Q3 2022 Charles & Colvard Ltd Earnings Call
Good morning. This earnings call may contain forward looking statements as defined in section $27 eight 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.
Forward looking statements are based largely on our company's expectations and are subject to a number of risks and uncertainties.
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.
These risks and uncertainties there can be no assurance that the forward looking information.
To be accurate.
The company's earnings call of the supporting Powerpoint slide deck, which is available in Nebraska relations section on the company's website.
Our dock topical bad Dot com slash events.
Company will be hosting a Q&A session with the question of our prepared remarks.
Did you have a question you'd like to E Mail IR at Charles and Colbert Dot Com. Please note that this event is being recorded.
I'd now like to turn the conference over.
President and Chief Executive Officer. Please go ahead.
Good morning, everyone welcome to our third quarter fiscal 2022 earnings conference call.
For Q3 fiscal 2022, we delivered $9 $8 million in revenue, which represents a 3% increase over Q3 fiscal 2021.
This is the third highest revenue for the quarter ending March 31 in our company's history and now marks the highest three consecutive quarters by revenue to date of $33 $8 million net.
That amount represents a 14% increase from the year ago period, and a 36% increase from the same period in 2020.
We're proud to say this is an important milestone.
Seven consecutive quarters of top line growth and profitability.
We've achieved this momentum by making strategic investments by expanding our organic and digital marketing efforts and by making a concerted effort to optimize our technology across our functional areas of the business.
These business decisions continue to be focused in nature, and we feel such investments are necessary to elevate our direct to consumer engagement.
Further and expand our brand presence and capture a greater share of wallet.
We believe these efforts are key reasons, we are gaining traction in our aspiration to become the leader in made not mined fine jewelry, creating a unique value proposition as we position ourselves to capture more of the projected lab grown market opportunity with sales of lab grown diamond alone now projected to reach $49 9 billion.
By 2030.
Arcadia lab grown diamonds sales continue to rise and we're up 141% for Q3, and 256% fiscal year to date and our forever. One <unk> sales remained strong up 10% for Q3, and 20% fiscal year to date on Charles and Colvard Dot com.
As we continue to lean into our direct to consumer business, we realized a 22% increase in our Charles <unk> Colvard Dot com revenue versus the year ago quarter, and a 34% increase fiscal year to date.
In spite of rising commodity prices and amid challenging global market conditions, our blended margin remained strong at 49% fiscal year to date.
46% comp to Q3 2021.
Our cash flow from operations for Q3 was a robust $1 1 million.
We delivered $416000 in income from operations or <unk> $339000 in net income or <unk> <unk> earnings per diluted share.
In addition, we continue to strengthen our cash on hand by 11% from the year ago quarter to $21 9 million up from $19 $7 million in the prior year, which is also at 84% increase over our cash position for Q3 fiscal 2020.
With all that said, we believe Cta charge share price trading below the book value at the end of Q3 presents an opportunity for us to initiate a stock repurchase program today.
Today, we announced our intent to buyback up to $5 million and Cta charge stock over the next three years.
As I mentioned earlier, we continue to make calculated investments in our direct to consumer online business segment, which now represents 65% of total sales and website traffic and conversion continue to decline.
And our average order value for Q3 fiscal 2022 was up 5% to last year at $200.
All presenting an opportunity for long term gains.
In support of that we continue to balance our inventory composition by broadening our fine jewelry assortment in line with consumer demand.
During Q3, we were pleased to launch our new Star series, which represents a distinct element of our signature Flores design.
Whether it's our broad bridal and anniversary selection available on both forever, one more site and Katy lab grown diamonds or our iconic patented signature collection with sales up for Q3, 29% and 59% year to date.
Our fashion forward styling, we truly believe we appeal to a broad audience.
As such we are featured in Vogue Forbes Brides men's health women's wear daily and recently quoted in CNS business.
And with the surge in demand for lab grown diamonds recently, making global news, we look forward to additional exposure to come.
