Charles & Colvard reports record Q4 sales

22 Feb '08

4 min read

Bob Thomas, Chairman and Chief Executive Officer commented, "We are disappointed with our sales and earnings results in the fourth quarter as the retail environment remains challenging and we face unique issues in our distribution model. With the uncertainty in the retail economic environment retailers are managing their inventory more conservatively. We are committed to developing a business model that allows customers access to moissanite jewelry and that enables us to resume growth in our business over the long-term.”

“As we stated in mid-January, we engaged Kanter International to evaluate our current business model and to make a recommendation to drive improved sales performance. We look forward to sharing these findings in the second quarter."

Charles & Colvard's domestic sales in the fourth quarter decreased 40% to $6.6 million compared to the fourth quarter of 2006. International sales for the fourth quarter increased 20% to $1.3 million, with strong results from all key geographic regions. Total shipments of 43,800 carats for the current period were 37% less than the 69,700 carats shipped in the same period of 2006. Shipments of carats in the U.S. decreased 43% while international shipments of carats increased 25%.

At December 31, 2007 total inventory (including consignment) increased by $323,000 compared to the end of the third quarter of 2007 and by $8.5 million compared to December 31, 2006. The Company's raw material inventories of silicon carbide crystals are purchased under exclusive supply agreements with a limited number of suppliers.

Because the supply agreements restrict the sale of these crystals to only the Company, the suppliers negotiate minimum purchase commitments with the Company that may result in periodic levels of raw and in-process inventories that are higher than the Company might otherwise maintain. As previously announced, the Company has reduced its raw material purchase commitments for 2008.

Share and per share data for all periods presented reflect the effect of the one share for every four shares owned stock split, effected in the form of a 25% stock dividend, distributed on January 30, 2006.

Charles & Colvard Ltd

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