While chairman and CEO Bob Thomas insists that demand from consumers is increasing, retailers that sell moissanite jewelry have too much inventory and aren't making big purchases. The gems, which are produced in a laboratory, are similar in appearance but cheaper than diamonds.

The Morrisville-based company reported Tuesday that third-quarter sales fell 46 percent from a year ago to $6.6 million.

Heading into the holiday shopping season, the company is increasing marketing to women, including advertising in Oprah and In Style magazines.

The year "to date certainly has been a challenging period," Thomas said on a conference call with investors and analysts. "We will be aggressive in the execution of our sales and marketing campaign ... to prepare for more favorable results."

Investors aren't optimistic.

Charles & Colvard stock, which traded above $25 two years ago, closed Tuesday at $3.82, down 11 cents. The stock fell as low as $3.25 in after-hours trading following the earnings announcement.

More retailers are stocking moissanite jewelry, which should boost future sales, Thomas said. Department store chain Kohl's, for example, expects to have moissanite products in 930 stores by the end of the year, up from several hundred now.

In the latest quarter, which ended Sept. 30, Charles & Colvard reported U.S. sales fell 51 percent. U.S. retailers remain "cautious" about buying more from distributors, Thomas said.

International sales were down 5 percent, with declines in Hong Kong offset by strong results from India, Taiwan and Italy.

Net income for the quarter declined to $246,000, or 1 cent a share. That was well below the net income of $2.2 million, or 12 cents a share, a year earlier.