As we strive to become a global leader in made not mined fine jewelry, we increased our finished jewelry inventory by 37% and decreased our loose jewel inventory by 5% from Q3 fiscal 2021.
We believe this puts us in a strong position relative to our competition meeting our customers' requirements.
All despite the increased shipping and logistic constraints worldwide supply chain issues and global unrest, we have continued to proactively manage our resources to maintain our position in the market.
So what does this mean.
This means that we will be in a position to continue to fuel any strategic opportunity to reach our consumer directly control their brand experience and capture the sale.
Not to say that our traditional revenue, which was down 12% to the year ago quarter, though remained up 7% fiscal year to date doesn't provide for future growth opportunities and remain an integral part of our foundation and an important business segment for us.
Matter of fact, we're placing additional emphasis on the trade in support of our distribution and brick and mortar partners through increased marketing co op in order to maintain our moist night branch superiority in the market, which we believe generates valuable brand equity across all our sales channels, thereby elevating our overall business.
We recently announced that cooks in gold the largest wholesale company servicing the jewelry industry in the U K has now joined our distribution network. We're.
We're pleased to have such a strong strategic partner in the UK and Europe to help further expand our brand presence.
Additionally, we're excited about our most recent expanded assortments and our drop ship programs on marketplaces.
With our brick and mortar partners <unk> diamonds at Macy's.
We work diligently to maintain our in stock rates to consistently be at or above 90% in response to customer demand and in compliance with the service level commitments of our marketplace and drop ship partners, thus positioning us for greater conversion opportunities.
Although both segments remain important the dynamics of these businesses are fundamentally different and require a distinctively different capital allocations in resources, along with their respective shared services.
We continuously make data driven decisions to support our investment choices.
Which helps to ensure that we're getting the return on investment that maximizes our ability to drive revenue.
While our Q3 sales and marketing spend was up from the year ago quarter. It was down 39% from Q2, evidenced that we manage these levers to adjust spend as the direct to consumer business exponentially grows in proportion to our traditional segment.
Look to us to adjust these thresholds as the business shifts and as we build consumer awareness and more customers choose to shop that Charles <unk> Colvard brand directly.
I'll provide some additional insights in our go forward direction later on in the call, but for now I'll turn it over to Clint Pete our CFO to unwrap the numbers in greater detail.
Sure.
Thanks, Scott today, I'll provide a summary of key financials for our third fiscal quarter and nine month period ended March 31 2022.
Additional detail can be found in our earnings press release that we issued earlier this morning, and our Form 10-Q, which we expect to file tomorrow.
Please note that all percentage comparisons are to the year ago quarter unless specified otherwise.
We will begin with revenue and total net sales for Q3, 2020 totaled $9 8 million versus $9 4 million or an increase of 3% and.
And for the nine month period ended March 31, 2022, net sales totaled $33 8 million versus $29 $5 million.
Or an increase of 14% in the yogurt period.
Net sales from online channels segment, which includes Charles <unk> Colvard Dot com voicing that outlet dot com marketplaces drop ship retail and other pure play outlets totaled $6 $4 million for the quarter or an increase of 14%.
Online channel net sales for the nine month period ended March 31, 2022 increased 19% to $21 million or 62% of total net sales while.
Net sales from our transactional website, Charles <unk> Colvard Dot com increased by 34%.
Net sales from our traditional segment, which consists of wholesale and retail customers totaled $3 $4 million for the quarter.
A decrease of 12% representing 35% of total net sales.
Net sales for our traditional segment for the nine month period ended March 31, 2022 increased 7% to $12 7 million or 38% of total net sales.
Finished jewelry net sales increased 19% to $7 4 million for the quarter finish.
Finished jewelry net sales for the nine month period ended March 31 2022.
<unk>, 26% to $23 6 million or 70% of net sales.
Up from 64% of total net sales in the year ago period.
This dual head sales decreased 28% to $2.3 million for the quarter.
Net sales for the nine month period ended March 31, 2020 decreased 5%.
The $10 1 million or 30% of net sales.
