DGSE Companies Closes Remaining Southern Bullion Locations
April 24 2014 - 4:01PM
Business Wire
Continuing Operations Expected to be
Profitable, Excluding Non-Recurring Charges
DGSE Companies, Inc. (NYSE MKT: DGSE), a leading wholesaler and
retailer of jewelry, diamonds, fine watches, and precious metal
bullion and rare coin products, today announced that it has closed
all locations in its Southern Bullion Coin and Jewelry division
("Southern Bullion"). As previously disclosed, six Southern Bullion
locations were closed in February. Subsequently, four additional
locations were closed in early April, and the final 13 locations
were closed on or about April 21, 2014. Following these actions,
DGSE Companies will continue to operate 12 retail locations,
including nine Dallas Gold & Silver Exchange locations in
Texas, one Bullion Express location in Illinois, and two Charleston
Gold & Diamond Exchange locations in South Carolina along with
Fairchild International, the Company’s wholesale watch
division.
The Southern Bullion division will be reclassified as
discontinued operations. During 2013, these discontinued operations
generated a net loss of approximately $1.9 million. The remaining
12 locations, inclusive of all ongoing corporate overhead and
public company costs, generated a net loss of approximately $0.8
million in 2013, and, excluding $1.7 million in non-recurring
charges, these remaining 12 locations generated a profit of
approximately $0.9 million in 2013. Management believes that
closing these locations will result in profitable continuing
operations on an annualized basis.
“Closing Southern Bullion was a necessary decision, as these
locations represented approximately 20% of our revenue, but
approximately 70% of our operating loss,” commented Dusty Clem,
Chairman and Chief Executive Officer of DGSE Companies. “The
significant change in the precious metal markets, including a 30%
decline in the spot price of gold, had a disproportionately
negative impact on the customer traffic, transactional volume and
ultimately the profitability of the Southern Bullion division.
These stores were unable to make the transition from gold-buying
shops to the full exchange model that characterizes our successful
operations in Dallas, Charleston and Chicago.”
Mr. Clem continued, “By eliminating ongoing losses, we expect to
return the Company to profitability and create a stable footing for
sustainable growth. We also believe this sets the stage for
potential strategic opportunities in the future. While this
decision was difficult because it negatively affected a large part
of our corporate family, the result is clearly positive for our
shareholders. I have never been more confident about the future
potential for DGSE than I am today.”
The Company expects to report approximately $3.7 million in 2014
in non-recurring charges related to these closures. This includes
approximately $2.9 million in expected write-offs related to the
Southern Bullion trade name, approximately $400,000 in expected
fixed asset write-downs, and approximately $500,000 in expected
lease termination expenses, severance payments and other related
costs. The inventory from the Southern Bullion locations will be
utilized throughout the Company’s remaining 12 locations.
About DGSE Companies
DGSE Companies, Inc. wholesales and retails jewelry, diamonds,
fine watches, and precious metal bullion and rare coin products
through its Bullion Express, Charleston Gold & Diamond
Exchange, and Dallas Gold & Silver Exchange operations. DGSE
also owns Fairchild International, Inc., one of the largest vintage
watch wholesalers in the country. In addition to its retail
facilities in Illinois, South Carolina, and Texas, the Company
operates internet websites which can be accessed at
www.bullionexpress.com, www.dgse.com, and www.cgdeinc.com.
Real-time price quotations and real-time order execution in
precious metals are provided on another DGSE website at
www.USBullionExchange.com. Wholesale customers can access the full
vintage watch inventory through the restricted site at
www.FairchildWatches.com. The Company is headquartered in Dallas,
Texas and its common stock trades on the NYSE MKT exchange under
the symbol "DGSE."
This press release includes statements which may constitute
"forward-looking" statements, usually containing the words
"believe," "estimate," "project," "expect" or similar expressions.
These statements are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements inherently involve risks and
uncertainties that could cause actual results to differ materially
from the forward-looking statements. Factors that would cause or
contribute to such differences include, but are not limited to,
continued acceptance of the Company's products and services in the
marketplace, competitive factors, dependence upon third-party
vendors, and other risks detailed in the Company's periodic report
filings with the Securities and Exchange Commission. By making
these forward-looking statements, the Company undertakes no
obligation to update these statements for revisions or changes
after the date of this release.
DGSE Companies, Inc.Dusty Clem, 972-587-4021Chairman, President
and CEOinvestorrelations@dgse.comorHayden IRBrett Maas,
646-536-7331Managing Partnerbrett@haydenir.com
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