Charles & Colvard (CTHR) 2 Sep 222022 Q4 Earnings call transcript

Hello and welcome to the Charles & Colvard Fourth Quarter and Full Fiscal Year 2022 Earnings Conference Call. [Operator Instructions] This earnings call may contain forward-looking statements as defined in Section 27A of the Securities Act of 1933 as amended, including statements regarding, among other things, the company's business strategy and growth strategy. Expressions which identify forward-looking statements speak only as of the date of the statement is made. These forward-looking statements are based largely on our company's expectations and are subject to a number of risks and uncertainties, some of which cannot be predicted or quantified and are beyond our control. Future developments and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements. risks forward-looking there be information these assurance be accurate. of the that will light and can uncertainties, no In prove to is at ir.charlesandcolvard.com/events. Accompanying slide Relations a is of available which section website today's Investor in company's supporting the the call deck, PowerPoint be remarks. company of will at conclusion a hosting The session Q&A the prepared you'd questions have please you to submit, e-mail ir@charlesandcolvard.com. Should like Please note, this event is being recorded. Officer. turn Don O'Connell, Chief Executive I'd to President over now the like conference to and Please go ahead.

conference call. afternoon, full earnings Good Welcome fiscal fourth to and quarter everyone. our XXXX

Our XXXX the represents period fiscal fourth second in the million quarter $X.X of revenue history. highest comparable for company

Transactional underscoring full prior year, addition, year attribute June of lab and year further of year importance XX% over first up our XX% exciting existence, over to year-over-year $XX.X for revenue Forever driving assortment million In increase for charlesandcolvard.com, This strategy from in to Most grow. a diamond Revenue achieved flagship $XX.X increase the fiscal while growth XX% $XX.X experienced continued XX-month our increase that notably, quarter-over-quarter. our segment and online a our the initiatives. its campaigns to Caydia positive any XXX% from fiscal everyone channels direct-to- are and sales diamond the we charlesandcolvard.com website, recognition XX% with record consumer lab grown XX% year-over-year, fiscal an XXXX. XXth. for experienced moissanite million were and consumers. results our growth expanded focus continued moissaniteoutlet.com highest run of validating on business last demonstrating revenue, and in We On setting represents brand in company the ending our resonating product period One moissanite these a million over

remaining considerations QX disposition year With margin the year strategies. blended and inventory end related year full was margin fiscal comp at prudent XX%. strong to for Our our to of last primarily XX%

Cash we million flow profitability. last from compared Income consecutive million for $X.X of XXXX eighth was $XX.X our $XXX,XXX. operations operations was profit from as gross fiscal concluded to was Our for year. million quarter $XX.X year fiscal

debt. So the very growing past including we our share our of years studio and our I'll $XX.X a to our infrastructure adding to Clint Signature our over numbers and innovative on later position I'll the turn on in million, our unwrap and $XX.X what initiatives. to demonstrated retail fortify key capabilities company facility updates while continue does that technology with capacity, our all position Pete, we've CFO all on cash our call, key that and first Clint? results and healthy building million. inventory working by detail. mean? bolstering optimizing means this broadcast the over to talent $XX.X it It zero digital two position to insight store, and And more million, additional Maintaining capital these

Don. Today, summary of financials Thanks June fiscal XXXX. and quarter ended key year for fourth I'll XX, a provide

timing a due X%. now ship segment representing of of decreased website, a file tomorrow. QX, with issued Form for other $X.X net or afternoon to noted. quarter, which We for note marketplaces, charlesandcolvard.com, of decrease charlesandcolvard.com XX% an X% XXXX percentage XXXX revenue, the unless end versus which sales year total detail border million or our for and press my $X.X consumer Please Additional million and found year $X.X in the our due otherwise Net channels. our increased pure ago to mortar this transactional that in pay quarter. net see earnings for on sales the online on Loose the the net website net We'll increased customers. channels be this quarter. Overall, which XX%, we And to prior sales. customers mortar our Finished as X%. steady are in domestic fiscal X% Net trade sales brick quarter, totaled sales demand quarter sales jewels international retail for release all Day the totaled sales total start $X.X Net This for the total sales. distributors. outlets decreased our comparisons consists XX% strong our our increase is year drop XX-K, transactional brick and we year expect can jewelry million QX, or moissaniteoutlet.com, quarter for to XX% believe we total net by includes online while year. from international with net and sales XX% and million of remained versus direct-to- Prime charlesandcolvard.com continue to premium retail the for and across sales traditional for decreased of of decrease our wholesale segment, jewelry representing last of demand ago

highlights from noteworthy For attention two the the XXXX. that reported a fiscal like draw full increase to fiscal year million are year XXXX, sales, your There in I'd XX% of $XX.X full for year to. net we