International net sales decreased 23% for the quarter and decreased 6% for the nine month period ended March 31 2022.
Moving on we delivered a gross margin of 46%.
2022 steady to the year ago quarter.
For the nine month period ended March 31, 2022 gross margins were at 49%.
For Q3, 2022, and supportive of our growth initiatives total operating expenses increased 22% compared to vehicle quarter.
Sales and marketing expenses increased 33% to $2 $9 million.
G&A expenses increased 1% to $1 $1 million for the quarter.
Net income for Q3, 2022 was $339000 or <unk> <unk> per diluted share compared with $1 million <unk> per diluted share in the year ago period.
For the nine months period ended March 31, 2022, net income was $2 3 million or <unk> <unk> per diluted share compared to $4 4 million or <unk> 15 per diluted share in the <unk> period.
Included in net income for Q3 2022 as income tax expense of $78000.
Compared to $500 in the yogurt quarter.
For the nine months period ended March 31 income tax expense was $485000.
Compared to $1500 for the year ago period.
Our weighted average shares outstanding used in the calculation of diluted earnings per share for the quarter were approximately 31 3 million shares at March 31 2022.
Compared to $30 5 million shares at March 31, 2021.
The increase in our weighted average shares outstanding of approximately 800000 shares was driven by an increase in options exercised by insiders and issuance of restricted stock to executives.
Now, let's move onto a snapshot of our balance sheet, our liquidity and capital position remained healthy as we ended the quarter with $21 $9 million of total cash.
Compared to $21 $4 million at our last fiscal year end June 32021.
And compared to $21 $3 million in the previous quarter increasing.
Increasing our cash position by $600000.
Our cash flow from operations remains positive at $1 $1 million for the quarter.
Our working capital increased to $32 $5 million at March 31, 2022.
Compared to $30 1 million at June 32021.
In terms of other sources of liquidity, we have access to a $5 million cash secured credit facility with Jpmorgan Chase Bank.
As of March 31, 2022, and through today, we have not accessed funds to the credit facility.
Inventory as of March 31, 2022 totaled $32 $5 million compared to $29 2 million as of June 32021.
Finished jewelry inventory was $16 4 million compared to $12 $3 million as of June 32021.
To maintain stock levels in support of our growing brick and mortar dropship retail.
And direct to consumer business requirements.
<unk> inventory was $16 million compared to $16 $8 million as of June 32021.
In summary, we are pleased with our progress and look forward to closing out our fiscal year 2022.
With that I'll turn the call back over to Don.
Internally for the past nine months, we've been increasing our creative horsepower and capacity to amplify our voice, we have been and remain focused on elevating the consumer experience at every major touch point for the brand from overhauling, the visual and messaging directives to re skinning, our direct to consumer web presence to live streaming opportunities that enable us to interact with.
Our consumers firsthand.
In addition, we're excited to report that our 8000 square foot state of the art production studio along with our first retail signature showroom are both on track to be completed in Q4.
Wrapping up.
I'd like to take a few minutes to showcase our marketing strategy and vision moving forward.
We believe that while in this discerning consumer landscape. It is essential to have a quality product. We also believe that people don't just buy what you sell they buy what you believe what you stand for.
This year, we revisited what makes us unique in what it is that we truly believe that.
Look to us to focus more on articulating that value to the customer and to our shareholders alike, creating a stronger value proposition.
We've dedicated the time internally to explore what we stand for as a brand and as a corporation and are confident that we stand apart in both what we believe and what we create here's what we've discovered Charles <unk> Colvard is a brand that is rooted in the values of love Trust and consciousness.
<unk>, we celebrate every facet of love for oneself for one's partner for the environment and for each other.
Our product offerings, we seek to redefine the ways in which we can express our love.
Trust is at the very core of our operations.
From the origin of our materials to our people to our supply chain to our history of being leaders in the May gemstone category for almost three decades.
And consciousness speaks to the fact that we are aware of our collective impact as a corporation on the planet and the industry.
