Blue Nile reported third quarter net sales of $53.2 million, compared to net sales of $42 million in the third quarter of 2005, an increase of 26.8 percent. Net income in the third quarter totaled $1.8 million, compared to $2.5 million in the prior year.

Net cash provided by operating activities increased 21.7 percent to $30.3 million for the 12 month period, ended Oct. 1, compared to $24.9 million for the twelve month period ended Oct. 2, 2005. Non-GAAP free cash flow increased 22.7 percent to $28.3 million for the twelve month period, compared to $23.1 million for the twelve month period of 2005.

“Our business model continues to demonstrate the ability to generate exceptional results, as reflected in our third quarter financial performance,” said Mark Vadon, Blue Nile chief executive officer. “The growing appeal of the Blue Nile brand, along with our focused operational execution, helped drive strong revenue growth and robust earnings results.”

Vadon added, “We will continue to focus on delivering an exceptional experience to our customers. We are confident in our ability to execute on the significant long-term potential we believe the business has for future growth and profitability.”

Gross profit for the third quarter, ended Oct. 1, was $10.4 million, compared to $9.2 million in the third quarter of 2005, an increase of 12.8 percent. Gross profit as a percentage of net sales was 19.6 percent in the third quarter of 2006 compared to 22.0% in the third quarter of 2005.

For the full year, ending Dec. 31, the Seattle-based Internet retailer expects net sales between $249 million and $255 million.

JCK