Internet diamond and jewelry retailer Blue Nile reported Tuesday that net sales for the third quarter decreased 2.9 percent to $65.4 million when compared to the same period of the prior year. Net income fell 23 percent to $2.3 million, year-over-year.
“Our top-line growth declined as a result of the further weakening in the economic environment in the U.S. during the third quarter,” said Diane Irvine (pictured), Blue Nile chief executive officer. “Our expectation is that this will be a very challenging holiday season based on the uncertainty in the external environment and extremely cautious consumer spending trends.”
Irvine, added, “Blue Nile is well positioned to generate profitability and cash flow even in difficult market conditions. We remain confident in our ability to continue to gain market share and to emerge from this economic downturn in an even stronger competitive position.”
During the quarter, the Seattle-based company repurchased 593,700 shares of its common stock for $23.2 million. Since the inception of the buyback program in the first quarter of 2005, the company has repurchased 4.4 million shares for a total of $160 million.
Among the company’s financial highlights:
* International sales for the third quarter grew 53% to $6.9 million, year-over-year.
* Gross profit for the third quarter was $13.3 million. As a percent of net sales, gross profit increased to 20.3 percent compared to 19.8 percent in the third quarter of 2007.
* Operating income for the quarter totaled $3.3 million. Operating income as a percentage of net sales was 5 percent for the third quarter.
* Selling, general and administrative expenses for the quarter were $10.0 million, compared to $9.7 million in the third quarter of 2007. Selling, general and administrative expenses include stock-based compensation expense of $1.6 million, compared to $1.4 million in the third quarter of 2007.
The company refused to give an outlook for the fourth quarter.
“The deterioration in the economic climate and the uncertainty surrounding consumer spending patterns combine to create a lack of visibility into expectations for the upcoming holiday season. As a result of the uncertainty in the external environment, the company is not providing financial guidance at this time for the fourth quarter and fiscal year.”