And of our responsibility to our customers to constantly seek to be better.
As the momentum for conscious consumerism grows and the focus turns towards ESG, we can no longer sit idle at the intersection of ethics and beauty consumers demand it.
And we as a company need to be in a position to respond and to convey what we believe has set us apart from our peers for decades now.
We have found that consumers today have become very vocal about the environmental and social impact of their fine jewelry.
They want to know the origins of their diamonds, and gemstones and be reassured there conflict free and to be confident in the treatment of workers. Both at the company they are buying from and downstream.
So what does this mean.
They are embracing the choice we now provide the purchase of piece of fine jewelry that aligns with their values and lab grown gemstones can deliver that in a way that mine diamond simply cannot.
As a brand that makes exclusively made not mined fine jewelry for the conscious consumer we are committed to using only made not mined gemstones, delivering 100% recycled precious metals and offering the highest quality materials and craftsmanship and the market.
For decades, we have been diligently working to revolutionize the industry and we are proud to be able to make these unique claims today. It is now our time to shine. We continue to bring forward new product that integrates these commitments and reflects what our consumers are looking for.
Our goal is to design and deliver incredible fine jewelry with an incredible experience that echoes what we believe in the right channel at the right place at the right time.
With that I'd like to turn it back over to the operator to open the lines for questions.
Thank you well now begin the question and answer session.
Question.
That's helpful.
David Please pickup your handset before pressing the keys.
Your question. Please press Star then two.
At this time.
Total legal assemble the roster.
Next question comes from Jason.
Please go ahead.
Good morning.
And.
Yes, congrats on that continued progress mentioned seven consecutive quarters of growth and profit.
When you contrast, this with the share price would you kind of mentioned not reflecting that back.
Back all the way below book value now just kind of asking it pretty directly which of those two aspects of growth and profit.
Whats your sense of which of those two investors are probably more worried about not continuing and it not being a consecutive quarters for both.
You report next quarter as you kind of straddle the line between being a.
Growth versus the value stock.
Growth.
Using kind of materialized as youre thinking and the current consumer environment.
Or is your sense.
We're more concerned about just the spending youre going to kind of push there.
Short term model, a little bit too far.
So let me try to understand Hey, Jason how are you doing let me try to understand the question. So as it relates to book value certainly our book value is right around $1 93, a share. So we believe that the current rate where we're trading at right now is definitely.
Below book, we believe that.
We're not getting the credit that we deserve for delivering.
The progress and the momentum.
We've achieved over the last seven consecutive quarters. So that's really important.
Secondary.
There is definitely a shift in the business, where we're looking for growth we're going after the growth.
So to the growth Investor, we certainly have something there also we wanted to focus in key in on the value proposition of Charles <unk> Colvard as a brand and the differentiation between us and the fact that a matter that we are.
In the ESG perspective.
Jewelry companies that provide.
Responsible and ethically sourced products, where we believe we are the leaders.
What our moist forever, one gem stones, and then Arcadia lab grown diamonds. It presents a unique opportunity to be able to invest in a company that's.
Really positioned in a place if youre ethics and your belief is that you are truly want to invest in a company that mindful of a lot of different things that.
Meets the consumer needs today than we certainly appeal to that consumer long term short term.
If people just looking for quick results at the bottom line, we're trying to.
Do a really good job in getting that growth and.
Be mindful of the fact that we want to maintain profitability. So a profitability to us in cash flow is very important and that's what's helped us build up the cash in.
In the last seven quarters to $21 $9 million, which now presents an opportunity for us to take advantage of the low share price right now as a company to be able to.
Make an investment in ourselves for what we're doing in our accomplishments.
As it relates to the value Investor certainly there is still a tremendous.
Cash position of $21 $9 million with.
No that we.
We have an exercised our line of credit at this point.
So we have been.
I wouldn't say slow and steady we've just been responsible fiscally responsible with our money with our capital with our business growing the business.
But make no mistake, our mission and our goal is to drive shareholder value and grow the business.
