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Charles and Colvard 4Q sales up 3 percent

February 15, 2007

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Morrisville, N.C.—Charles and Colvard, manufacturers of moissanite, announced net sales for the fourth quarter reached $12.1 million, up 3 percent from $11.7 million for the same period in 2005.

Gross profits were up 11 percent to $9.3 million from $8.4 million in the fourth quarter of 2005. As a result of improved production costs, gross profit margins increased 500 basis points to 76.9 percent from 71.9 percent.

Operating income for the three months ended Dec. 31, 2006, reached $1.9 million, up 39 percent over 2005. Net income was up 42 percent to $1.3 million.

"Our sales increase was attributable to the additional number of doors that sold moissanite jewelry in the fourth quarter," Charles and Colvard President and Chief Executive Officer Bob Thomas said in a statement.

He added that overall sell-through levels may have been negatively impacted because some of the company's leading retail customers increased prices of moissanite products, which led to a slower number of product re-orders.

"We continue to work aggressively to add new points of distribution and believe these efforts will result in continued improvement to our business. We added approximately 270 doors in the fourth quarter of 2006 primarily from Kohl's, Zales Canada and Sears," he said.

In addition, Thomas said Charles and Colvard is working with existing clients (both retailers and moissanite-jewelry suppliers) to offer more selection at appropriate price points. The company is also pursuing sales opportunities with home-shopping television, noting that HSN has agreed to increase the total number of programming hours dedicated to moissanite sales to 25 hours in fiscal 2007, up from 9 hours.

Thomas also said the company continues to work on raising the profile of moissanite, and that a recent third-party study indicated awareness among U.S.-based consumers was up from 7.8 percent at the end of 2005 to 10.5 percent at the end of 2006.

"As we look to 2007, we expect to continue to make progress with current customers and to further expand our customer base," he concluded. "We will continue to work ambitiously to build consumer awareness and demand for moissanite jewelry to drive sales within our multiple channels of distribution."
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Business | Company Activities and Information | Corporate Reporting | Earnings and Loss Announcements | Earnings and Losses

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