Charles & Colvard Ltd (NASDAQ:CTHR)
Q1 2016 Earnings Conference Call
April 28, 2016, 04:30 PM ET
Suzanne Miglucci - President and Chief Executive Officer
Kyle Macemore - Senior Vice President and Chief Financial Officer
Rodney Baber - Paulson Investment Company
Hello, and welcome to the Charles & Colvard Limited first quarter 2016 earnings conference call. [Operator Instructions]
This webcast 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 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. In light of these risks and uncertainties there can be no assurance that the forward-looking information will prove to be accurate. This webcast does not constitute an offer to purchase any securities, nor a solicitation of a proxy, consents, authorization or agent designation with respect to a meeting of the company's shareholders.
I would now like to turn the conference over to Suzanne Miglucci, President and CEO. Please go ahead.
Good afternoon, and thank you for joining us, as we summarize Charles & Colvard's 2016 first quarter results. I'll begin our dialog today with a few highlights from the first quarter.
Today's earnings represent the highest revenue quarter since 2006 and lowest inventory quarter since 2005. We closed the quarter with $11.4 million in net sales from continuing operations, a 62% increase over the same quarter last year. Net sales from our e-commerce site Moissanite.com grew 21% over the same quarter last year.
We also recognized a one-time large purchase of $6.8 million of Forever Classic Gemstones by our largest customer. This sale along with a continued focus on operational efficiency also contributed to our improved inventory position. We finished Q1 2016 with $25 million of on-hand inventory compared to $37.5 million in Q1 2015.
I'll note that we're nearing what I consider to be a more stable inventory level, and I'm thrilled with the progress the team has made in drawing down our inventory levels. Going forward, while you may see further reduction in inventory, we do not expect it to be at the level we've achieved in recent quarters. We want to ensure that we're stabilizing with efficient inventory to meet our customer's expectation of delivery time, while reducing overhead cost.
We also exited the quarter with a greatly improved cash position of $11.6 million compared to $5.2 million in Q1 2015 and $5.3 million just last quarter. We plan to leverage this strong cash position, as we execute against our strategic plan. And I am pleased to note that all of these achievements have been accomplished, while we remain a debt free organization.
Lastly, on March 4, Charles & Colvard signed an asset purchase agreement to divest certain assets of our Charles & Colvard Direct LLC business, also known as Lulu Avenue. This subsidiary had consistently lost money, despite significant investments in sales and marketing and a concerted effort to grow the business.
After careful analysis of our core competencies, go-to-market strategies and intent to advance toward profitability, the management team and Board of Directors determined that it would be in our and our shareholders best interest to divest the business. I am very pleased to say that this divestiture now allows us to focus on our core strength, the manufacture and distribution of moissanite gemstones and finished jewelry.
This renewed focus on our core strength and strategic plan has been instrumental in our positive Q1 performance and our outlook for the remainder of the year. I'd like to share with you our progress against that strategic plan, and I'll do so after we dive into the financials.
With that, I'll now turn the discussion over Kyle Macemore, our CFO, who will provide you with an overview of our Q1 2016 financial results. Then I'll return to further discuss the progress we're making on our strategic direction. Kyle?
Thank you, Suzanne. Good afternoon, everyone, and thank you for joining us today. As a result of the divestiture of assets associated with Lulu Avenue in the first quarter of 2016, we are presenting Lulu Avenue and discontinued operations in our financial statements. We did not include the revenue, gross profit or loss from Lulu Avenue in our results from continuing operations for the first quarter of 2016.
We also reported results from the first quarter of 2015 in a comparable manner at discontinued operations. Unless otherwise noted, the financial results discuss during this call will be from continuing operations for both the first quarter of 2016 and the first quarter of 2015.
As announced in today's earnings press release, net sales for the first quarter of 2016 increased 62% to $11.4 million compared with $7 million in net sales during the same period of 2015. Included in the first quarter net sales of 2016 was a $6.8 million sale of Forever Classic loose jewels to our largest customer. As we stated in our press release, we believe this was a one-time sale and provided us an opportunity to strengthen our balance sheet and continue our acceleration towards moving upmarket and advancing our colorless jewel Forever One.
Net sales to this customer in the first quarter of 2015 were $2 million, mostly in finished jewelry. The customer purchased a total of $6.4 million of jewelry and loose jewel in all of 2015, with the majority approximately $3.2 million being purchased in the second quarter of 2015.