Exponentially.
If you go back to the seven quarters, we've made significant strides from coming out of the gate and if you look at the revenue right now of $33 $8 million reported this quarter.
<unk> 2018 revenue beat 2019 revenue in <unk> 2020 revenue. So that's currently where we're at with without reporting our Q4 and our year end. So we're pleased that so we've got the growth and we think.
Thats appealing.
Paul.
At the same time being profitable across.
<unk>.
Pretty much across the channels and across the quarters.
I don't know if Doug but I.
I guess that are laid out.
<unk> from items like you've kind of done exactly what youre, saying youre going to do.
Stock is not.
Not reflecting that.
Can you speak to investors what is your sense of which of those people are.
Not believing I guess for right now because from my perspective, you are doing.
Both of what Youre, saying youre going to do.
So it's not a question of whether they believe or they don't believe in my opinion. It's a question of whether we're doing a good enough job in getting the word out it's a question.
Whether people are.
Seeing who we are and what we're about and really just understanding. The fact that there is an incredible microcap company out there that's performing incredibly well.
For me by standards of all Microcap companies I think we're outperforming most.
And a lot of ways and.
Basically if there is a tree growing into for us Thats My exact analogy that I use.
People may not hear it or may not see it. So our goal is to be able to continuously push the word we need our investors that are currently in this space to be able to shout out.
But if you look at the liquidity liquidity is not as strong as we would like it to be.
But certainly.
We need to do a better job.
Kind of elevating kind of PTH are from an investment standpoint and a.
Positioning so we've been mainly focused on really driving the business driving the growth and exceeding.
Our own internal expectations every single day.
But I do believe moving forward.
<unk> for us as we say it's time to shine.
That's kind of.
Really important across the board but.
We just really need to.
Get the word out there a little bit better.
Okay, great well I appreciate you taking my questions. Thanks.
Okay, great. Thanks James.
Okay.
Thank you the next question.
Private Investor. Please go ahead.
Yes, good morning.
Two questions actually one just in terms of shareholder value question.
So.
I know management feels like they own a lot of stock and you do and so maybe you don't want to be taken out any more but if I recall correctly, it's only been director al <unk>, who has been buying in a meaningful way over the last year or two and so.
Can you make any comment about perhaps other insiders participating at these crazy levels.
Yes sure so.
No.
In full transparency not every director every individual has the means to be able to go into the market and purchase right or make investments.
Everybody has their own investment strategy and everybody has literally their own cash on hand or capital to be able to invest.
If you look.
Recently.
Yeah.
Pete Mike CFO and myself have just recently take on a position, albeit not the strength of our insights on sites.
I can't speak on his behalf, but certainly.
We're very pleased with his vote of confidence in.
In his position.
And certainly we have insiders exercising their options as well as.
Our directors exercising across the board.
And it's been it's been quite significant from from the shift from the moment.
Basically I took over as CEO seven quarters ago.
Okay fair enough.
Secondly, can you talk a little bit just about margins I joined the call late so maybe you already discussed this but I just wanted to know.
In terms of the whole supply chain issue in gross margins, what you are seeing going forward.
Yeah, Great question. So our blended margin is actually up 1% year to date from last year. We were at 48 last year, we're at 49% this year.
Certainly this quarter, we comp to last year's margin, we did see some margin creep related to.
Commodity prices that shot up here recently.
Certain.
Lab grown diamond pricing on the smaller goods certainly increased a little bit there, we believe that's going to stabilize.
Certainly commodities in precious metals stabilized a little bit now and actually dropped down for a little bit around the eight hundreds and now with the theory.
<unk>.
Back and forth and we estimate that we'll get some stabilization.
Based on.
Based on the trend that I've been seeing itself and based on what our insiders are saying about the metal. So we believe moving forward, we're going to be in a good position, we'll be able to stabilize and maintain that.
Just like everyone else will we will look at that closely and we'll make a executive decision to either do pricing increasing.
<unk> across the board I will tell you that shipping cost and expense has also risen so thats another factor there to kind of keep an eye on.
