Blue Nile reported mixed financial results in the first quarter of 2012—with sales up but profits down 93.5 percent.
Overall, the jewelry e-tailer’s sales increased 3.6 percent to $83.1 million—a reversal from the prior quarter, when sales dipped. But profits sank too, to $154,000, from last year’s $2.4 million.
In a conference call following the release of the results, chief financial officer David Binder said the company’s aggressive pricing and increased marketing had led to a 20 percent increase in new customers in the first quarter, but impacted margins. He said the engagement ring business has grown “as planned,” but the non-engagement business, its new focus, “has been slower to ramp.”
He added that the company has been helped by a settling down of diamond prices.
“Where our business model had been challenged in 2011 was offline competitors who were holding onto inventory they had held for 12 months prior,” he said. “We are beginning to get back to some of the historic [price] gaps we have had.”
The company also continues to be “fairly active” in group deal and flash deal sites, though those also impact gross margins, Binder said.
Highlights of Blue Nile’s financial statement (three months ended April 1):
- U.S. engagement net sales: Up 3.1%
- U.S. non-engagement net sales: Up 1.3%
- International sales: Up 9.3%
The company expects sales for the 2012 fiscal year to hit between $384 million and $417 million.