National Jeweler Network

Financial Reporting

Engagement ring sales up 19% for Blue Nile in Q1

2013-05-03

Seattle--Online retailer Blue Nile reported solid first quarter results, with total sales increasing 17 percent on the back of a record first quarter for engagement ring sales in the U.S. market.

In the period ended March 31, Blue Nile’s net sales totaled $97.1 million, up from $83.1 million in the prior-year period. Gross profit totaled $17.6 million, up from $15.3 million in the first quarter 2012. As a percent of net sales, gross profit was flat at 18 percent.

In the U.S. market, engagement ring sales increased 19 percent year-over-year, from $46.4 million to $55.3 million.

“Clearly we are excited,” CEO Harvey Kanter said during a conference call held late Thursday. “More people bought a Blue Nile engagement ring in this first quarter than in any other first quarter in history.”

Stabilizing diamond prices and the addition of the Monique Lhuillier-branded line of engagement rings launched in October helped to boost Blue Nile’s engagement business. Kanter said sales of the line have exceeded expectations and that it “clearly resonates with the bride-to-be.”

Sales of non-engagement jewelry increased at less than half that rate of engagement ring sales, rising 7 percent from $22.6 million to $24.2 million.

International sales increased 26 percent at constant exchange rates, rising from $14.1 million to $17.6 million.

In announcing their fourth-quarter results in February, Blue Nile executives noted that the company needed to shift its merchandise mix of fashion jewelry away from trendy pieces to more “updated classics.”

Kanter said that sales of diamond fashion jewelry and wedding bands were strong. The company is looking to expand its assortment in both these categories and plans to extend the Monique Lhuillier line into fashion jewelry.

He also said the company is looking to offer more branded, proprietary lines like the Lhuillier collection. It’s an “important part of creating differentiation in the marketplace,” Kanter said.

During Thursday’s call, an analyst asked Blue Nile executives about the projected impact on their business if Congress passes the proposed legislation for a federal Internet sales tax.

Chief Financial Officer David Binder acknowledged that the bill is something the company is monitoring closely and that it “does seem like it’s moving its way through Congress.” If it does pass, he said Blue Nile expects customers to be “disjointed” at first when prices increase. 

Blue Nile charges sales tax in only two states: New York and Washington, where the company is based.

For the second quarter ending June 30, Blue Nile projects net sales of $100 million to $105 million.

For the full year, net sales are expected to total between $440 million and $470 million, exceeding net sales of $400 million reached in fiscal year 2012.

Blue Nile ranks No. 17 on National Jeweler’s 2012 list of $100 Million Supersellers.