A. Mansfield 0 9,600 0 16,800
Charles E. Bogan 10,350 6,300 57,836 12,438
_________________________ ___________ _____________ ___________ _____________

</TABLE>

(1) The value of unexercised in-the-money options equals the difference
between the option exercise price and the closing price of
Duckwall-ALCO Stores, Inc. stock at fiscal year end, multiplied by the
number of shares underlying the options. The closing price of
Duckwall-ALCO stock on February 1, 1998 was $14.50.

Employee Stock Option Plan

In May 1993, the Company adopted the Duckwall-ALCO Stores, Inc.
Incentive Stock Option Plan (the "Plan") to encourage key employees of the
Company to participate in the ownership of the Company and promote the
success of the business of the Company. Presently, 450,000 shares of
Common Stock are authorized for issuance upon exercise of options under
the Plan. The number of shares and option price covered by outstanding
options may be adjusted in the event of any stock dividend, stock split,
reorganization, merger, consolidation, liquidation or any combination or
exchange of shares of Common Stock. The Plan is administered by the
Compensation Committee consisting of not less than two nor more than five
members of the Board of Directors who are appointed by the Board. The price
of each option shall be its fair market value as determined by the
Compensation Committee if the Common Stock is not traded on a public market.
Employees of the Company eligible to receive options are those selected by
the Compensation Committee in its sole discretion on the basis that such
employees have made material contributions to the successful performance
of the Company in the past, or are expected to make material contributions
in the future.

Of the 450,000 shares of Common Stock available under the Plan, an
aggregate of 247,075 shares were subject to options as of April 3, 1998.

Compensation Committee Report

This report has been prepared by the Compensation Committee of the Board
of Directors, which has general responsibility for the establishment, direction
and administration of all aspects of the compensation policies and programs
for the Company's executive officers. During Fiscal 1998, the Compensation
Committee was composed of three independent outside directors, none of whom
is an officer or employee of the Company. The Chief Executive Officer of the
Company, and certain other executive officers of the Company, may attend
meetings of the Compensation Committee, but are not present during discussions
or deliberations regarding their own compensation. The Compensation Committee
meets at least annually or more frequently as the Company's Board of Directors
may request.

Compensation Policy. The Company's executive compensation policy is
premised upon three basic goals: (1) to attract and retain qualified
individuals who provide the skills and leadership necessary to enable the
Company to achieve both its short and long-term earnings growth and return
on investment objectives; (2) to create incentives to achieve Company and
individual performance objectives through the use of performance-based
compensation programs; and (3) to link executive pay to corporate performance,
including share price, recognizing that there is not always a direct and
short-term correlation between executive performance and share price.

In determining the structure and levels of each of the components of
executive compensation needed to achieve these goals, the Compensation
Committee considers all elements of the compensation package in total, as well
as the individual components thereof. As more fully described below, the
determination of such levels of executive compensation is a subjective
process in which the Compensation Committee considers many factors including
the Company's performance (as measured by earnings growth and return on
investment, among other factors) and the individual executive's specific
responsibilities, historical and anticipated personal contribution to the
Company's business, and length of service with the Company. In addition,
the Compensation Committee considers publicly available executive
compensation data for comparable positions in companies believed to be most
comparable for purposes of executive compensation. The levels of compensation
paid by the Company to its executive officers were matched to comparable
positions of executives at comparable companies and a competitive level for
the total compensation package and relevant individual components was
determined.

Compensation Components. The Company's compensation program is reviewed
annually to ensure that compensation levels and incentive opportunities are
competitive and reflect the performance of the Company and the individual
executive officer. The principal components of the compensation program
for executive officers are base salary, annual incentive bonuses, and
employee stock options. Management has been granted options in the past to
provide linkage between executive pay and corporate performance and to
provide incentive to continue employment with the Company. The
Compensation Committee believes that the total compensation package
awarded to top management is fair based upon the total compensation
packages awarded to top management at comparable companies.

Base Salary. The Compensation Committee reviews each executive officer's
base salary from the previous year and, in determining whether to adjust base
salary levels, takes into account the Chief Executive Officer's recommendations
and assessments of each executive's growth and effectiveness in the
performance of his or her duties and the Company's performance. For
Fiscal 1998, base salary levels for the executive officers were increased
by approximately two to nine percent from Fiscal 1997 levels. These
salaries were based upon the Compensation Committee's analysis of the
Company's performance, including a review of the Company's revenues,
earnings, return on investment and new store openings for the prior year.
An analysis of the role played by each individual executive in generating
the Company's performance included a consideration of the executive's
specific responsibilities, contributions to the Company's business, and
length of service. The Compensation Committee also considered publicly
available executive compensation data for comparable positions in
comparable companies. Base pay levels for the executive officers are
competitive within a range that is considered in the Compensation
Committee's judgment, to be reasonable and necessary.

