May 5--Charles & Colvard, the Morrisville manufacturer of moissanite jewels, said today that sales in the first quarter fell 27 percent compared to the same period last year amid a significant slowdown in the retail market.

Its operating loss narrowed, though, as Charles & Colvard clamped down expenses. The company had an operating loss of $1 million during the first three months of the year, compared with an operating loss of $1.1 million during the first three months of 2008.

Charles & Colvard, whose core product is marketed as an alternative to diamonds in jewelry stores, faces severe challenges during this recession. The company received no major orders from its customers during the first quarter and does not expect any in the near-term.

"The consumer retail jewelry market has become increasingly difficult with very soft demand," Chief Executive Richard A. Bird wrote in a statement. "We are experiencing sharply reduced sales and sales prospects."

The company faces the prospect that some retailers might forego selling moissanite altogether, according to the statement.

Taking into account interest and tax expenses, Charles & Colvard had a net loss of $1.02 million during the quarter, compared with a net loss of $698,085 during the first quarter of 2008.

jonathan.cox@newsobserver.com or 919-836-4948.

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