Blue Nile records highest sales growth in 5 years
By Michelle Graff
Seattle--The fourth quarter 2012 was the best since 2007 for online retailer Blue Nile, driven primarily by strong sales of engagement rings in the United States.
In the fourth quarter ended Dec. 30, Blue Nile’s net sales increased 21 percent year-over-year to $136.1 million. Net income totaled $4.9 million, up from $4.2 million in the prior-year period.
U.S. engagement ring sales increased 31 percent to $73.6 million, compared to $56.2 million for the fourth quarter 2011, the category’s highest level of growth in five years. Sales of the newly launched line of bridal jewelry by designer Monique Lhuillier exceeded expectations.
However, U.S. non-engagement ring sales, an area the company had been emphasizing recently, fell short of expectations due in part to a decrease in discretionary spending among consumers. Fourth-quarter sales in the category were up 5 percent year-over-year, from $40.4 million to $42.5 million.
In a conference call held late Tuesday, Blue Nile President and CEO Harvey Kanter acknowledged that the range of fashion jewelry the e-tailer explored in 2012 was, perhaps, too trendy for its customers. He said in 2013, they will stock more “updated classics” and fewer “high-fashion” and “trend” pieces.
Kanter also noted that the company “over-invested” in colored gemstones while “under-investing” in diamond fashion jewelry. In 2013, Blue Nile plans to expand its selection of diamond fashion jewelry across all price points, he said.
“The fourth quarter caps off a great year of growth at Blue Nile, building upon our sequential growth while posting greater profitability versus the prior year,” Kanter said in a news release. “Investments we made in 2012 paid off with the highest annual levels of revenue and customer acquisition in five years, exceptional strength in engagement sales in the U.S. and a return to strong growth internationally. While we fell short of our expected sales of non-engagement jewelry during the holiday season, in part due to weaker environment for consumer discretionary spending, we gained valuable insight that will guide the evolution of our product mix.”
For the full year 2012, net sales reached $400 million, up 15 percent from $348 million in 2011. Net income was $8.4 million, down from $11.4 million last year, with investments made throughout 2012 driving down profitability for the year.
U.S. engagement ring sales rose 5 percent for the year. Non-engagement net sales also grew 5 percent.
In 2013, Kanter said improvements to their customers’ mobile experience will be a top priority. In the third quarter 2012, one-third of the site’s visitors accessed BlueNile.com via a mobile device. He said he expects that number to increase to more than 50 percent
Blue Nile forecasts first-quarter sales of $94 to $100 million and sales of $440 to $470 million for the full year. The retailer said it anticipates diamond prices to increase slightly.