Annual Incentive Bonus. The Company's executive officers and certain
other employees of the Company who, in the discretion of the Chief Executive
Officer, are considered to be in a position to significantly influence the
Company's results or operations and level of profits are eligible to receive
annual incentive bonus awards under the Company's incentive bonus program.
Annual bonus opportunities allow the Company to communicate specific goals
that are of primary importance during the coming year and motivate executives
to achieve these goals. The selection of the persons eligible to participate
in the incentive bonus program is necessarily subjective in nature and is
made after taking into account management's assessment of each person's
level of responsibility. The incentive program establishes a bonus
pool at the beginning of each year which is included in the Company's
operating budget for that year. Each of the participants in the incentive
program is evaluated based upon a number of criteria related to management
skills and personal characteristics. In addition, each participant
is evaluated based upon his or her accomplishments for the year

compared to the goals that were established at the end of the previous year.
The size of the bonus pools, the persons who are eligible to receive bonuses,
the targets established for bonus participants and the amount of bonus payments
can vary from year to year and are subject to the discretion of the
Compensation Committee and management.

Stock Options. Since the Company's policy is to retain qualified
individuals to enable the Company to achieve both short- and long-term
earnings growth, it is important that there be a long-term component of the
compensation policy. The Company's Incentive Stock Option Plan which was
approved by the Stockholders in 1993, provides the vehicle for addressing
long-term rewards. The Compensation Committee administrates the Stock Option
Plan. The Chief Executive Officer provides recommendations to the
Compensation Committee who may grant the options at any time. The options
permit the holder to purchase shares of the Company's stock at a price equal
to the fair market value of the Stock at the time of the grant. Thus, the
options gain value only to the extent the stock price exceeds the option
price. To date, all of the options that have been granted become exercisable
in equal amounts over a four-year period beginning one year subsequent to the
grant date.

Compensation Committee:

Robert C. Amenta
Robert L. Barcum
William J. Morgan

Compensation Committee Interlocks

Robert C. Amenta, Robert L. Barcum and William J. Morgan each served on
the Compensation Committee of the Board of Directors during the 1998
Fiscal Year.

Robert C. Amenta and William J. Morgan, directors of the Company, are
employees of Pacholder Associates, Inc., an investment advisor to the
Kansas Public Employees Retirement System ("KPERS"). As of
March 13, 1998, KPERS owned 967,000 shares of Common Stock.

Insider Participation

Dennis A. Mullin is President and Chief Operating Officer of Steel &
Pipe Supply Co., Inc. Mr. Mullin is also a partner in or stockholder or
officer of five partnerships or corporations which own stores leased
to the Company. During the 1998 Fiscal Year, the Company paid fixed
rentals aggregating approximately $585,066 and percentage rentals
aggregating approximately $846 to these entities. The Company also
pays the taxes, insurance and maintenance on the stores leased from
these entities. Each of the store leases has a remaining term of more
than five years.

Robert L. Barcum is President of Applied Intelligence Group, Inc. ("AIG"),
a computer consulting firm. During the 1998 Fiscal Year, the Company paid
AIG $41,739 for the purchase of software, services and expenses related to
upgrading the Company's point-of-sale systems. The Company has used AIG as
a source for point-of sale software and related services since 1987.

Glen L. Shank, James E. Schoenbeck, and Charles E. Bogan were three of
the five members of the administrative committee of the Duckwall-ALCO
Stores, Inc. Profit Sharing Plan and Trust (the "Profit Sharing Plan").
On May 29, 1991, the Plan purchased 327,350 shares of Common Stock
from the Company for $1,300,000 in cash. On March 16, 1998, the plan
owned 81,553 shares of Common Stock. See "Ownership of Duckwall Common
Stock."

Company Performance

The following graph compares the cumulative total return of the Company,
the Nasdaq Stock Market Index, and the Nasdaq Retail Trade Stocks Index
(dividends reinvested). The graph assumes $100 was invested on October 27, 1994
in Duckwall-ALCO Stores, Inc., Common Stock, the Nasdaq Stock Market Index, and
the Nasdaq Retail Trade Stocks Index (the "Peer Group").

<TABLE>

Comparative Total Stock Returns

10/24/94 01/29/95 01/28/96 02/02/97 02/01/98

Duckwall-Alco Stores, Inc. 100 102.778 108.333 145.833 161.111
Nasdaq Composite Index 100 97.497 137.789 180.642 213.475
Nasdaq Retail Stock Index 100 90.123 101.859 125.271 146.473

</TABLE>

Based upon the data reflected in the table, a $100 investment in the
Company's stock would have returned a total return value of $161.11 at
fiscal year-end, as compared to $213.48 for the Composite Nasdaq Index and
$146.47 for the Nasdaq Retail Stock Index.

