Charles & Colvard Ltd. (NASDAQ:CTHR), a North Carolina-based jewelry manufacturer, announced today that its net sales for the fiscal year ended June 30, 2024, fell by 25% to $22.5 million from $29.9 million the previous year. The company also anticipates a significant net loss for the year, although a precise estimate is not yet available pending the completion of its year-end financial statement review and audit process.
The decrease in net sales and expected net loss are consistent with the company's performance in the first three quarters of the fiscal year. The anticipated net loss for the fiscal year ended June 30, 2024, represents a notable shift from the $19.6 million net loss reported in the previous fiscal year. This change is partly attributed to the absence of income tax expense for the current fiscal year compared to the $5.9 million income tax expense from the previous year, due to a full valuation allowance against the company's deferred tax assets established in the fiscal year ended June 30, 2023.
Additionally, the company did not report an inventory write-down for the current fiscal year, unlike the $5.9 million write-down in the prior year, which was attributed to pricing pressures and constrained consumer demand.
The details provided are based on preliminary and unaudited figures prepared in accordance with U.S. generally accepted accounting principles. Charles & Colvard cautioned that these figures could be subject to adjustments upon the completion of the audit.
The information in this report is furnished and shall not be deemed "filed" for regulatory purposes, nor shall it be deemed incorporated by reference into any of the company's filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, as per General Instruction B.2 of the Current Report on Form 8-K.
In other recent news, Charles & Colvard Ltd. has reported a 21% decrease in its third-quarter revenue for fiscal year 2024, with net sales amounting to $5.3 million. Despite this, there was an improvement in the company's net loss, which was $3.6 million, a significant decrease from the previous year's $8.4 million loss.
In addition, the company announced a reverse stock split of its common stock at a one-for-ten ratio, reducing the number of outstanding shares from approximately 30.3 million to about 3 million.
In response to market pressures, top executives and directors at Charles & Colvard have agreed to substantial pay cuts. The company's President and CEO, Don O'Connell, along with CFO, Clint J. Pete, accepted a 10% reduction in their base salaries. Furthermore, the company's Board of Directors approved a 100% reduction in their fees, both measures to remain in effect until further notice by the Board.
In compliance news, Charles & Colvard has regained compliance with Nasdaq's minimum bid price requirement for continued listing. The company also launched For Everbright, a new gem brand, and a wholesale portal as part of strategic initiatives.
InvestingPro Insights
The recent financial performance of Charles & Colvard Ltd. (NASDAQ:CTHR) aligns with several InvestingPro metrics and tips. The company's revenue for the last twelve months as of Q3 2024 was $23.68 million, reflecting a significant decline of 29.69% compared to the previous period. This decline is consistent with the 25% drop in net sales reported for the fiscal year ended June 30, 2024.
InvestingPro Tips highlight that CTHR is "trading at a low Price / Book multiple" and "trading at a low revenue valuation multiple," which could be a result of the company's recent financial struggles. The tip indicating that CTHR is "quickly burning through cash" aligns with the anticipated significant net loss for the fiscal year.
On a positive note, CTHR "holds more cash than debt on its balance sheet," which may provide some financial flexibility as the company navigates its current challenges. However, the tip that "analysts do not anticipate the company will be profitable this year" corroborates the expected net loss mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for CTHR, providing a deeper understanding of the company's financial position and market performance.
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