Wholesale net sales increased 70% in the first quarter of 2016 compared to the first quarter of 2015 to $10.1 million and comprised 88% of net sales. The company's direct-to-consumer e-commerce business, Moissanite.com, had net sales of $1.3 million in the first quarter of 2016, an increase of 21% compared to $1.1 million in the first quarter of 2015.
The company's net sales of loose jewels increased approximately 152% to $9.6 million in the first quarter and comprised 85% of net sales compared with $3.8 million or 54% of net sales in last year's first quarter. Finished jewelry net sales during the first quarter of 2016 were $1.8 million, a decrease of 45% as compared to the same quarter in 2015.
Gross margins for the first quarter of 2016 were 20% compared to gross margins for the first quarter of 2015 of 37%. The gross margin percentage in the first quarter of 2016 was negatively impacted by the large loose stone sale of $6.8 million. This sale was at a positive, but low gross margin percentage. The $6.8 million net sale had an 18% downward impact on our first quarter 2016 gross margin percentage.
Operating expenses decreased to $3 million in the first quarter of 2016 compared to $3.2 million in the first quarter of 2015. The decrease in operating expenses was due to a decrease in G&A expenses of approximately $423,000, driven primarily by a decrease of approximately $500,000 of expenses associated with our CEO transition in the first quarter of 2015.
The decrease in G&A expenses was partially offset by an increase in sales and marketing expense of approximately $170,000. The increase in sales and marketing expense was primarily related to an increase in advertising expenses of $185,000 in the first quarter of 2016 compared to the first quarter of 2015.
The company recorded a net loss of $1.3 million in the first quarter of 2016. Included in this net loss was a loss of $559,000 from discontinued operations. The company recorded a net loss of $1.7 million in the first quarter of 2015. Included in that net loss was a loss of $1 million from discontinued operations.
The company ended the first quarter of 2016 with $11.6 million of cash and cash equivalent from the balance sheet compared to $5.3 million of cash and cash equivalents at the end of the fourth quarter of 2015. This was the highest level of cash, cash equivalent and investments on the company's balance sheet, since the first quarter of 2013, and is $9.1 million higher than the company's cash balance during the first quarter of 2014. The company does anticipate investing some of this cash in marketing, branding and awareness efforts during the upcoming quarters.
Inventory at the end of the first quarter of 2016 was $25 million, which was a decrease of $7.3 million from $32.3 million at December 31, 2015. Loose jewel inventory at the end of the first quarter of 2016 was $22.3 million and finished jewelry inventory was $2.7 million. This is the lowest level of inventory since the third quarter of 2005, and is $18.7 million below the company's inventory level of $43.7 million in the first quarter of 2014.
As Suzanne mentioned, we believe we are nearing an inventory level that is more stable. I will also point out that not only has the inventory level declined, but the composition of the inventory has improved in quality. The company has no long-term debt and has not utilized the $10 million credit facility it entered into with Wells Fargo at the end of June 2014.
I'd now like to turn the call back over to Suzanne. Suzanne?
Thank you, Kyle. When we met last quarter, I outlined the strategic plan that we expect to shape our activities throughout the remainder of 2016 and set the tone for our 2017 market presence. Let's revisit that plan, discuss some of our Q1 outcomes and the related millstones our team plans to achieve over the next few quarters.
A cornerstone of our go-forward plan is to unleash our new colorless gemstone Forever One. We introduced it late last year in a limited launch, and it received an enthusiastic response from channel partners and customers. Given its brilliant and colorless attributes, we believe this gemstone will position us to move upmarket, enabling us to contend more effectively for a greater share of high-end sales and position us to compete directly against diamonds for share of wallet.
We believe that hypothesis is proving itself to our Moissanite.com transactional website, where our leading category is bridal. With brides adopting our Forever One gemstone to commemorate the most important day in their lives, we believe that moissanite has gained critical acceptance, and that we're now in an advantageous position to promote and deliver a line of jewelry to celebrate all of life's important moments.
Later this quarter we're looking forward to exhibiting at JCK Las Vegas, the jewelry industry's premier event. It's being held June 3 through 6, and we'll be there with an expanded booth presence. We'll be exhibiting many shapes and sizes of our Forever One gemstone and anticipate announcing an exciting and brand new-cut, while we're at the show.
