By Michelle Graff

Seattle--For the second quarter in a row, Blue Nile’s diamond engagement ring sales have slipped, with more people buying their rings on the website but the average sale price declining.
The Seattle-based e-tailer reported Thursday that U.S. engagement sales totaled $61.0 million in the first quarter ended April 3, down 7 percent from $56.7 million in the first quarter 2015.

The decrease comes on the heels of the 8 percent drop in U.S. engagement sales Blue Nile reported in the fourth quarter 2015.

On a conference call held Thursday morning, CEO Harvey Kanter described the first quarter as “challenging,” as it expected. He noted that the company’s average sale price declined and that it continues to see weakness in sales at the high end of the market.

The drop in engagement sales, the company’s core business, dragged down overall sales.

Blue Nile reported a 3 percent year-over-year decline in net sales, from $106.5 million to $103.1 million. Net income was down slightly, from $1.2 million to $1.1 million.

Non-engagement sales, a category that encompasses all other jewelry sold on the website including wedding bands, were up 4 percent from $26 million to $27.1 million.

Executives said on Thursday’s conference call that they continue seeing double-digit growth in wedding band sales while sales of diamond fashion jewelry grew in the mid-single digits. Sales of other fashion jewelry declined.

The company has added another jewelry designer to its Designer Collective, Angela George.

Also on Thursday’s call, executives spoke briefly about the company’s “webrooms,” the physical locations it is opening in malls in New York, Virginia and Oregon where consumers can try on engagement rings; all purchasing, however, still happens online.

Blue Nile has one webroom open so far, in Roosevelt Field Mall on New York’s Long Island.

Kanter said the other New York webroom, plus the ones in Virginia and Oregon, are slated to open by mid- to late summer. He also said that the company is now working on a plan to open additional webrooms in 2017, though he provided no further details on location or timing.

When asked how the company expects the webrooms to contribute to sales volume on the website in the second quarter and next year, Blue Nile Chief Financial Officer David Binder said, “It’s very much a learning period for us. We’ve very optimistic and we’re also very cautious in what a different market may do relative to the success we’ve had a Roosevelt Field.”

Blue Nile said it anticipates sales of $114 to $117 million in the second quarter and is maintaining its full-year guidance of $465-$495 million in net sales.

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