Lazare Kaplan International Inc. reported that first quarter net sales fell 23.7 percent to $78.3 million, year-over-year, primarily because of a substantial drop in rough diamond sales.

Polished diamond revenues for the three months ended Aug. 31 increased 20.6 percent to $40.9 million, year-over-year, the diamond company said Tuesday. Rough diamond sales for the period decreased 45.5 percent to $37.4 million, year-over-year.

“The global financial crisis has grown very serious and will inevitably affect the diamond and jewelry market,” said Leon Tempelsman, president and chief executive officer. “Demand is bound to decline during the upcoming selling season as discretionary spending falls.”

Gross margin on net polished sales for the quarter was 12.8 percent, compared to 12 percent for the prior year period. Rough diamond gross margin for the period was 3.2 percent, compared to 6.2 percent in the comparable prior year period. Overall gross margin for the period was 8.2 percent compared to 8.1 percent for the prior year period.

Net income for the first quarter was $900,000, compared to $400,000 in the comparable prior year period.

JCK