Last quarter we also discussed the importance of Charles & Colvard's decision to not only deliver its gemstone to the market, but also to bring a line of jewelry to the masses. We believe that as we further develop our direct-to-consumer strategy, it's important that we exhibit this exquisite stone in fine jewelry settings.
Moissanite set and fine jewelry creates an emotional tie with the consumer, as opposed to loose stones that require the consumer to imagine or guess what type of setting they might put the stones in. In order to successfully deliver on this strategy, we anticipated it would require investments in talent and production.
I am pleased to announce that earlier this year we made two critical hires, we believe will assist us with this important aspect of our strategy. First, Julianna O'Brien has joined us as Vice President of Merchandising. Julianna has more than 20 years of experience, specific to the jewelry industry in merchandising, e-commerce and buying.
She comes to us from Tacori, designer and distributor of intricately crafted bridal jewelry, where she worked as Director of Merchandising. Julianna's prior experience includes creations for Harry Winston, Bulgari and [ph] Glass. Her charter is to build out our bridal selection and elevate the entire line of Charles & Colvard's fine jewelry. We plan to migrate toward a finely curetted upscale jewelry line, while staying true to our core principle to deliver sustainable, socially responsible products.
Our second hire is Don O'Connell, Senior Vice President of Supply Chain and Distribution. Don has over 25 years of experience in the jewelry industry. He served organizations such as Berkshire Hathaway's Richline Group, one of the country's leading jewelry manufactures and distributors. He also works for OFT Investment & Management Group, and comes to us with expertise and production and optimization.
As Julianna is shaping our product line, Don is working toward producing our gemstones and jewelry in a most cost-effective manner and in a timely fashion that will allow us to compete in a digital commerce world. Today's consumer demand, short delivery windows and flawlessly executed shopping experiences, Don and our production team are constantly honing our processes, so we can be and ideally exceed those customer expectations. We look forward to seeing the fruits of Julianna and Don's work over the next few quarters, as we rollout our curated jewelry line in advance of the holiday rush.
To follow our progress, visit us at Moissanite.com and watch for our press releases as we announce new offerings. I encourage you to visit the executive management page of our website to learn more about these critical new hires and a significant industry experience they've brought to Charles & Colvard.
Another key tenant of our go-to-market strategy is to develop partnerships with industry-leading wholesalers and retailers. This means fostering existing relationships, while securing new channel partners, who will bring Charles & Colvard to a completely new audience.
By a way of example, we've had a historical and meaningful presence with a television shopping partner for many years. In Q1 we expanded our presence by adding EVINE Live to our television channel mix.
EVINE held two shows featuring Charles & Colvard created moissanite in Q1 and several shows already in Q2. We intend to continue to pursue television shopping channels, as they provide an opportunity for the consumer to visually experience our product, before they buy.
Now, one of the most important aspects of our strategy is to gain a direct connection with the consumer. There are several factors that we believe are critical to a successful direct-to-consumer strategy, and we're working on all fronts. Let's talk about them.
First and foremost is creating a brand presence. We believe that consumers today, especially that elusive millennium, are interested in striking a relationship with the brands they choose to consumer. And their expectations are quite high. They want to be educated and courted. They want an outstanding buying experience. And to be able to find information about our brand, when and where they may enter their way through their shopping journey.
Charles & Colvard has historically been a very quiet brand and we've been less than clear about our value proposition. Our marketing team has been very busy working on a repackaging effort that we anticipate will cast the company and more importantly our amazing gemstone and finished moissanite jewelry in a new light. This branding effort is designed to streamline our story, clearly position our value and deliver the right messaging to the consumer on their terms and on their chosen platforms.
Here are three specific efforts where we plan this packaging to be delivered. Number one, through a widespread awareness campaign we plan to rollout a public relations and digital marketing effort across search engines, social media sites and blogs. We intend to invest in targeted advertising and events and make our voice heard across the industry. Whether consumers search for branded terms or related key words, we want them to find Charles & Colvard. If they are striking up a conversation about moissanite or respectively sourced jewelry on social media, we intend to be there with proactive dialogue.