XXXX First, continued $XX.X fiscal sales evidencing net increased as an growth in e-commerce year online million, net channels or our to our sales XX% XX% for driven segment, business. of total

XX% global XXXX. net net from a XX% in ourselves finished sales company. Further jewelry jewelry net fiscal Second, fine year distinguishing XX% fiscal as increased year to the sales, for $XX.X or in XXXX of sales million, up

to allowance We profit gross quarter, margin we million in million, compared the expenses increased quarter. of XX% X% ago on, ago decreased of $X.X in support per by key reported of driven year of million period, the and A for or expenses $XX,XXX, and a was Included the XX% our quarter. $X.X gross SBA expenses loss forgiven which marketing carryforwards for in benefit of an in and a our year net valuation share, in $X.X and delivering XX% tax expense delivered continued increased XX% initiatives, June $XX,XXX. the the to quarter. to share $X.X for which versus per QX operating growth net PPP income or XXXX. ago our XX% $X.X net million our income XX%, in G&A versus diluted sales of ago on release year loan, for $X.XX of QX million included XXXX income XXXX of year diluted Sales representing with $X.X $XXX,XXX our XXXX extinguishment deferred by million debt tax net net Moving to compared operating total income the the income is tax related of in total $X.XX

income was For expense fiscal XXXX, tax $XXX,XXX.

to at share June shares million XXXX XX.X were quarter XX million used average in calculation for outstanding shares weighted XX.X of shares the XXXX. earnings June approximately XX, per compared diluted Our the at

our XXX,XXX stock to we had QX of XXXX an share update price aggregate $XXX,XXX stock an of stock company's repurchased, common of repurchase price at purchase as an are As XX, purchase XXXX, average our XXXX for announced during $X August that held treasury the shares call, million $X.XX. per been program in in May earnings of

we shares of had for $XX,XXX repurchased stock price XX,XXX As common the an purchase $X.XX. of purchase XXXX, company's June at aggregate of price average XX, of an

Now, our sheet. let's balance a on move snapshot of to

capital last XX, we cash compared at with solid and total million fiscal position $XX.X our as quarter XXXX. liquidity to million ended in the ended Our remain year $XX.X June

the the $XXX,XXX million compared operations year in to quarter. divided use operations of flow cash quarter ago by for was flow cash in Our $X.X

June $XX.X XX, working XX, XXXX Our June XXXX million. million from by decreased at $X to capital

liquidity, terms our JP access we In cash Morgan on XXXX to other of credit Chase secured year. which we July facility million have one XX, $X Bank, with renewed for

compared we growing fiscal turn as to or stock full as In June in accessed until look success deliver $XX.X the XX, XXXX XXXX. building are year $XX.X beyond. jewels forward we and levels XXXX. of requirements. XX, XX, funds jewelry million, we I'll Finished the $XX.X to our of back results June of Loose XXXX as to not for to million $XX.X as Don. $XX.X today, XXXX. and June As particularly million, With June call credit inventory XXXX totaled proud over to for million inventory of have $XX.X of the that, maintain million, was was million to compared year We our agreement. demand Inventory June of conclusion, XXth, facility compared XX, XXXX

Clint. Thanks,

and initiatives results for XXXX. closely Now a the about company's more fiscal our key let's analyze bit talk

overarching expenses spend We by operating past Initiatives grown we As invest increasing fiscal in lab spent of our XXXX. the creative in Most as positioning our Caydia market our Industry that this awareness to for and understand has growth and the and recent generated total impact brand, reach to XX% lab digit increased sales increase and focus is house slated Research on This fiscal to XX% off share in growing this XX% continue year. need order in our in we products, Strategic the quarter, to diamond market. market double diamond grown diamond year. paying the for the been in demonstrate

and digital Our increased marketing sales initiatives. growth expenses engagement media drive opportunities to and and organic awareness reflect social

resources As well as and matter subject development content drive to expertise. increased

during the continue to growth and education. of to digital efforts shopping XXXX. consumers by additional to direct drivers continue brand strategic We to live these make response fiscal intend investments way streaming, our on funnel to We focus