One thing we pride ourselves on is free shipping across the board. So we're kind of analyzing all of that and making mindful responsible decisions no indications that we will not be able to maintain our our blended margin.
And if there is an indicator that we will make the adjustments accordingly.
Fair enough and can you give us an update on.
<unk> planned to open distribution centers in.
In various countries that I saw the announcement regarding.
The UK and there was the previous announcement.
In China I believe can you give us an update on any possible other expansions.
Yes, So let me just address those two so the Asia Pac region, obviously is having some.
Difficulties with Covid still independent Emmick there.
So we're basically we're pushing what we can there we're excited about the international expansion between the U K.
And.
<unk> gold just for the mere fact that the international for US has not been the primary focus.
Since I've taken over we wanted to be able to.
One the United States. There is a huge market here and we think we can capitalize on that market and we've done so incrementally.
But we're excited about the European side, and I think for right now, that's where we're going to.
Book end between the Asia Pac and.
And cooks in gold in the Europe region in the U K.
That's not to say that we wouldn't look to.
You pull in some other things we will wait for the.
Kind of the.
Global uncertainty to kind of resolve itself and kind of go into direction. Its going to go before we make any type decisions with that regard I hope that answers your question.
It does thank you.
Thank you next question comes from Paul.
Please go ahead.
Hi, guys. Thanks for taking the question.
What percentage of your product assortment is proprietary jewelry design versus generic and then second question.
I was hoping you could provide some more color on the showroom and the livestream the.
Strategy. Thanks.
Yes. Thanks.
Sure.
So we don't give out the numbers on kind of the product mix of what we do what I can tell you that the lab grown diamonds aspect of our business is growing very nicely and we're very pleased with that and we've expanded the assortments.
<unk>, if you kind of look at our catalog and go on Charles and Colvard Dot Com you can essentially.
Just look at the increase in volume.
Filing thats going to look to us to increase that even more as the awareness and as the acceptability starts to increase which we believe we're in a great position for we believe that we've created a destination for all things made not mined and that.
Choice that we offer that consumer is becoming mainstream so we think thats, a really really good thing for us so.
I know youre looking for specific numbers, but at this point, we just it's a product category for us, but we don't disclose that but it is incrementally growing.
Pretty much by the day, but.
But the customer and the consumer if you look at our <unk> business has still grown by 10% and you look at the growth in the lab grown diamonds business for US has grown by 141%. So the growth is there and we started out.
A little less than a little over a year ago, and we had basically a basic assortment and now we've kind of grown that into from engagement to anniversary to now fashion and look to us to do a lot more in the fashion category.
As it relates to our showroom.
We anticipate that we will get our first signature store opened.
Sometime here shortly I am not going to give specific timing for that just because of the fact of <unk>.
Strange between inspections and final.
Difficult Occupancies there.
That's the same thing related to our.
Through our digital studio, let me talk a little bit about the digital studio and what that looks like that digital studio works as a hub for Charles <unk> Colvard.
We can be self serving self sufficient we create our own video content, which we believe is the future. We believe that this digital studio capacity and capability will set us apart from anyone else in this industry.
It will give us the ability to push content, whether it's sharper both video content, whether it's direct response content, whether it's just through Tictoc Instagram Facebook.
Whether it's through our own social campaigns.
Allow us to produce a tremendous amount of content, where currently there are limitations and costs.
Prohibited aspect to bringing that content forward in today's consumer you have to be everywhere that consumers I know thats a cliche, but.
And that consumer is gravitating to video that consumer wants to interact it has to be an intuitive interactive experience and we believe that studio, which is nearing completion here shortly will give us an opportunity to phase in more and more content and then eventually get that video shopping.
City up and running and the potential for direct response shopping.
Through any means it could be through Directv it could be through.
Regular cable it could be through Youtube TV. So.
That's a pretty broad swath, there that I gave you but.
Okay.