Number two, we are recasting our web presence. For those of you familiar with us, you know we have several web properties. A consumer visits Moissanite.com to shop. They visit charlesandcolvard.com to learn about the company and get educated about moissanite. And to tune into what's trending, they visit our blog moissy.com. We believe this disjointed presence is confusing, and it isn't serving our customers the right information in the right way.
As we embark on our widespread awareness campaign, we want to have a highly organized and compelling web presence to serve those customers, regardless of their reason for visiting our website. We're currently working on a single integrated site that merges the best content and functionality of all three properties. We plan to ripple our rebranded presence across this new site and deliver it via an updated backend that takes advantage of all the latest online technologies available to a web retailer.
Finally, number three, we're expanding our presence across more online channels. Having our own transactional website is simply not enough of a presence in today's online shopping world. We need a present across a myriad of shopping engines and marketplaces. Again, it's about being where the consumer is during their shopping journey.
In keeping with this, we're currently determining which channels are best aligned with our product and target customer, and we intend to push those channels to push to those channels this year. And that's a lot of moving pieces. So let's summarize what we've discussed about the future of Charles & Colvard with a strategy in play.
We plan to expand our footprint for Forever One. We believe this gemstone will take us upmarket into the bridal and fine jewelry categories. We're working on a newly curated collection of jewelry that we're planning to rollout in the coming months.
We intend to recast our brand to better clarify our story and value proposition, and educate our consumer on our new branding through a consorted public relations and digital marketing program to drive awareness. We plan to launch a new consolidated web presence that delivers a compelling and engaging consumer experience.
And finally, we intend to be on more transactional channels, marketplaces and comparison shopping engines that align with our product and audience. These are 2016 projects, designed to create awareness, engage consumers and drive the sale of moissanite loose stones and jewelry.
I am confident we have the team and the expertise to execute on this plan. And I am quite optimistic about the future of Charles & Colvard with a strategy in play. I encourage you to follow us on our social media sites and to keep an eye on our web properties, as we rollout these plans throughout the year.
This concludes our formal remarks this afternoon. And we would now like to open the call to answer a few questions that participants on the call may have. Operator, would you please open the line for the Q&A session?
[Operator Instructions] The first question comes from Rodney Baber of Paulson Investment Company.
A couple of things. The .com business in $1.3 million versus $1.1 million was a little surprising to me, because I keep thinking every quarter that's going to kick in. And if I remember correctly, I'm not looking at the numbers. I think I remember that .com sales last year were rather some quarters up 50% and 60% and that kind of thing and maybe a slap in those numbers, that's harder. But give us a quick update on Moissanite.com? Is there any issue there that we should be aware of or what's your current thinking on that?
First and Foremost, I'll say this, a transactional website requires promotions. And as I alluded in my prepared remarks I feel as though, Charles & Colvard is not doing the .com site the justice it needs in order to get exposure for the site. So as part of the rebranding effort that we discussed earlier, we will then kick in a very proactive plan to bring people to the site.
With that, I will say, we have some pretty strong metrics. As we did note there was a 20% increase of net sales in Q1 of this year versus Q1 in last. We're improving on our gross margins on the site. Very interestingly, average order value increased from $662 in Q1 of 2015 to $816 in Q1 of this year.
And our visitor numbers are up pretty dramatically, just in a quarter, a 198,000 in Q1 of last year; 295,000 in Q1 of this year, so traffic is increasing, average order value is increasing. Conversions are down a bit. But what we're finding is that people are coming again for the more curated and higher end pieces of jewelry and that I think is to our advantage. I think the short answer is we simply need exposure.
The comment you made on the bridal, did you remember or know what the numbers were and how much you were up in bridals year-over-year? And is some of this bridal, is it happening because of the millennial approach or is it too soon to have kicked in yet to get that. But what is making the bridal grow and how much was it actually up year-over-year if you got that number?
So unfortunately, Rodney, I don't have that number and I would be surmising if I shared exact numbers with you, but here is what I can say, millennials are the age of people that are getting married, and so I have to assume that there are large portion of the people that are doing our bridal purchases. And by the way that will be the audience that we're focusing on as we roll out this new public relations and promotional campaign in the coming quarters. We believe that that's the target to go after.
Relative to the millennials, are there any metrics that -- you started system before March maybe, and it takes time to do all this, with all of this, say, really kicking in the first quarter, but it just takes time. Do you have any metrics that actually show the millennial improvement other than maybe the bridal, which we didn't have that number. But are you seeing it in any other sectors of the business that you're driving people in, in that age group.