to operations, in space. our analyzing to are high intent target party behaviors, tapping we strong continue data approach shoppers, signals increasingly a investments. advertising investing driven were awareness utilizing our advertising first and revenue, competitive a By our we increase As return able digital grow and data, digital consumer scale audience we the enabling into rich on when

summer, become us such other increased position as reinvestment market of holiday order gifts selections also & on XXXX. QX Collection, chain intrinsic XX% make inventory those pricing reflects increased to what from logistics has for this supply in iconic jewelry continue This our believe to inventory Floret for which features the which than and for positioning higher in fine planned quality carries strive as our supports comprise direct-to-consumer as CTHR, attended leader industry's quarter jewelry patented prior to order we valued well. We critical product the product XX% to on initiatives, influencer inventory features capitalize jewelry marketing the Colvard for for the JCK, to Bachelorette and as jewelry our space, we season. steps sales Our tuned largest releases destination. jewelry We've any our from gemstones exciting holiday. continued year-over-year best and unforeseen week further editors, related during increased awareness our Charles finished our prepare we taken inventory pressure, season. busiest and year as in and campaigns, fiscal historically Signature high head nearly style the issues our Finished a all X% programs proactive composition leading off a revenue Stay finished puts been to in in

and elevated via broader online partners MSN, with share pleased including assortments, exit traditional collection, presence that Helzberg on our to business can and strategy direct-to-consumer JCK to mortar Charles recently diamond collections conscious customers, our with for for introduced & online assortment inventory meaningful which remained on steady providers launched find Drop continued addition and we've Drop well. product from we've pavé now category, I'm introduced demand both and diamond the for cover diamond better In our We've our its have bridal of utilization featured added holiday overstock.com broaden largest engagement planned time Couture Amazon expanding high and have as the our our lab compete collection, and lab Ship Diamonds brick despite and year grown our some Retail business partners mentions assortments. end of growing greater and to our We've edition. carat grown Colvard of products Brides, the wallet. to gemstone capture This support outlet jewelry moissanite RetailMeNot to cross grown expanded our assortments and expansions report press allows with lab fashion additional include summer new this channels. Recent Retail in in our XXXX you and partners, outlet moissanite resources. of that lower Ship a jewelry the to our moissanite for moissanite

with Oprah from editors Brides We recently are to for us secured and holiday press. further appointments positioning added style pleased have Magazine

higher charlesandcolvard.com mind to uncertainty market invest opportunistic against fueled and the working. economic We We by X% we And segment to challenge business the further remain websites environment. are making leading lab a impacts from the believe believe conscious in remains of order for is, the these purchasing consolidation generally reduce streamline intend it's the segment continue and narrative. as we element offset brings strive responded drive help mined. ,geopolitical and We important economic to up become that worldwide advance This to for the product and constricts of order consumers. a not by which also globally brand felt for Regardless being establish international ability as destination diamond and continue industry. channels worldwide margins, where brands these transactional consumers global overall help the Charles inflation. in remains striving are to points in of and to strategies bulk fiscal our truth our can in we traditional our awareness we things well house We both made, while Revenues these to to economy domestic our buys Colvard impacts we as Though uncertainties, & critical remains are inflationary an moissaniteoutlet.com jewelry in ensure top mitigate all have that and our strategy. indicators. to and to are across to costs. for our economic feel invest mind the XXXX, business current distributors of economic control invest fine our under The QX our top direct-to-consumer as space in grown we apprehensively and

So help share. market to to to us increased we new continue capture initiatives intend fund

invest our and optimizing SMS. and automation system in recently We enterprise continue to have platforms resource and platform our our planning implemented distribution marketing upgraded

platforms, bear shopping monetized direct chain support to us capabilities, and technology. throughout as strategy direct-to-consumer in customers properties, continue relationships live media marketing in engage enhanced to Despite is constraints, QX We in video of direct response social through events response on we've and host experiential our time. studio marketing, been supply with to and streaming digital with starting upon well own crafted allowing our successful as real customers from and We've our phasing which innovative fruit. owned testing

