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Charles & Colvard 1Q Sales +4% But Reports Loss

Apr 29, 2011 12:47 PM   By Jeff Miller
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RAPAPORT... Charles & Colvard reported first quarter sales of $2.98 million, a year on year increase of 4 percent for three months that ended March 31, 2011. Still, the creator of moissanite reported a net loss of $236,388 compared with profit of $298,385 one year earlier.  Charles & Colvard held no long-term debt and a positive cash flow of $491,000 as of March 31.

Loose moissanite gemstone sales were relatively flat in first quarter of 2011, but finished jewelry sales increased 130 percent year on year to $410,000.

Charles & Colvard concluded that its  net loss was primarily a result of higher manufacturing overhead and operating expenses incurred during the quarter to invest in new business initiatives to support future revenue streams.

Total inventory, including long-term and consignment inventory, was approximately $36.8 million as of March 31, which was down from  $37.4 million the previous quarter.

"Our first quarter results reflect our focus upon establishing customer relationships that can increase future sales of finished jewelry, combined with the fact that January and February are seasonally the slowest months of the year for wholesale jewelry sales," stated Randy N. McCullough, chief executive  of Charles & Colvard.

McCullough explained that usually the  majority of quarterly revenue has been derived from the sale of loose moissanite to distributors and jewelry manufacturers. This past year, however, Charles & Colvard made a strategic decision to increase jewelry manufacturing activities and finished jewelry sales as a percentage of the company's total revenues. "While gross profit margins on finished jewelry, due to labor and overhead, are generally lower than margins on loose gemstones, we believe the success of this new business initiative will increase the total revenue and gross profit dollars that Charles & Colvard generates from the ultimate sale of moissanite jewelry to the consumer," he said.

"I am pleased to report that management's efforts to broaden our customer base and expand marketing channel relationships have been successful in recent months, and we believe this will be evident in our results for the year ending December 31, 2011,"  McCullough added.


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Tags: charles, colvard, expansion, financial, finished, Jeff Miller, Jewelry, moissanite, results
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