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RAPAPORT... DGSE Companies Inc. reported that revenue plunged 32 percent year on year to $19.9 million in the first quarter that ended on March 31 due to significant decreases in both bullion and scrap sales as a result of weak gold prices. However, gross profit margin rose to 22.3 percent compared with 18.1 percent in large part due to an increase in high-margin jewelry sales, coupled with improved margins on bullion and scrap sales. DGSE recorded a loss of $523,000 or 4 cents per share compared with a profit of $300,000 or 2 cents per share one year earlier.
“Through our actions in the first part of 2014, we have laid a foundation for consistent profitability going forward by eliminating ongoing losses and lowering our overall cost structure,” said Brett Burford, DGSE’s chief financial officer. “We are optimistic about moving forward with fewer distractions and the ability to focus our efforts on a proven business model which has worked well, in good markets and bad, for years.” During the quarter, DGSE closed six Southern Bullion coin and jewelry division locations. The company has since completed the plan closure of 23 stores since February. The company also executed a one-year extension of its loan agreement with NTR Metals LLC, extending the maturity date to August 1, 2015.
Dusty Clem, DGSE's chairman of the board and CEO, said, “In light of existing market realities, we took decisive action during the quarter to mitigate our losses in order to return the company’s continuing operations to profitability. Collectively, the 23 Southern Bullion locations we closed this year contributed approximately $1.9 million to our net losses for 2013. These closures allow us to return all of our attention to the 12 locations that can support the full exchange model, which DGSE has successfully operated for decades. Moving forward, we continue to focus on building a more robust ecommerce platform and bolstering revenues in the higher-margin segments of our business, including our high-end jewelry, diamonds and watches.”
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