Looks like CTHR might actually turn into a significant revenue contributor to CREE:
After years of being snubbed, Moissanite appears to be a girl's new best friend.
Just ask Brooke Shields, Minnie Driver, Mia Hamm or the members of Destiny's Child.
All of the above, as well as a host of other celebrities, are touting the charms of the man-made gem created in the Durham labs of Charles & Colvard.
Its allure? The sparkle and luster of a real diamond -- at a price that means you don't have to treat it like the real thing.
Combine that appeal with the slow economy and some marketing muscle from C&C, and suddenly Moissanite's future is brighter than ever.
"Customers think: 'For $900 I can get a nice ring or pay $9,000 for a diamond.' If they know it's Moissanite and their neighbors don't, that's OK," said Kenneth Gassman, president of the Jewelry Industry Research Institute of Richmond, Va.
But even when the economy rebounds, Moissanite will still have a strong market, Gassman said.
"It's not a fad," he said. "People thought [Cubic Zirconia] was a fad, but it is still around and selling well.
"Moissanite is different. It's a new gem, it's unique and it's not available across every counter. There are people out there who want the newness and uniqueness that Moissanite offers."
Melissa Todd might be one of those people. On a recent afternoon, she was looking at the sparkling earrings, bracelets and engagement rings displayed inside the bright glass case in Impostors Copy Jewelry in Crabtree Valley Mall in Raleigh. She glanced at the engagement ring she was wearing, then back at the case.
"I can't tell the difference," said Todd, who owns an aviation company in Savannah, Ga. "So what's the story with this Moissanite?" she asked the saleswoman on duty.
That was all Pat Bergeman needed to launch into her pitch: Moissanite actually has more luster and brilliance than diamonds but sells for about one-tenth of the price.
Todd ended up walking off without a purchase -- but she said she might be back. She didn't think Moissanite was appropriate for an engagement ring, but said it would be fine to wear casually.
Steve Boole, who owns Impostors and has been selling Moissanite for nearly two years, said that he is selling nearly 10 times more than he was last year.
He has about 15 different styles in stock at his stores in The Streets at Southpoint, Crabtree Valley Mall and Four Seasons Town Centre in Greensboro. He said he plans to double that during the holidays.
In addition to Boole's three stores, Moissanite is being sold in 27 other Impostors costume jewelry stores; the 60-store Landau accessories boutique chain, the 19-store fine jewelry chain Morgan Jewelers in the Western United States; and on the TV shopping networks ShopNBC and Shop At Home.
On the wholesale front, Rio Grande and Stuller Settings, two internationally recognized jewelry suppliers, are distributing Moissanite to 3,500 retail jewelers.
Charles & Colvard's sales have nearly tripled from $4 million in 1998, when it was practically laughed out of the $40 billion jewelry industry, to $12.8 million in 2000, though they fell back to $11.5 million in 2001. Since the stock price hit a low of 91 cents about a year ago, it has come back strongly, closing Monday at $4.98, up 6 cents.
Even in 2000, when the national jewelry industry saw retail sales drop slightly, Moissanite sales climbed. This year, the 42-employee company is continuing to outperform the industry. It posted a third-quarter net income of $572,000, a 255 percent increase over the previous year.
Sales have been helped by Moissanite's increased popularity among TV costume designers. It has graced Stockard Channing on "The West Wing" and Alex Kingston and Ming-Na on "ER." The nationally syndicated TV magazine show "Extra!" recently highlighted Moissanite in a piece on what stars are wearing.
And a recent episode of CBS' "CSI: Crime Scene Investigation," featured the gem as part of a story line. CSI writers said they were looking for a high-end product that had similar physical properties of a diamond. Moissanite was the winner.
But getting Moissanite to this point has been an uphill battle for Charles & Colvard.
Originally Bob Thomas, president and chief executive of C&C, was marketing the synthetic gem as a direct competitor to diamonds.
Even though experts said they could hardly tell the two apart without the aid of a special instruments, diamond lovers rejected it as a cheap knockoff. Three years after Moissanite entered the market, C&C had not turned a profit and shareholders were impatient.
The company faced a huge marketing dilemma: It had to find a way to reposition Moissanite so it would be viewed on its own merits and still be taken more seriously than common faux jewelry such as Cubic Zirconia.
Thomas shifted his targeted market from wealthy shoppers to working women such as doctors, educators and lawyers -- even actors and sports stars -- and poured millions of dollars into a brand-building campaign.
Then Thomas began telling the Moissanite story to viewers of home shopping TV shows and any one else who would listen.
"I believe that once women take the time to understand the story, they fall in love with its beauty," Thomas said.
The story, in short, is that the near colorless Moissanite gemstones are silicon carbide, the third-hardest substance known to exist. Diamond, made of carbon, is the hardest.
According to a jewelry industry comparison of Moissanite and diamond, Moissanite has more fire, brilliance and luster but is not as hard, which means it is more likely to chip or be scratched than a diamond. (Fire is the sparkling prism of different colors reflected back to the eye; brilliance is how bright the light is; luster is the light reflected from a jewel's surface.)
One complaint about Moissanite is that under certain light, some of its jewels have a faint greenish hue. But that could work in the company's favor, said Gassman of the Jewelry Industry Research Institute.
"The green color, that's something special," he said. "It can be a problem, but it depends on your point of view. It could be a differentiating factor that could help better position Moissanite in the market."
But the most obvious difference between Moissanite and diamonds is the price. A one-carat Moissanite costs between $500 and $600, compared with $5,000 or $6,000 for a one-carat diamond. (A one-carat Cubic Zirconia goes for about $125.)
Despite Moissanite's new-found fame, it still has a way to go to overcome the stigma associated with faux jewelry. Many people have a deep, sentimental connection to diamonds, and that has been difficult for Charles & Colvard to overcome.
"When it comes to diamonds, I have to have the real thing," said Mary E. Hornberger a Raleigh stay-at-home mother. Hornberger was shopping in Impostors for earrings to wear to a wedding reception.
She said that she buys fashion jewelry all the time, but draws the line at diamond look-a-likes. But she admitted she was impressed by the stone and plans to attend a Moissanite trunk show at Impostors on Saturday.
Persuading high-end jewelry retailers to carry Moissanite remains a challenge, as many jewelers adamantly protect their exclusive image.
"I don't think we would ever sell Moissanite," said John B. Bradley jewelry consultant at Carlyle & Co. in Crabtree Valley Mall.
"We have a history of only selling genuine stones. If we break that off, that could be a problem for us."
But for fashion jewelry sellers such as Boole, that could mean more business.
"Moissanite is still just a minority part of my business," said Boole. "But it's a growing part, and we don't know where it's going to go."
Raleigh, NC News and Observer |