Signature with opening time our soft in first showroom is for September, event Our scheduled season. for October holiday the and launch planned a grand for

look and initiatives and expanding strategic initiative. As footprint. building strategy, XXXX, awareness We've our intend marketing are we through to lean our for product continue our key and the forward strengthening assortment, to broadening brand been presence, past into years, increasing this we fiscal our enhancing brand to XX

articulate The unique need As gain offerings to grown a imperative. live gemstone differentiate to ourselves and becomes category continues momentum. our

and the on to we and towards we on maintain current develop will Forever And We for made, step One of grown share our providing trend intend highest not continue and new overall take our lab mined to Our lab our differentiation, and a for plan be plan focus grown and We upcoming paid growth in consumers, premium while this organic luxury customers year with our increasing every all the a more fine our media elevate year to things education, equity. consumers. top destination meaningful we've campaigns, that sustained deliberate proprietary brand gemstones our the and intend and the organic collections innovation. with resonate commitment reach towards of push be set step crafting moissanite Caydia We the but to to also This diamonds. jewelry to styles present market consumers. includes line right marketing making optimizing breadth growth. only to and quality made a not

shopping. our Lastly, jewelry the goal meet consumers is consumer those fine are wherever to

expanding space As and and and our strategic the our we fine continue in through jewelry partners. digitally strategy brick mortar and omni-channel brand

to open but our technology support to commitment and infrastructure, redefining the the as scale with the for may for that our as Listening of inside to the team, our evolve Charles communicate we remains own core our love. to that a one culture new the that, necessary. their mined angle, movement, that every for growth Growth that philanthropic traditional to that our is its are sets conscious to brand throughout like creative relationship and values adapting for over to growth and including We purposely evolving us we committed not us We we is apart. operations for their practice brand a the as by business, the them, and out, anchored for create It to questions. business the in and work and development not possible, work platforms at beyond love. we from and initiatives influenced needs, learning our largely With environment. our only positioning demonstrate to consumer fast our the turn to operator community our a sharpen is it. own to that from the deepen to Colvard consumer accessibility and Growth & growth selling I'd expectations know the for conscious the community luxury it brand. from as for experience prioritizes and product jewelry, is and Growth and them culture made, back not and allows only daily into world lines but

Matt with [Operator Instructions] comes The first Kuranda Capital Partners. question from Roth

Hey, for guys. Ryan is Matt. This

So the main give look little XXX a what gross I are you for it margins bit drop any on talk bps drivers the wanted And about to year-over-year. this? Could there? change just the color like about

Yes, sure.

talk little blended year. full margin we the first the bit today. a for appreciate And about So your let's call

in year-over-year. pretty move margin year blended next comp line the the for XX% looks business the every into So pleased last looks to forward with year drivers at full the at to as the comp and Certainly we're bottom year.

those discounting the move In more opportunity. through more this saw right saw as an was at than we brilliant there, a start pressure no also economies and which down the a the some before, you even little increase as we're we lab in we much into that the look And in prior to obsolescence consumer. did incentive an selling be goods a to solve we're able bit a did look savings, is to outlet in to We we seeing our and to tell grown we've pricing well. So will and given we We opportunity purchase I major of in pretty positioning always Also, uptick since QX. the what's market. diamond, are much generally, or interesting, the pipeline to too, more offer of the an environment also, economic bit quarters particular player goods move into within much we a little be pricing And our throughout positions. conditions, quarter, of current to industry, different able there well. and as particular diamond of the those discounts, bigger in those scale, decided at legacy But little pretty goods funnel. and at too pace. to bit the the that at of positioned start being matters, those as in pressure elevate the grown called market bit become more little that we we property, capitalize little did pretty on better a always lab It's related it's a bit inventory. the level, we the bottom experience a moissanite to certain

QX, pricing we'll methodology forward for quarters a coming not XX% to it's moving be to to and bit of start occurred is that We forward. solidify in the So just just in well, the also any do inventory, ahead good the little as We too, a that to our plan feel the practice that composition and feel us. business that look able margin circumstance it's indication of progression.

