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Charles & Colvard's Loss Widens to $13M in 2014

Mar 13, 2015 3:13 PM   By Jeff Miller
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RAPAPORT.. Charles & Colvard Ltd. reported that sales fell 10 percent year on year to $25.6 million in 2014.  Revenue across  U.S. operations rose 7 percent to $22.1 million, while international sales plummeted 55 percent to  $3.5 million. Charles & Colvard recorded a loss of $13.1 million compared with a loss of $1.3 million one year earlier. 

Loose jewel sales, including that of Forever Brilliant® moissanite, fell 30 percent to  $12.9 million; however, sales of finished jewelry jumped 27 percent to  $12.7 million. Wholesale business revenue fell 19 percent to  $20.8 million and accounted for 81 percent of company sales, down from 90 percent of total revenue in 2013.  Charles & Colvard's direct-to-consumer ecommerce business at Moissanite.com generated revenue of $3.4 million, an increase of 36 percent compared with 2013.

Despite weak sales results,  the company closed its fiscal year without any outstanding debt.  Inventory, including long-term and consigned inventory, totaled $38.9 million as of December 31, which was down from $42.4 million as of December 31, 2013.
 
Randy N. McCullough, the CEO of Charles & Colvard, told investors that 2014 was a transitional year for the company.  “While we were challenged by difficult economic conditions in some of our international markets, we had strong growth in our U.S. direct-to-consumer businesses. This year also showed positive cash flow from operations, compared with negative cash flow in 2013. In addition, we strengthened our balance sheet by lowering our inventory and improving our cash position.

“Domestic sales improved due to the ongoing execution of our growth strategies, including our direct-to-consumer channels and continued growth of our wholesale customers’ moissanite finished jewelry lines with styles that include both Forever Brilliant® and Classic Moissanite™. During this transitional year, we made the strategic decision to de-emphasize international markets and instead allocate our resources toward further strengthening our domestic sales.

"Our wholesale segment sales are trending for first-quarter 2015 to be consistent with the first quarter of 2014, although much of that segment’s sales historically have been recorded toward the end of the quarter. We are very encouraged about the significant increases, albeit from a small base, in sales in 2014 over 2013 through our direct-to-consumer businesses, Lulu Avenue® and Moissanite.com. We are just beginning to realize the long-anticipated benefits from the investments we have made in these segments and, although the first two months of 2015 are no guarantee of future success, we continue to see both of these segments post strong sales increases through the first two months of 2015 compared to the first two months of 2014,” McCullough said. 

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Tags: charles, colvard, gemstone, Jeff Miller, Jewelry, moissanite, retail, sales
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