E-tailer Blue Nile has set up a second showcase at Nordstrom Roosevelt Field in Garden City, N.Y.—part of an experiment to see if letting customers see and touch its jewelry can drive more sales.
“These are tests to see if the display of our products in a retail store as well as face-to-face interactions with a diamond and jewelry consultant will materially increase our conversion rate,” said CEO Harvey Kanter in a conference call following the release of the company’s financial results. “We are excited about what this type of partnership could mean to the future of Blue Nile.”
And while the company has suggested the showcases might expand to the 17 other Nordstrom Wedding Suites throughout the country, both Kanter and chief financial officer David Binder cautioned this is only a test.
“We are going at it with two stores on a limited basis,” Binder said. “It gives the customer a chance to see, touch, and feel the settings and wedding bands and speak directly with a diamond and jewelry consultant.”
He added: “The levels of investment are really nominal, and that is the key. This kind of partnership is inventory light and cost-efficient.”
The company does not make direct sales at the boutique, but instead directs companies to its website, sometimes with the help of the iPad-touting consultant manning the booth. That means the transactions are not subject to state sales tax, spokesman Josh Holland tells JCK. And while the two tests are in Washington and New York— two states where the company already collects sales tax—that is a “coincidence,” Holland says.
The company didn’t give further details on the test, but a job posting to work the boutique said the Roosevelt Field role will run through the end of May, with the possibility of becoming permanent.
The news came as the company announced generally positive financial results. Net sales for the fourth quarter ended Dec. 30 increased 7.2 percent to $146 million; the company’s full-year sales totaled $450 million, compared to last year’s $400 million.
The revenue numbers disappointed analysts, and Binder admitted that they came at the “low end of expectations.”
“Consistent with what you have probably heard from many other retailers, we believe that the relatively few shopping days between Thanksgiving and Christmas worked against us, not giving customers as much time this holiday to plan a large and highly considered jewelry purchase,” he said.
On a more positive note, the company has seen “strong results” with the Monique Lhuillier bridal jewelry, Kanter said, adding the company is “pleased” with the results from Lhuillier’s line of non-bridal jewelry.
“We believe that products developed by branded designers will further differentiate our offer,” said Kanter. “In the first half of this year, we will launch new products that feature exclusive, unique, and compelling jewelry developed in partnership with designers.”
Binder said the company will soon debut a “designer’s collective.”
“This is a strong trend within the industry, bringing in designer names within jewelry,” he said. “[It] will be an interesting test for us, to see how well designers work within our retail environment.”
The company is also focusing in on mobile.
“Revenue coming from mobile devices is growing disproportionate to the rest of the business,” said Binder.
It was also noted that Vijay Talwar, the international division head who served as interim CEO from November 2011 to March 2012, has left the company.
The company has also authorized an up to $100 million stock repurchase program, and it will purchase as much as $40 million of stock this year.
Some highlights of Blue Nile’s financial results, for the fourth quarter (ended Dec. 29) and full year (ended Dec. 30):
- Net income for the fourth quarter: $4.9 million
- Net income for the full year: $10.9 million
- U.S. engagement net sales for the fourth quarter: Up 6.9 percent to $78.7 million
- U.S. engagement net sales for the full year: Up 12.9 percent to $255.8 million
- U.S. nonengagement net sales for the fourth quarter: Up percent to $45.9 million
- U.S. nonengagement net sales for the fiscal year: Up 8.9 percent to $121.0 million
- International net sales for the fourth quarter: Up 6.8 percent to $21.4 million
- International net sales for the fiscal year: Up 17.3 percent to $73.2 million
- Cash and cash equivalents on hand: $115.9 million