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Charles & Colvard's 1Q Revenue +40% Loss at $376K

Sales of Moissanite -4%, Jewelry +319%

Apr 27, 2012 10:24 AM   By Jeff Miller
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RAPAPORT... Charles & Colvard reported that its  revenue jumped 40 percent year on year to $4.18 million, while total costs surged 53 percent to $4.9 million for the first quarter that ended on March 31. Due to a $720,000 investment in the company's consumer-direct selling model as well as higher expenses, Charles & Colvard reported a loss of $375,846, which was up from a loss of $236,388 one year ago.

Still, Charles & Colvard held no long-term debt as of March 31 and cash on hand amounted to $10.6 million. charles colvard

Loose moissanite sales decreased 4 percent year on year to approximately $2.5 million in the first quarter, primarily due to the timing of restocking orders from a number of the company's existing wholesale customers. But finished jewelry sales, an important part of the company's growth strategy, increased 319 percent to approximately $1.7 million.

"I'm very pleased with a $500,000 gross margin increase for the first quarter of 2012 over the first-quarter of 2011," said Randy N. McCullough, the company's chief executive. "This demonstrates that we're on the right track toward building profitable long-term sustainable revenue.''

McCullough added that he believes the company's investments in Lulu Avenue and, while unfavorably impacting the bottom line in the short-term,  have laid the groundwork to drive substantial revenue and profits in the near future.

''Our Lulu Avenue direct sales front-end and back-office system went live earlier this month, which we believe is a significant catalyst in recruiting and supporting independent sales representatives as we grow the business,'' he explained. '' Additionally, we had over 120 people turn out at our launch event last week here in Raleigh to learn more about Lulu Avenue. We continue to anticipate that the third quarter of 2012 will begin the home party build with fourth quarter hitting a stride to produce meaningful revenue.''

Charles & Colvard's new Forever Brilliant enhanced gemstone is gaining traction across the jewelry industry and the company will unveil its new Forever Brilliant campaign at the JCK Vegas show, McCullough said. ''Our campaign includes a 12-page catalog designed to highlight the features and benefits of the Forever Brilliant gemstone, with an emphasis on the improvement of up to four color grades whiter. Five of our larger distributors are participating in the catalog that will be inserted into over 40,000 JCK show magazines targeting jewelry trade professionals at the show. In addition, Charles & Colvard will have banners throughout the show and an informational booth.''

McCullough confirmed that the finished jewelry business will continue to grow as Charles & Colvard have reallocated  resources to enhance this aspect of the business, including implementing a new jewelry specific ERP system and putting a seasoned management team in place. ''We also see significant opportunities to grow our wholesale loose gemstone business with the increased consumer awareness we expect from exposure we receive from home shopping networks, our consumer-direct sales efforts, and exciting new product offerings like our Forever Brilliant enhanced gemstone.''

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Tags: charles, colvard, forever brilliant, JCK, Jeff Miller, moissanite, results, show
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