Blue Nile saw sales growth in the second quarter—but the company’s profits still fell.
Overall, net sales for the second quarter grew 13 percent to $91 million. But net income totaled $1.6 million, down 43 percent from the $2.8 million the company posted the prior year.
The numbers were considered above analyst expectations, and the company’s stock rose following the announcement.
In a conference call following the announcement, chief financial officer David Binder credited the improved results to the recent reduction in diamond prices, which he said gave the company some room to increase margins.
“When pricing comes down in the supply market, we have some opportunity to optimize profits,” he said.
The company also touted the non-engagement side of its business, which has become a priority for the company. While that sector grew only 1 percent, recently appointed CEO Harvey Kanter said the company “is still evolving the mix.”
Kanter said the company had seen some “great acceleration” in its mobile business—noting it had just completed an $85,000 transaction over a smartphone.
He also hailed the social media site Pinterest, which he called a “great example” of the company’s success with social media.
“We look at social media as a really meaningful way of continuing to build the brand and engagement with the customer,” he said.
Binder said the company doesn’t see any serious competition out there for online jewelry sales.
“We don’t see anyone out there that has nearly the supply chain that we have in place,” he said. “We are not seeing anybody with the breadth, the pricing, the customer service that can touch the value proposition that we deliver.”
Binder also said the company had made what he called a “strategic investment” in a retailer in China, which he did not name, to help with its Asian business.
In a statement, Kanter noted the company was buying back shares, purchasing approximately 349,000 shares in the second quarter, and 1.5 million shares year to date, representing approximately 11 percent of the shares outstanding as of the end of last year.
Other highlights of Blue Nile’s financial statement, for the quarter ended July 1, 2012:
- U.S. engagement net sales: $52.4 million, compared to $43.9 million last year
- U.S. non-engagement net: $24.2 million, compared to $23.8 million last year
- International net sales: Up 12.6 percent, to $14.4 million
- New customers: up 32 percent
- Cash and cash equivalents: $53.7 million