Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On September 16, 2009, the Compensation Committee of Duckwall-ALCO Stores, Inc., (the "Company") met and approved (i) an increase of the base salary of Tom L. Canfield, a Senior Vice President ("Canfield") and (ii) the granting of 10,000 stock options under the 2003 Company Incentive Stock Option Plan. Also on September 16, 2009, the Company and Canfield executed an Incentive Stock Option Agreement, incorporated into this Item 5.02 by reference, related to the grant of the aforementioned options.

Effective October 1, 2009 Canfield's base salary shall be increased to $205,000.00. All other terms and conditions of his current Employment Agreement with the Company remain unchanged.

The aforementioned Incentive Stock Option Agreement for Canfield allows him to participate in the Company's Incentive Stock Option Plan dated May 22, 2003. Under the terms of this Agreement, Canfield is granted the right to buy 10,000 shares of the Company's common stock at a price equal to $17.89 per share, the price of the Company's stock as of the close of business September 16, 2009. The Grant Date of the options is September 16, 2009. The aforementioned options vest in four equal annual installments beginning September 16, 2010. The options shall expire five years from the Grant Date.

Item 7.01 Regulation FD Disclosure.

Attached as Exhibit 99.1, and incorporated into this Item 7.01 by reference, is an Incentive Stock Option Agreement executed on September 16, 2009, by the Company and Canfield.

Item 9.01. Exhibits.

(d) Exhibits

99.1 Incentive Stock Option Agreement dated September 16, 2009 between the Company and Canfield.

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