Charles and Covard, the manufacturer of moissanite, announced that sales for the first quarter were $2.5 million, down 27% from $3.4 million in the first quarter of 2008.
In addition, the first quarter of 2009 had an operating loss of $1.0 million, which was a 10% improvement over the operating loss of $1.1 million in the 2008 first quarter. The reduced loss came from lower operating expenses, stemming from tight cost control and management’s in-depth review of sales and marketing programs.
The company noted: “We received no significant orders during the first quarter of 2009 from our manufacturing customers to support in-case business at the largest retailers selling moissanite jewelry. Further, we do not expect significant orders from our manufacturing customers to service these larger retailers in the near term. As retailers evaluate their business, we are at risk that some retailers may not be able to achieve acceptable financial performance and may choose not to continue selling moissanite jewelry.”
The company also reported:
– The company generated $0.2 million in cash in the first quarter of 2009 as cost controls and cash collections helped to offset the net loss. It had $5.8 million in cash at the end of the quarter.
– Total inventory, including long-term and consignment inventory, was $43.3 million at the end of the quarter up from $43.0 million at the end of 2008.
– The average selling price per carat decreased 13% over the same period last year primarily due to a special pricing promotion offered by customers during the first quarter of 2009.
Richard A. Bird, Chief Executive Officer of Charles & Colvard, commented, “We have made significant progress in addressing some of the Company’s legacy cost issues. We reduced the Company’s spending for sales and marketing related programs that did not generate expected sales or consumer demand. We have also tested sales initiatives, with limited results, as we work to reduce our finished goods inventory. However, the consumer retail jewelry market has become increasingly difficult with very soft demand. We are experiencing sharply reduced sales and sales prospects, particularly with some of our larger existing customers and primarily due to higher than desired inventories of moissanite jewelry at retailers, but also due to bankruptcies and financial challenges facing retailers. These factors are severely constraining our sales opportunities.”