Charles & Colvard Reports 27% Decline in Net Sales for Fiscal Year Ending June 30, 2024

Charles & Colvard, Ltd. reported a significant decline in financial performance for the fiscal year ending June 30, 2024, with net sales of $21.96 million, down 27% from $29.95 million in the previous year. The company experienced losses of $14.36 million, compared to a loss of $19.58 million in the prior fiscal year. The decrease in revenue was attributed to weakened consumer demand for finished jewelry and loose jewels, driven by ongoing economic uncertainties, inflation, and increased competition in the jewelry market.

In terms of operational changes, the company has made strategic adjustments, including a shift towards a more direct-to-consumer business model and the launch of new product lines. Notably, the company introduced the Caydia® brand of lab-grown diamonds and expanded its offerings of moissanite jewelry. Additionally, Charles & Colvard opened its first Signature Showroom in October 2022, enhancing its retail presence. The company also launched charlesandcolvarddirect.com, a direct-to-wholesaler online sales portal, to reach a broader customer base.

The company faced operational challenges, including a cybersecurity incident in June 2023 that temporarily disrupted its IT network. However, the company reported no evidence of compromised customer data and managed to restore operations without significant long-term impacts. Financially, the company incurred approximately $300,000 in costs related to the incident, which were largely covered by insurance.

As of June 30, 2024, Charles & Colvard had a total inventory of $24.93 million, a decrease from $26.75 million the previous year. The company’s cash and cash equivalents also fell to $4.14 million from $10.45 million, raising concerns about liquidity and the ability to continue operations. The company has acknowledged substantial doubt about its ability to continue as a going concern, primarily due to ongoing losses and cash flow challenges.

Looking ahead, Charles & Colvard aims to stabilize operations and enhance efficiency while navigating a challenging economic landscape. The company plans to focus on cost management, product differentiation, and expanding its online presence to adapt to changing consumer preferences. Despite the current challenges, management remains optimistic about the potential for growth in the lab-grown diamond and moissanite markets, which are increasingly appealing to consumers seeking ethical and affordable alternatives to traditional gemstones.