HOTJ Q3 Sales Slide 59% to $4.9 Million

House of Taylor Jewelry (HOTJ) reported a third quarter net sales decline of 59 percent year-over-year, from $12 million to $4.9 million, for the period ended September 30. The decrease in sales, the company explained, resulted from a $6.4 million drop in sales of loose diamonds as the company focused on sales of its branded jewelry.  

Net sales for the first nine months of 2007 totaled $14.2 million, a drop of 10.4 percent from the $15.9 million of 2006. It was noted that a sales decline in loose diamonds and in the Elizabeth and Kathy Ireland branded products was partially offset by a slight sales increase in the House of Taylor Jewelry brand.

It was also noted that in 2006, loose diamonds were sold to increase market penetration and brand awareness. Additionally, the firm’s available inventory was affected in the third quarter because its $30 million credit facility was not closed until October 12. This contributed to the decline in sales of its branded products, which accounted for the balance of the year-over-year sales decline.

HOTJ’s third quarter gross profit was $395,000, a 59 percent decline from the $959,000 realized in 2006. However, gross profit as a percentage of sales increased slightly to 8.1 percent of consolidated net sales in 2007, from 8.0 percent in 2006.

Year-to-date gross profit was $1.7 million, up 45.5 percent from $1.1 million in 2006. Gross profit as a percentage of sales increased from 7.2 percent to 11.7 percent.

Third quarter 2007 net loss totaled $2.4 million, compared to $3.1 million in the same period of 2006. Year-to-date net loss was $5.4 million, down slightly from the $5.5 million in 2006.

"While our financial results are not currently in line with our long-term objectives, we are extremely pleased to have recently achieved a key objective for the third quarter in securing a new credit facility and completing our equity offering which closed on October 12, 2007,” commented Jack Abramov, president and CEO.