Blue Nile enjoyed a positive second quarter, with both sales and profits posting gains.
Overall the Seattle-based e-tailer’s sales for its second quarter (ended July 5) rose 6.7 percent to $113.7 million. Net income totaled $2.3 million, up from last year’s $2.2 million. Operating income for the quarter came to $3.4 million, a 3 percent margin, even with last year.
The company saw lifts in both its engagement and nonengagement sales: U.S. sales of engagement products grew 7.5 percent to $65.5 million, while nonengagement sales increased 3.5 percent to $28.7 million.
The company’s Garden City, N.Y., webroom, which opened in June, has drawn “incredible levels of traffic,” president, CEO, and chairman Harvey Kanter told analysts on a conference call following the results’ release.
“The traffic is not only compelling but it’s a large contingent of consumers who didn’t know [us],” he said. “The feedback from customers is not only that it’s different, but also an empowering experience, and we believe that is what people want.… It is something different from a traditional jewelry experience.
“The webroom concept should achieve a financial return that is similar to our overall business,” he added. “We are excited about this opportunity. [But] it’s just one location, and we have a long way to go before it is a material part of our business.”
To date, the store has not had materially impacted conversion rates in the surrounding market, said chief financial officer and chief accounting officer David Binder.
Sales “have exceeded expectations, and are well on our plan toward having this be a profitable extension of the business,” Binder added.
In addition, the company’s growing suite of designer brands, from names such as Monique Lhuillier and Colin Cowie, are “resonating more” with consumers, Kanter said.
“We [want] no more than three to five designers in the bridal category, and no more than six to eight in the nonengagement category,” he added. “We are not looking to become a marketplace. We are looking to make sure we curate a collection that brings a unique positioning to the mix that is on target with our millennial customer … Our designers are an embedded part of our mix, but we are not going to materially grow them to the point where they become Blue Nile,” which stands for value.
While the company saw fashion jewelry sales increase for the third consecutive quarter, wedding band sales were mixed, Binder said, as customers increasingly favored lower-priced gold and alternative metals.
Declining diamond prices helped the company as they let it capture margins, Binder added.
Other results highlights:
– Second quarter international net sales jumped 8.9 percent to $19.5 million. Excluding the impact of foreign exchange rates, they grew 15.3 percent.
– In the second quarter, the company repurchased 374,728 shares of its common stock for $10.5 million.
– The company saw its highest-ever marketing spend in the second quarter.Follow JCK on Instagram: @jckmagazine
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