Hopefully that we understand that but going back to the product category with our signature collection, which is our proprietary designs and everything our sales were up 29% on $9, 59% year to date.
But the signature collection is very important to us because that's a differentiation between Charles called BARDA and other brands, we believe Thats our advantage and it also tells the story between.
Between the four season, the elements of Charles <unk>, Colvard, and what we're about and its debt red thread that.
I hate to use the term, but I'll use German at SCOR Tiffany thread like.
Like major brands that we think is resonating with our consumers and that percentage is growing I don't give that percentage out too as well because it's also a product but.
It is growing and it represents a very significant part of our business now.
Great. Thank you very much.
Thanks.
Okay.
If you have a question. Please press Star then one.
Your next question comes from Matt Koranda.
While the capital. Please go ahead.
Hey, guys, it's Mike <unk> on for Matt Koranda.
Could you just help us break down the online performance in the quarter, specifically as it pertains to onsite versus Amazon and comment on our new web traffic conversion trends youre seeing.
Yes sure.
How you doing.
So the bottom line is we do break out our online segments. Our CDC are you talking about our Charles <unk> Colvard dotcom business itself.
Yes.
Kind of breaking out performance.
Charles and Cologuard versus Amazon performance, I'm, just web traffic, specifically on site and any conversion trends you've seen.
Yes, so our overall Charles <unk> Colvard Dot com were up 34% fiscal.
Year to date so.
We're definitely seeing some real improvement there and that is really kind of what we call. The gift the gift that keeps on growing in a gift that keeps on giving I can tell you that.
<unk>.
Overall, if you look at our overall revenue at $33 $8 million and look at our online business now 65% of that and you look at where we reported our online business to date at 34% is just about.
Just shy of last year's full year. So that remains to be very remains very very strong we don't publish as far as the amazons and the marketplace breakouts between the drop ships.
But.
It basically.
It's all about Charles and Colvard Dot com.
Got it okay.
And maybe next just speak to where <unk> ended up in the quarter.
They are impacted by the current mix of lab grown diamonds that we have.
Yes, so going back to also.
I think the online business. If you are asking as far as Charles and Colvard Dot com represents 62% of.
The revenue in our online business right now so just to give you that specific.
Okay.
Okay, so as far as our <unk>, we reported that it's $200. So we're very excited about maintaining our <unk> were also excited of the fact that on the LGD, even though there are higher ticket items.
A lot of our products are in the anniversary band in the fashion category, which helps us maintain a nice strong.
End of <unk>. So it's not I know some of the other competitors are selling.
A lot of large center stones, and engagements that skews, there <unk> a little bit.
The beauty of what we have going with our <unk> on the return aspect of the business, which we have very low return rates don't impact the business overall, so we're very pleased with.
The strength of our <unk> at $200 right now.
Got it and last one for me just on sales.
Sales and marketing last quarter, we called out healthy realized metrics and new campaigns, maybe if you could just provide an update on how these metrics trended in the third quarter.
Quarter over quarter today in situ, which channels specifically performed the best.
Sure so when.
We addressed the Rou assets for Charles <unk> Colvard Dot com. So we believe that we've got these levers we're pulling the levers in the right direction as the business shifts more 65% now being online visits and 62% representing a Charles <unk> colvard.
Certainly were paying very very close attention. We're looking at that data every single day I will tell you that our average AD spend year to date right now is about $3 75.
And for the quarter, it's about close to $300. So that's basically a reduction so we've been getting a little bit better increasing our ROE as increasing our ability to kind of drive that.
Traffic and conversion.
Meaningful and basically we reduced it by.
100 and $100.
Average ad spend per customer so.
That's per new customer.
Thank you Claire.
Got it.
That's helpful guys. Thank you.
Thank you.
Question from Paul Jonathan Private Investor. Please go ahead.
Yes can you give an update on the macys and <unk> businesses and then in terms of the <unk>.
<unk> is going forward, so looking at the nine months figures.
Revenues were up 14%, which is good but SG&A was up like 40%.