There can be no assurances that the Company's stock performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company does not make or endorse any predictions as to the future
stock performance.

OWNERSHIP OF DUCKWALL COMMON STOCK

The following table sets forth certain information as of March 16, 1998
(as of December 31, 1997 for Heartland Advisors, Inc., Wellington Management
Company LLP, and Putnam Investments, Inc.) regarding the beneficial ownership
of Duckwall Common Stock by each person known to the Board of Directors to own
beneficially 5% or more of the Company's Common Stock, by each director of the
Company, by each executive officer named in the Summary Compensation Table
under "Executive Compensation and Other Information--Executive Compensation"
and by all directors and officers of the Company as a group. All information
with respect to beneficial ownership has been furnished by the respective
directors, officers or 5% or more stockholders, as the case may be, or by
documents filed with the Securities and Exchange Commission.

Amount and Nature of Percentage of
Name Beneficial Ownership Share Outstanding
___________________________________ ____________________ ___________________
<S> <C> <C>

Glen L. Shank (1)(2)(3) 22,275 *
James E. Schoenbeck (1)(2)(4) 16,275 *
James R. Fennema (1)(5) 11,500 *
Charles E. Bogan (1)(2)(6) 10,350 *
Richard A. Mansfield (1)(7) 0 *
Robert L. Barcum (8) 0 *
William J. Morgan (9) 0 *
Robert C. Amenta (9) 0 *
Lolan C. Mackey 0 *
Dennis A. Mullin (10) 118,121 2.32
KDF, a Kansas Nominee (9) 967,000 18.97
INTRUST Bank N.A., as Trustee for
Duckwall-ALCO Profit Sharing
Plan & Trust (2) 81,553 1.60
Heartland Advisors, Inc.(11) 520,100 10.20
Wellington Management Company LLP (12) 499,000 9.79
Putnam Investments, Inc. (13) 265,000 5.20
All directors and officers
as a group (10 in group) 178,521 3.50
___________________________________ ____________________ ___________________
</TABLE>

*Less than one percent.

(1) The address for this person is 401 Cottage Street, Abilene, Kansas
67410-0129.

(2) Glen L. Shank, Chairman of the Board and President of the Company,
James E. Schoenbeck, a Vice President of the Company, and
Charles E. Bogan, a Vice President of the Company were three of the
five members of the administrative committee of the Duckwall-ALCO
Stores, Inc. Profit Sharing Plan and Trust (the "Profit Sharing Plan"),
however each has disclaimed beneficial ownership of any shares of
Common Stock owned by the Profit Sharing Plan. The address of the
Profit Sharing Plan is INTRUST Bank N.A., 4000 Sommerset Drive, P.O.
Box 8338, Prairie Village, KS 66208-0338.

(3) Mr. Shank owns options to purchase 32,050 shares of Common Stock.
Of those options, 16,438 are currently exercisable and 2,437 more
become exercisable on April 28, 1998.

(4) Mr. Schoenbeck owns options to purchase 23,475 shares of Common Stock.
Of those options, 12,025 are currently exercisable and 1,750 more
become exercisable on April 28, 1998.

(5) Mr. Fennema owns options to purchase 19,100 shares of Common Stock.
Of those options, 8,450 are currently exercisable and 1,250 more
become exercisable on April 28, 1998.

(6) Mr. Bogan owns options to purchase 16,650 shares of Common Stock. Of
those options, 9,038 are currently exercisable and 1,312 more become
exercisable on April 28, 1998.

(7) Mr. Mansfield owns options to purchase 9,600 shares of Common Stock.
Of those options, none are currently exercisable.

(8) The address for Mr. Barcum is Applied Intelligence Group, Inc., 13800
Benson Road, Edmond, Oklahoma 73013.

(9) KDF is the nominee holder of shares of Common Stock on behalf of the
Kansas Public Employees Retirement System ("KPERS"). KPERS, Pacholder
Associates, Inc. ("Pacholder") and Portfolio Advisers, Inc. ("PAI"),
share investment and voting power with regard to these shares.
Pacholder and PAI are investment advisors to KPERS. In the event
KPERS terminated either such arrangement, the terminated advisor would
no longer have any such power with respect to these shares. William J.
Morgan and Robert C. Amenta are the President and Senior Vice President,
respectively, of Pacholder. Each of these individuals has disclaimed
beneficial ownership of all shares of Common Stock beneficially owned
by Pacholder, KDF and KPERS. The address of KPERS is c/o Pacholder
Associates, Inc., Bank One Towers, 8044 Montgomery Road, Suite 382,
Cincinnati, Ohio 45236. The address of PAI is 9 Old Kings Highway
South, P.O. Box 1224, Darien, Connecticut 06820-1224.

