Charles & Colvard first quarter sales dropped 29 percent

Charles & Colvard, Ltd., the sole producer of moissanite, said Tuesday that first quarter sales totaled $8 million, a 29 percent drop in sales when compared to the same period in 1995. Net income for the quarter fell to $1.5 million, from $2 million during the same period of the previous year.

Bob Thomas, president and ceo of the Morrisville-based company, blamed the profit decline on weaker sales following the merger of Federated and May department stores.

“Lower sales are the result of substantially lower orders from K&G Creations during the first quarter of 2006 when compared with the first quarter of 2005 when K&G Creations placed orders for its initial rollout of moissanite jewelry for Finlay,” Thomas said. “As a result of the Federated-May Company merger, Finlay’s leased department store retail counters and distribution of moissanite jewelry supplied by K&G Creations at Finlay contracted by approximately 20 percent in the fourth quarter of 2005.”

He also said that orders from their others customers during the first quarter of 2006 “showed continued growth,” he said.

Sales in the U.S., which represent 88 percent of total sales for the company, were down 33% for the quarter (31 percent in carats), which the company again attributed to K&G Creations decline. International sales for the first quarter rose 38 percent (37 percent in carats) primarily due to increased sales to United Kingdom, Indonesia, and India, which partially offset by lower sales to Thailand. Total company shipments of 47,000 carats for the first quarter were 28 percent below the 65,000 carats in the same period of 2005.

The company also said that it will no longer provide quarterly or annual sales guidance.

“We believe that it is better to measure our progress as we execute our strategy to build our business over the long-term, instead of focusing on the establishment and attainment of short-term sales guidance,” Thomas said.