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RAPAPORT... DGSE Companies Inc. reported that revenue dropped 26.3 percent year on year to $17.52 million in the second quarter that ended on June 30. Costs of goods sold were reduced by 30.6 percent to $14.51 million. Losses from discontinued operations surged to $3.91 million and DGSE's quarterly loss jumped fourfold to $4.45 million during the period. DGSE, which wholesales and retails jewelry, diamonds, fine watches, precious metal bullion and rare coin products, closed its Southern Bullion Coin and Jewelry division this year, which accounted for the high rate of discontinued operations. In terms of retail activity, the company noted a significant decrease in both bullion and scrap sales during the quarter, a result of the drop in gold prices; however, this was partially offset by strong growth in jewelry sales. Furthermore, gross profit improved to 17.2 percent of sales compared with 12.1 percent one year ago, as high-margin jewelry sales increased and low margin bullion sales fell, according to the company. During the period, DGSE added two new independent directors to the board: Bruce Quinnell and Dennis McGill. Dusty Clem, the chairman of the board, said, “While our earnings are still below my expectations, DGSE is starting to see the benefits of expanding our focus on high-margin jewelry, diamond and watch sales. This is reflected in the fact that our gross profit actually increased this quarter, despite the fact that our top-line revenue was down almost 26 percent compared to 2013, due to substantially lower gold prices. Our success in focusing on these high-margin segments should show even more benefits as we move into the holiday season.”
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