(10) Dennis A. Mullin owns 4,000 shares of Common Stock and is the President
and Chief Operating Officer of Steel & Pipe Supply Co., Inc., which owns
107,441 shares of Common Stock. The address of Steel & Pipe
Supply Co., Inc., is 555 Poyntz, Manhattan, Kansas 66502. Mr. Mullin is
also an executive officer of Manhattan Buildings, Inc. and Business
Buildings, Inc. each of which own 840 shares of Common Stock.
Mr. Mullin is also an executive officer of MBI, Inc., which owns 5,000
shares of Common Stock.

(11) The address of Heartland Advisors, Inc. is 790 North Milwaukee Street,
Milwaukee, Wisconsin 53202.

(12) The address of Wellington Management Company LLP is 75 State Street,
Boston, Massachusetts 02109.

(13) The address of Putnam Investments, Inc. is One Post Office Square,
Boston, Massachusetts 02109.

ITEM 2

RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors, upon recommendation of the Board's Audit
Committee, has selected the independent certified public accounting firm of
KPMG Peat Marwick LLP as Duckwall's independent auditors to audit the
consolidated financial statements of the Company for the year ending
January 31, 1999. Stockholders will have an opportunity to vote at the
Annual Meeting on whether to ratify the Board's decision in this regard.

KPMG Peat Marwick LLP has served as the Company's independent auditors
since 1969. A representative of KPMG Peat Marwick LLP is expected to be
present at the Annual Meeting. Such representative will have an opportunity
to make a statement if he or she desires to do so and will be available to
respond to appropriate questions.

Submission of the selection of the independent auditors to the
stockholders for ratification will not limit the authority of the Board of
Directors to appoint another independent certified public accounting firm to
serve as independent auditors if the present auditors resign or their
engagement otherwise is terminated.

The Board of Directors recommends that you vote for approval of the
selection of KPMG Peat Marwick LLP.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires Duckwall's directors and executive officers, and persons who own
more than 10% of the Company's outstanding Common Stock, to file with the
Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership in Duckwall Common Stock and other equity securities.
In addition, under Section 16(a), a director, executive officer or 10%
stockholder who is a trustee and has a pecuniary interest (such interest
includes situations where a member of the trustee's immediate family is a
beneficiary of the trust) in any holding or transaction in the Company's
securities held by the trust, must report the holding or transaction on the
trustee's individual form. Securities and Exchange Commission regulations
require directors, executive officers, greater than 10% stockholders and
reporting trusts to furnish Duckwall with copies of all Section 16(a) reports
they file.

To Duckwall's knowledge, based solely upon review of the copies of such
reports furnished to Duckwall and written representations that no other
reports were required, during the 1998 Fiscal Year all Section 16(a) filing
requirements applicable to its directors, executive officers, greater than
10% stockholders and reporting trusts were complied with, except that 1997
Fiscal Year annual statements of change in beneficial ownership on Form 5,
reporting the grant of stock options, were filed late by Mr. Shank,
Mr. Schoenbeck, Mr. Fennema, and Mr. Bogan.

OTHER BUSINESS OF THE MEETING

The Board of Directors is not aware of, and does not intend to present,
any matter for action at the Annual Meeting other than those referred to in
this Proxy Statement. If, however, any other matter properly comes before
the Annual Meeting or any adjournment, it is intended that the holders of the
proxies solicited by the Board of Directors will vote on such matters in
their discretion in accordance with their best judgment.

ANNUAL REPORT

Duckwall's Annual Report to Stockholders, containing financial statements
for the year ended February 1, 1998, is being mailed with this Proxy Statement
to all stockholders entitled to vote at the Annual Meeting. Such Annual
Report is not to be regarded as proxy solicitation material.

STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING

It is presently anticipated that the 1999 Annual Meeting of Stockholders
will be held on May 27, 1999. Stockholder proposals intended for inclusion in
the proxy statement for the 1999 Annual Meeting of Stockholders must be
received at the Company's offices, located at 401 Cottage Street, Abilene,
Kansas, 67410-0129, within a reasonable time before the solicitation with
respect to the meeting is made, but in no event later than December 31, 1998.
Such proposals must also comply with the other requirements of the proxy
solicitation rules of the Securities and Exchange Commission. Stockholder
proposals should be addressed to the attention of the Secretary of Duckwall.

By Order of the Board of Directors

/s/ CHARLES E. BOGAN

Charles E. Bogan
Secretary

May 1, 1998
Abilene, Kansas