Charles & Colvard Sales Rise in Fourth Quarter

Charles & Colvard fourth quarter net sales increased 3 percent to $12.1 million from $11.7 million in the fourth quarter of 2005. Gross profit increased 11 percent to $9.3 million.

The moissanite maker’s net income for the fourth quarter 2006 increased 42 percent to $1.3 million compared to net income of $.9 million in the comparable period of 2005. A recent study found that U.S. consumer awareness to moissanite increased from 7.8 percent at the end of 2005 to 10.5 percent at the end of 2006.

CEO Bob Thomas attributed the increase in sales to the additional number of stores that sold moissanite jewelry. “We added approximately 270 doors in the fourth quarter of 2006 primarily from Kohl’s, Zales Canada, and Sears,” he said. The company plans to add new points of distribution.

However, he said sales were hurt by increased prices of moissanite products at some of the department store chains and mall jewelry retailers.

Thomas noted that HSN, home television shopping networks, has agreed to increase the total number of programming hours dedicated to moissanite sales to 25 hours in fiscal 2007 compared to 9 in 2006.

Charles & Colvard expects fiscal 2007 net sales to be in the range of $49 to $51 million with some modest revenue growth in the first half of the fiscal year, primarily in the second quarter. The company expects much stronger revenue growth in the second half of the fiscal year as retailers accelerate their rollout to prepare for the holiday selling season.

The company believes that gross profit margins will remain in the range of 65 percent to 75 percent, and that full year marketing and sales expense will be in the range of approximately 36 percent to 41 percent of total net sales.