Charles & Colvard Reports 41% Decline in Q2 Fiscal 2025 Net Sales

Charles & Colvard, Ltd. reported a significant decline in financial performance for the second quarter of fiscal year 2025, with net sales of $4.63 million for the three months ended December 31, 2024, down 41% from $7.91 million in the same period last year. For the six months ended December 31, 2024, net sales totaled $7.86 million, a decrease of 39% compared to $12.86 million in the prior year. The company attributed this decline to weakening consumer confidence amid economic uncertainties, inflation, and rising interest rates, which adversely affected demand for its moissanite jewels and finished jewelry.

The company's total costs and expenses for the second quarter were $7.17 million, down from $10.84 million in the same quarter of the previous year. This reduction was primarily driven by lower sales and marketing expenses, which decreased by 35% to $2.77 million, and general and administrative expenses, which fell by 15% to $1.27 million. Despite these reductions, Charles & Colvard reported a net loss of $2.54 million for the quarter, slightly improved from a loss of $2.87 million in the same period last year. The loss per share for the quarter was $(0.81), compared to $(0.94) in the prior year.

Operationally, the company experienced a decrease in customer engagement, with finished jewelry sales representing 92% of total consolidated net sales for the three months ended December 31, 2024, down from 93% in the previous year. Sales of loose jewels also declined, accounting for 8% of total sales, compared to 7% and 9% in the same periods of the prior year. The U.S. market accounted for 100% of total consolidated net sales during the quarter, reflecting a shift in focus as international sales dropped to zero due to decreased demand.

In terms of strategic developments, Charles & Colvard has been actively managing its inventory and cash flow. As of December 31, 2024, the company reported total assets of $36.63 million, down from $40.98 million at the end of the previous fiscal year. The company’s cash and cash equivalents decreased to $1.52 million from $4.14 million, while accounts receivable increased to $1.26 million from $0.84 million. The company is also facing challenges related to a recent arbitration settlement with Wolfspeed, which requires a total payment of $4.77 million, raising concerns about its ability to continue as a going concern.

Looking ahead, Charles & Colvard is focused on addressing its liquidity challenges and exploring financing options to support its operations. The company is implementing cost-saving measures and evaluating inventory liquidation strategies to improve cash flow. However, there remains substantial doubt about its ability to sustain operations over the next twelve months without additional financing. The management is committed to enhancing customer relationships and adapting to market conditions to drive future growth.