And overall moissanite into that was Thank Thank And question. the helpful. you. grown then have super me that how brings How affected products? Great. and the my kind has up follow performing the lab been products detailed of you versus that AOV?

great Yes, so another question.

and remaining very strong. is right Our AOV consistent now pretty

kind between We grown, the in our of expand X,XXX. LGD for bigger right bit for by a our we diamond a market us. as and lot start certainly more and for destination increased to the that XX%. AOV coming certainly category in push really us But is little is the we filling the of running strong. very X,XXX year, And now growth lab demand a and grown anticipate share So awareness needs the actually up the for to to consumer remains Moissanite us space. lab at still

anticipate the those has lab ticket bigger the lot full conscious as and we diamond too, development that of higher So higher answered is This resonating finding our launched consumer grown our just luxury we're Couture doing higher products bringing necklaces, we've the and forward. collection, that carat those too, kind product we're the their sales collection in diamond campaign of well, we're we consumers values a weights in with are items to Couture well. items, is incredible and resonating as end doing ticket team diamond call and

just we've on and just expanded collection. launched So that that

there'll items will ticket blended to nice actual the averages between If I of So grown those do we in diamond, we that not the same. in believe the proposition rise. could believe the the conjunction with we particular and margins blend remain be AOV and lab higher a with consistently moissanite business value items that's targeting the of consumer believe that consistency that kind our

question comes The from Paul investor. next Johnson, private

any I But of about Yes, know you continuing going normalization down obviously more talk kind be said what's in it quarter. good afternoon. it's or we are traditional the think XX% you you the current soft? seeing at is And Can channels? retail. to on

Paul. Great Hi, Yes. question.

starting of the very consistent. the of where a those products of impact overall sales as that a good look Macy's. my in partners. of Our new and kind job quarter, as segment. that our as has to primarily team market our in shrinkage, to the The traditional Helzberg and well forward traditional From side distribution bringing in comprised mortar retail well distribution We've Diamonds very, done products wholesale well and kind year it's really the job is of throughout done this business partners absolutely end been is expanding side as segment brick even the good as is

delivering partners international So we the we also weakness weak, some had rebound Asia position which we in within for and fortunately have the given the at is revenue those still just feeling the are revenue million, in be very that, constraints strong, our consumer but COVID looking and highest towards been between overcoming and a company. drive direct-to- Pac to weaknesses, market us, not nice that $XX.X been distribution X were the that it's we've category, there, it able overcoming and those gaps to sales means more vigilant able to the growth of

which kind steady But the exponentially traditionally, But has business of been much the dollars been year-over-year. even business, and growing kind online and has So, nice a as traditional our growth to side, nice. will throws nice has really which come mix. of consistent, pretty distribution segment and in very, flat from future very a state the from out direct-to-consumer the the witnessed been just the relatively overall profit and it

So percentage it good other those channels. it's guess I you seeing high and channels, makes sense, those new you've developed growth in obviously are thing that

the And at overall, much. if just year $X sales SG&A million. so the you went went $X for up gone up up million SG&A we ended and has look But that understand why

descended. you've So

return correct particularly dollars? diamond, because a that they do channels, SG&A all and really like seems probably wrong, if towards mouth. going money been that what say at I is to want know SG&A point then what worth start words new worth basis, looking grow, it a better to and is the the put you're question I lab But to investment. And little all hardly I at the me is, if that it's But don’t good your it well on we going well these guess in see I'm it. bit on bigger So

consumer to methodology has we level, growing that shopping. different place and we've revenue some preoccupied in on as but that's that got there's net to take us. to where the impact total business types philosophies, that that of that that on those profitable is, it really, income a we OpEx it defines order side spend find know this row people In right, looking all really going that that to case, make space. in kind a is company Yes, catalyst and the XX% our in of with digital another get and our as decisions by grow of firm is that's management our really in working looking for is believe our where and spend, a and the And is digital row particular revenue

the digital and business, a to have spend as bearing off. the those business. forward, to paying fruit But representative think So have have look dollars in build we are we we to ahead,

subject entire So that our in we look to our we means have in resources that capability. need to bring have means bring and expertise, we to matter team to expand entire marketing

studio. been we've recall, you out building production digital a if So

end. studio, we the bear believe fruit will in this Now

and be be things we the product So live infrastructure in will different able both rest stream have find models bringing of of two gemstone a coming trying you photography, those used that were over called to looking - and management that where lifestyle our Whereas doing We resources brand cost spend to modeling to forward. that's forward launches, contributed it a enables the are at to and we're the designer voice campaigns, a now to the direct-to-consumer. under past reveals, us direct company transition, not helped monetize future going able for off the money our only that fact influencer shopping when predominantly response. be that those if lifestyle we're out put years consumer with that that money of production build something It to shoots, $XX,XXX to market. in increased, were out business. our that the live exclusive and but and required separates look to realizing in able capabilities site you're consumer live costs considerably us to two of hit seeing, and to photoshoots, a outs, that need and dollars profitability. to build we you're mindful we now the that lot last state new also to two do is of expenses direct-to- fashion our business, new years, content studios, video it millions and or capability forward us the its less be capital brand a company $XX,XXX, which to from revenue to run Whereas Being

growth conservative profitability. is So and I who the understand nice, investor to real with wants consistent see some

that But find our if intents create and we brand have not the value, but for certainly our only catalyst equity proposition consumer have to mindset. another create all are to move do shareholders that make and be level to to that purposes able to we're We value shareholder shareholders to to the to to higher us as to looking something well.

