Dallas - DGSE Companies Inc. has closed all locations in its Southern Bullion Coin and Jewelry division. As previously disclosed, six Southern Bullion locations were closed in February, and 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. Management believes that closing these locations will result in profitable continuing operations on an annualized basis.
DSGE 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.
“Closing Southern Bullion was a necessary decision, as these locations represented approximately 20% of our revenue, but approximately 70% of our operating loss,” said Dusty Clem, chairman and CEO 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.”