Charles & Colvard, Ltd. (CTHR) saw its loss narrow to $0.56 million, or $0.03 a share for the quarter ended Mar. 31, 2017. In the previous year period, the company reported a loss of $1.31 million, or $0.06 a share. Revenue during the quarter plunged 50.45 percent to $5.65 million from $11.39 million in the previous year period. Gross margin for the quarter expanded 2338 basis points over the previous year period to 42.95 percent. Operating margin for the quarter stood at negative 9.66 percent as compared to a negative 6.53 percent for the previous year period.
Operating loss for the quarter was $0.55 million, compared with an operating loss of $0.74 million in the previous year period.
Suzanne Miglucci, president and chief executive officer of Charles & Colvard, said, "During the first quarter, we began to see positive momentum as the outcomes of our re-branding effort took hold. Our online channels, including charlesandcolvard.com, generated a 5% increase in net sales over the same period in 2016. We believe this growth was fueled by our ongoing digital marketing efforts, driving strong Valentine’s Day sales and overall increased traffic to our many e-commerce outlets. We remain on track with our strategic programs including the expansion of our direct-to-consumer business, continued growth within our traditional channels, and our move up-market with our Forever One™ gemstone leading the charge. The ongoing rollout of Forever One™, the world’s first colorless moissanite jewel, has been met with great enthusiasm from channel partners and consumers, and now represents 86% of our sales."
Operating cash flow turns negative
Charles & Colvard, Ltd. has spent $0.60 million cash to meet operating activities during the quarter as against cash inflow of $5.98 million in the last year period. The company has spent $0.20 million cash to meet investing activities during the quarter as against cash inflow of $0.33 million in the last year period.
Cash and cash equivalents stood at $6.63 million as on Mar. 31, 2017, down 42.75 percent or $4.95 million from $11.58 million on Mar. 31, 2016.
Working capital drops significantly
Charles & Colvard, Ltd. has witnessed a decline in the working capital over the last year. It stood at $14.37 million as at Mar. 31, 2017, down 35.16 percent or $7.79 million from $22.16 million on Mar. 31, 2016. Current ratio was at 4.11 as on Mar. 31, 2017, down from 7.83 on Mar. 31, 2016.
Cash conversion cycle (CCC) has decreased to 78 days for the quarter from 104 days for the last year period. Days sales outstanding went up to 49 days for the quarter compared with 26 days for the same period last year.
Days inventory outstanding has increased to 133 days for the quarter compared with 105 days for the previous year period. At the same time, days payable outstanding went up to 103 days for the quarter from 27 for the same period last year.
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