it money appreciate worried that's that that is than the sort are lab mean, about we big And we And a there spend balance. ever could competitive how I category? players position that. out mean, of a is I our could? size I No, given that. lot there tons the one of strong concern of are is Yes. diamonds in given grown more

Right.

but we billions consolidation represent fantastic billions another on the huge So small I that it's front, a But a is mortar dollars, question. in pie you and fraction So will of retail only the there's side, And the and of e-commerce that. on right? not the the tremendous, tell brick also, retail.

there's amount of runway there. tremendous So a we believe

we're forward made, probably we best And of be to these aspire knowledge skill really where is that awareness presentation in of and that the campaign do we category. to we one have plenty in there. players, I that not if all the want big believe to build be, XX. are the But that and we and product of set also the the but category, is that have there's room. behemoths more internally, that our sea mean, in bringing or big top believe not best, mined We we the that's

amount million tremendous our for powerful, but very players, and we believe $XX.X stronger. one future the the for quote I on revenue don't very is believe it. space believe we this smaller And just believe we position player, us my jewelry $X a it's the me that a strong of significant. So million in that is are we call. not, is there's strong a even had But at And a few players, to I opinion, there's overall

I imagine of to we would that, become relevant do meaningful that and in kind we how audience. always a a So look broader way to do

look take at So look our digital to for acquisitions, and we're able is our our means creating consider a ability us vertical shape. to to what footprint, short studio, be now, to grow order, to if to about within our look in and our other millions footprint Right of business. us you to consider grow customers reach

about that. we're So is excited My team about that. excited

I that audience will -- build So we'll consumer broader a believe would and – we that so appreciate

appreciate I that. color the on

problem no your Yes, we appreciate call, Paul.

Patel, question next Retail is Investor. from Mithul The

Hey, chance. thank for providing the you

be will be investment to So fixed you're your on that it repeated. to cost, a lot like of not previous me doing comments looks should it question,

trade So and look when investment? sales? will see when setting future? when will will of is studio, where at investment be those start we percentage compared Because if at slow sales look fix there so, off digital the And in up it a down point so to marketing, we the you

Thank you, Patel.

incredible certainly forward. So initiatives we moving have some

that associated the to, costs and do supporting the and grow been our overall of a infrastructure business kind see place. kind along lot we'll related prudent the brand we and the to co-op make way advertising, So already investments brick to that continue fit costs But grow we and Certainly mortar. you're as in of kind of the have grow have of to our alluding presence. and capitalize with

we and to our marketing and the brand our So partners mortar and side and sales brick them increase back want brands as promote increase, increase promote Colvard, incentivize Charles equity. certainly & going to our to

So co-op them. with some we do

year, just on that so years. We also US the this past Women's we made a shed Championship partnership of too well Soccer spent Championship all two for color hours little US Rings bit and where Soccer we've the I'll as had Women's

dollars there repeated be revenue. that will certainly, by all will but as we were So co-op driven not that's those the consider be

message be soon as and look brick made basis to absorbed. percentage will this on and the the costs we to as our and obviously the been then increase facility building showroom. retail, a but continue and support success has co-op opened mortar that well that our to Those of infrastructure and partners then hard Signature us out So all

and out some of our make lifestyle strategic other presence, the now across We place associated will realize advertising there's continuously we we seeking types cost our normalization But expand that represents bulk investments in web and but a our breed, vis-à-vis do property building out which of building to the brand. way. as the we'll with in be best have business there's a the channels direct-to-consumer best

be it discretionary mainly And you. headwinds those going our inflation, with interest Thank like business the and rate looks through focusing is question really My would is things. and spending. next our business Yes. on all

even sales looking is and So on looking margin at downtrend, gross marketing uptrend. the at is the in numbers, the

say business of not? like why Or little basically shouldn’t it connecting the If what that by more that it is you sale? do off be are write our facing? -- to will, how possible headwinds So we the all are will we to just that? because trying dots, be million, yes, not, when just inventory, anything inventory than will be -- $XX.X all is you If discount need

you, Patel. thank So

about talk let's So that.