Rodney, we don't collect age ranges when we're doing transactions with our consumers, so it will be very hard for us to do hard metrics on that.
It would be nice down the road, if we could hear some of those kind of numbers and we can get them.
I am certain to do some market research, that would be of value in the future.
The next question comes from [ph] Chuck Lane, a Private Investor.
Couple of quick questions and comments. One bridal is 50% of net jewelry sales for independents in America, and I don't want to get into the bigger picture, but that's a sweet spot. Good to see you have couple of new additions to your team in that regard. Second comment was really for Kyle with regard to -- and I don't want to look at life in a rearview mirror, but it puts into perspective, you touched on it, maybe I missed it in the translation.
If we look at the wind down from Lulu, you had some revenue associated with that, but you obviously had some exit cost. I would assume that you've divested yourself from the inventory that had nothing to do with moissanite and you had severance cost. And I was curious net-net we spend a lot of money on that, ran it hard, made the right decision to walk, what was the net-net cost of exiting Lulu? And I wish you well, I am so pleased to see you return to quarter competencies and focus on what should bring us to the dance long term, that's it, that's more than you need from an old guy?
Lulu is going to be with us, as we continue to wind down through the next few quarters. But in our discontinued operations, we reported Lulu as a negative $560,000 for the quarter. And I think we talked last time about the historical perspective on Lulu. So in the revenue numbers that we talked about in this call that did not include any Lulu nor did it include any of the cost for Lulu. So we'll keep reporting it for discontinued operations through the rest of the year, as well as in comparisons to last year quarter-by-quarter.
And so we are winding down the inventory as we mentioned in the way the transaction was structured. Yanbal has access to up to $250,000 of inventory at cost. And they've taken some of that in March. And they will continue to utilize that inventory through the Transition Services Agreement out into the summer. It will be an unwind process, but we feel like the bulk of it is behind us. I will also encourage you when we file our 10-Q, which will hopefully be in the morning, there will be a detailed footnote in there; Footnote 12, which will also have a lot of information that you may want to look at.
How are we treating the revenue associated with the sale of Lulu? Is that amortized over a period of time or we take it once or when?
No. That amount of money shows up in our -- like if you look at our cash flow chart, we have a gain on the sale, but it is not showing up in our continuing operations. So we have booked that transaction in Q1 and it is not showing up in our continuing operations.
Well, and at the end of the day, getting inventory in line was overdue and I think is appropriate thing to suck it up with regard to gross margin for the quarter, and it needs to be an asterisk for historical purposes, but you got rid of a lot of inventory that needed to be disposed of and that's good. Anyway, pointed in right direction.
The next question comes from [ph] Mark Wright, a Private Investor.
First question is an easy one here and then I'll do a follow-up. First question, how much of the Forever Classic is left in inventory?
I'll take that one Mark. So we have, in our loose jewel inventory, we have just under $23 million of inventory. About $5.5 million is raw material, which is newer material that we purchased since 2013. There is about a little over $7 million in working profit, which is a mix of all three qualities, Classic, Brilliant and Forever One, but most of it is, is in the Forever Brilliant, Forever One.
And then we have just under $10 million in finished stones, of which over $3 million is in Forever Brilliant, Forever One. So the answer of your question, we have probably -- over half the inventory is now Forever Brilliant or Forever One quality, well over half. So we've reduced substantially from where we were, say, two years ago.
And my follow-up here on a separate topic. We've kind of been talking about here in various way, help me out with the consumer advertising, that's being done now. What new consumer advertising do you plan to do? I get emails every day about a sale, what else. I heard you say social media, search engines, but for example, for something more specific, does that mean you're going to have employees posting on social media sites? Can you give me a little more detail there?
Sure, Mark. So we certainly do a lot of sale emails today and we do post information to social media. But I would say we're not bringing forward the brand in quite the way that it should be represented. And just to your example alone is proof of that, because we're promoting sales not promoting necessarily a highly curated line of high-end jewelry. So there will be a shift and how it is we speak to our market and what it is we promote and it won't be bargain basement sales only. In addition, we will be exploring what new outlets we will go to.
