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DGSE's Loss Increases to $3M, Revenue -15% to $109M

Growth Prospects Improve for Diamonds, High-End Jewelry

Mar 31, 2014 1:37 PM   By Jeff Miller
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RAPAPORT... DGSE Companies Inc. reported that its  revenue fell 15 percent year on year to  $108.5 million for the fiscal year that ended on December 31. Gross profit margin dropped to 18.2 percent from 19 percent.  DGSE recorded a net loss of $2.7 million, or 22 cents per share, compared with a net loss of $2.3 million, or 19 cents per share, in 2012.

James Vierling, DGSE's CEO, said, “We continue to navigate a challenging environment, but recent encouraging movement in the price of gold suggests that improvements may be on the horizon. We are focused on stabilizing the business to achieve profitability at current revenue levels while building incremental revenue streams."

He added that DGSE closed six underperforming retail locations this past year to further reduce costs. DGSE is focused on building its ecommerce function and allocating resources toward revenue streams with the highest profit potential such as high-end jewelry, diamonds and watches. "With the costs associated with the legacy issues now largely behind us, and with a more efficient expense structure, we are positioned for an improved 2014,” Vierling said.

Dramatically lower gold prices had a negative impact on DGSE's  bullion and scrap categories in the fourth quarter; however, jewelry sales increased as the company drove its marketing efforts higher during the Christmas season.

“Our efforts to focus on jewelry and watches during the holiday season paid dividends,” added Vierling. “Historically, customers selling pre-owned or 'scrap' gold created significant retail traffic at our retail stores and there was a likelihood of these customers spending that cash to purchase something else in our stores. Lower scrap prices have depressed this important portion of our business. However, we were encouraged by retail traffic during the fourth quarter, though lower scrap and bullion sales continued to depress our results. More recent positive movements in gold prices, thus far in 2014, provide some optimism of better days ahead, but we are focused on rationalizing expenses to operate successfully at current revenue levels, which should create stronger profitability as the industry normalizes.”

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Tags: DGSE, diamonds, Jeff Miller, Jewelry, prices, resale, scrap gold
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