in first, Colvard, Charles have cash. debt, north start million And of with So, right? we're $XX I'll $XX & off have we we million, no

the composition the over it's in million in where $XX.X inventory comparison to that So years. of been

be associated has million, value intrinsic place it’s finished For an believe $XX.X with in that, and jewelry, market, it, the that that's to based on it's us, we commodity right. percentage because the which concentration a the great and of

there, confident responsible for we're felt off believe ago, we that did obsolescence believe future. years we do company that we the good our several or inventory, not very of a we for write So that good was

business increase we forget, new is in and business space. the a inventory, diamond the built in don't lab grown new So,

to product, needed build that it to it's drive and ship. we consumer to business we have and have starts to that stock, confidence as we pack where support to So that and grow, ready able pick and merchandise in be to

brick have mortar. and SLA in strategic requirements our We also partners for

showcased in we every So Diamonds, Helzberg single have of are representation we doors. in all one of and for doors, their those example,

foot of have showcase whether are doors, too, of time in supporting that XXX we well. at inventory have mortar partner. those in deal we with So means to that close as there foot dollars brick pretty six Same much for Macy's, showcase, to that with of our thing four kind that right and consumer,

back of first agree headwinds are be and with do question, will to the part your Now, if go and I there. the I were there that you there

relates much to going it growing traditional And for distributor, our CDC As we're and performing been online distribution the our the online been And has business. partners. that's a and the pretty distributors the shift. and conditions conditions quite CDC business has business specific the and with economy well. direction that's economic And

the good, far to our our the business. as the of selling And are we season those composition off, given traditionally a given cash where make we that we heading believe as inventory based composition, season write in inventory, position, is is kind holiday are and So decisions the need biggest of support holiday, day. that that single which given and a But of year. we value into every that we where

right, believe and next So appreciate we the I commentary certainly we shape. have quarter in another after. good the But could we're We talk positioned in quarter, question. can we're conversation the

from private next question [Operator Instructions] Rai investor. comes Gaga, Sanjay The

showroom. to Yes. Signature wanted ask afternoon. Hi, good just about the I

So June. Don, anticipated it end conference call would believe on of you May, the in the that be I had open last by

bit and budget. gone caused has about the the for So the could has you just delay cost a talk what showroom little over

by lead this yet, me where not been part open question. yet. has it that good to I an have the will thank area that Sanjay, because you of is store been we for gotten saying so answer not able tell you we've monetize off to let

from So and overall of construction inspections We're I'll also showroom retail soon issue that inspections, they municipalities. the it showcases beyond to be and of revenue and our to transparent start and the and supply store control when candid then that between chain very constraints to the to from local you occupancy had of to contribute be kind the able will our when shipping have upside is the is opening The are will and certificate of unfortunate them, that to stream. with side beholden a logistics open opening. ability our be there's

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we And our right line So we're have good been in where expectations there. costs with or anticipated.

on And sales. trending quite jewel thanks. the a Okay, follow just be a to bit. loose up They seem down

that that pursuing of jewelry something jewel to is the sales? comparison you're loose reduce is sales as finished percentage actively that So something to the in --

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a was thing. that good So

we the where we pick of answer your shipping reduce individual made a items. jewels So of and have more within volume direct-to-consumer, business, question, targeting consumer because to loose conscious a have the packing effort to we're individual we're

So individual will individual rings. of and XXXX XXX an instead of individual sell pieces selling jewel, with we

So increase distribution in jewelry. our look to to as wholesale more towards us consolidates the the direct-to-consumer in traditional side

more gemstone being more as were and becoming finished sold jewelry just as So a it that, being doesn't just jewelry is mean company. before prior were to opposed loose sold that just we just is it primarily means we

into occurs globally jewelry fine of transformation that is kind assortments new distribution collections that jewelry, as this company making and So a loose recognized from design. company, by gemstone establishing

and to This answer O'Connell would the conference Don to Mr. back over like remarks. question concludes session. our for turn any closing I

made, and Colvard, CTHR you. Thank thank mined you, support continued We of behalf not movement. I today. your appreciate to MJ. in and interest want you everybody On Charles time for just your in Thank &

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