Is that something thats going to be tailing off or are we going to continue to see that kind of disparity between the growth in expenses relative to sales.
Yes, so actually our spend is down 39% from last quarter, but look to us to make strategic investments, let's talk a little bit about the businesses first.
So Macy's remains very very strong and a great strategic partner for us Macy's in store and Macy's online I can tell you their online business is.
Is performing quite well and we're real excited about that and as we announced here we've expanded the assortments there on both sides of the house between in store and as well as online <unk> remains really a gem of an account a gem of a customer in a business for us it continues to grow and as the lab.
Brown movement gets stronger and stronger so does our business with <unk> <unk>.
Look to us to continuously grow that business continuously support it we look forward to.
Continuing that relationship so we're in all the Hillsboro doors.
Albeit they did reduce several doors through the pandemic, but the strength of the doors that they now have is still remains very very strong.
Not even stronger than it was before the pandemic.
So we're real excited they're in their online business still remains incredibly strong.
So.
That's real real good.
But in terms of the expenses going forward.
Can you just talk about that.
Yes, so we will continue to.
Spend.
Specifically to Buildout resources right. So that's really important to us as we continue to grow a larger business.
Certainly when I took over the business we were at.
Basically.
Less than $30 million and now we're we're increasing.
Even greater in order to get that incremental growth in revenue, we would need to be able to spend strategically into paid and social campaigns, we need to support the brick and mortar partners that I just spoke about between co op programs, we need to support our traditional partners would trade. So we will continue to be mindful will continue to spend.
Try not to get caught up in.
The increase on SG&A and when Youre looking at <unk>.
<unk> trailing.
Nine months were based on a fiscal year to date of the seven months.
You pull in our last year, which was the first year I took over as CEO tremendous growth and improvement there, but this year to date, we're seeing the same but we are incrementally spending as we're driving the revenue side.
So we will be mindful of it we'll pull the levers as we need but we have thresholds in place.
For performance based thresholds related to the rollout and then as the online business segment starts to become more of an integral part of our business right. Now currently representing a 65% and let's just say that's where the growth is right. Our traditional remains strong and keeps and maintains itself.
But then the true growth is the direct to consumer and as that exponentially grows it's a different business and that's why I tried to call that out during the script today, it's a completely different business and the costs associated with bringing on the right talent and resources and marketing.
In design in overall collateral in support for that business and actually pushing out in this competitive landscape between paid and search terms and phrases.
We're going to continue to spend there, but again still profitable continue to grow top line and doing what we need to make this business an incredible business and find catalysts that gets us to the one.
150, 100 $200 million range.
Fair enough and in terms of the of the wholesale accounts is there any possibility with I don't know someone like a dillard's or or even a costco.
Yes, So costco is a great name. So what we're looking to do is do business with people that are solvent or we think that are really in good financial condition and financial.
<unk>.
Or or presents the financial capability for long term.
<unk>.
In short, yes, we're constantly looking at those opportunities that <unk> like opportunities, they're very rare defined right now.
Certainly, we think with macys and warehouse Bergman with the two strongest.
Costco has a different kind of business model.
Or are they.
Supply certain components of the pieces.
So, it's a little bit different but look to us to look for additional.
For all intensive purposes, I'd like to use the term tentacles that can connect to our main vault of inventory so.
It's a great point I appreciate you, bringing it up as many of those tentacles that we can connect to our bulk of inventory there.
Better we are in.
The more growth, we will see so it look to us to to bring on or be aggressive in bringing on more of those.
Online partners to be able to connect at pinnacle's.
Alright, guys. Thank you. Thank you.
Yeah.
Okay.
Sure.
This concludes our question and answer session will follow at.
At the time of the conference back over Mr. Donald Hall for closing remarks. Please go ahead.
On behalf of the entire Charles <unk> Colvard team I'd like to thank you for your time today and your continued interest in Cta HR and looking forward to our fiscal year end call.
Stay tuned for Charles and called Bard's growth.
And path forward and we're excited so.
Thanks.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.