The bride, for example, goes to many exhibits and events. The bride goes and purchases many magazines; it's very possible that we would do advertising in bridal magazines in order to draw that bride in for not only her own jewelry, but that of her wedding party. That would be one specific example that we're exploring that might help you understand how we're going to expand our footprint in advertising.
I will say, social media really is a platform where we should spend a tremendous amount of time. It is where millennials spend their time, it's how they crowd source their buying decisions. So we really need to be there when they're there. And again, not with promoting a sale, but helping them understand the socially responsible products that we have, why moissanite is a viable and valuable gemstone for them to consider as part of their engagement and bridal collection; more a dialogue, Mark, than the heavy promotions that we're doing today. So you'll see a shift in the approach.
The next question comes from [ph] Dennis Stubbs, a Private Investor.
Apology, if I missed this. You talked about shop channels being away for people to get a visual experience of our jewel, but if we're honest with ourselves, that's not truly a visual experience, they really need an in-person experience at brick and mortar stores. And millennials may use social media and mobile more than some others, but they still walk into jewelry stores. And when they don't find our jewel there, they don't think it's really included in fine jewelry. How are you going about addressing, making sure we get into the brick and mortar, the big stores that you see in the all the malls?
So I'll tell you what, Dennis, we work on that everyday. We would like very much to be in those stores. They are a tough nut to crack. I've been at this now four months, and I can tell you its surprising to me how very challenging it is to get in those stores. But I'm learning, and what I've learned is that many of those stores are actually underwritten and backed in part by the diamond industry.
And so they are very interested in keeping a very close reign on what products go into their stores. There is a resistance of diamond carriers to carry moissanite in their stores. So it's a bit of a blocker for us, not that it's insurmountable and we're working on some relationships that may very well open doors for us, none that I can share with you today. But rest assured to the entire audience, it is in our cost here and is something we're very focused on, we realize a touch of this product by the consumer would absolutely help solidify that sale and we're looking at all the options to in fact to do that.
I mean, we've known for over a decade and a half the whole time of the company that it was a tough nut to crack in. We also I think honestly admit that we have to crack it or we're never going to be huge. So it's not an unknown problem, it should seems like we should be focusing our strategies better on that by now.
And I have a specific question, and part of your messaging is about on moissanite jewel being more ethically sourced than mine diamond, to me that seems like that's making a statement against the product that is in the stores and the retailers that we need to get into? And how do you seek -- do you not think that's going to harm our effort to get into those stores or is it somehow going to help us?
Well, certainly differentiate us, Dennis. We believe that the Millennial is very concerned about ethically sourced products. And so we're simply trying to come forward and confirm our commitment to creating a socially responsible stone and socially responsible jewelry.
And as we launch our new web presence, you'll see that we're talking a bit more about it. It's not a ding on other parts of the industry, it simply us stating that we are in fact sourced in an ethical way. We don't mine the earth to create our product, it's actually lab grown, and that does clearly differentiate us from mines diamond.
And I will say, the lab created diamond industry is very much standing on a similar platform. And they too are getting a ground throw right now. And so I don't think it's uncommon to the consumer that this is something that the industry speaking to. We're simply playing our role in it.
It's a bit of a trend, but it's in the mainstream, I think I even kind of read in your Annual Report, comments to the effect, of all things equal, similar pricing quality that will entertain giving some thing that's more ethical, but you have to meet the similar price quality and price part first and get that messaging cost. And then they'll say, okay, I'll choose the more ethical one. And you do that in the reverse way by saying more ethical and the try to convince that we're just as good a jewel?
Yes. What you will find, Dennis, is we're going to lead with the very high quality of our stone and our jewelry, that's really the platform we're seeing. We have an outstanding gemstone. And I'm just kind of blowed away by its quality, certainly its brilliance. So that is message number one. And then the other pieces are supporting characters behind it.
I did hear a lot of comments on the call today that point in that direction. That just seems like the strategy isn't quite clear yet. And we don't want to harm our chance to get in the brick and mortar stores.
This concludes our question-and-answer session. I would like to turn the conference back over to Suzanne Miglucci for any closing remarks.
End of Q&A
Once again, I would like to thank everyone for their time to participate in our call today. It means a great deal to us. I want to thank our associates for all of their hard-work and continued dedication, and to our shareholders for their continued belief and the opportunity we face at Charles & Colvard. Thank you and have a good evening.
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