Blue Nile Sales Up 19.8 Percent

Blue Nile said Thursday its net sales increased 19.8%, year-over-year, to $89.8 million for the third quarter due to a increases in all its product categories, including its new focus on fashion jewelry, and a large increase in new customers. However, international sales fell for the period ended September 30.

Operating income for the diamonds and jewelry Internet retailer totaled $2.7 million, representing an operating margin of 3 percent of net sales. Net income totaled $1.7 million, or $0.14 per diluted share. Non-GAAP adjusted EBITDA for the quarter totaled $4.8 million.

"We are excited to report solid results in the third quarter, with accelerating revenue growth and expanding earnings per share, said Harvey Kanter, president and CEO of the Seattle-based company. “The execution of our strategy is clearly on track. Investments we made in marketing and pricing are working and building momentum behind the strength of our diamond engagement products. Sales of our non-engagement products also improved this quarter, and we are only beginning to launch an assortment of new jewelry aimed to further accelerate our growth. With continued steady execution of our strategy coupled with exciting product offerings for the holiday season, we believe we are well positioned to achieve our goals for 2012.”

Among the highlights for the third quarter:

* U.S. engagement net sales increased 31.5 percent to $54.1 million.
    
* U.S. non-engagement net sales (a new focus for the company) increased 12 percent to $21.8 million.
    
* International net sales fell 3.3 percent to $14.4 million for the third quarter 2011. Excluding the impact from changes in foreign exchange rates, international net sales decreased 1.5 percent.
    
* Gross profit totaled $16.9 million. As a percent of net sales, gross profit was 18.8 percent compared to 19.8 percent for the third quarter of 2011.
    
* New customers grew 22.4 percent.  
    
* Selling, general and administrative expenses were $14.3 million, compared to $12 million in the third quarter of 2011.
    
* At the end of the third quarter, cash and cash equivalents totaled $30.2 million.

In its financial guidance, the company said it expects fourth quarter net sales to be between $140 million and $153 million, with earnings per diluted share are projected at $0.44 to $0.50.

For the fiscal year it expects net sales to be between $404 million and $417 million, with earnings per diluted share are projected at $0.70 to $0.75.

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Jewelry and Watches a Top e-Commerce Performer

Jewelry and Watches is one of several product categories that grew at least 15 percent in sales, compared to a year ago, according to comScore, Inc., a digital measurement and analytical firm.

The Reston, Va.-based company did not give details on the jewelry with a report it recently published. However, jewelry and watches was a top performer, along with other categories that experienced year-over-year growth of 15 percent. They include: digital content and subscriptions, event tickets, consumer electronics (excluding computer peripherals) and computer software.

Overall online retail spending reached $36.3 billion for the third quarter, up 13 percent, comScore said. This represents the eighth consecutive quarter of positive year-over-year growth and fourth consecutive quarter of double-digit growth rates.

“The third quarter of 2011 saw a continuation of the year’s strength in U.S. retail e-commerce spending, even in the face of renewed economic headwinds and uncertainty facing the U.S. consumer,” said Gian Fulgoni, comScore chairman. “As we approach the critical holiday shopping season, we are optimistic about the continued health of the e-commerce sector despite other factors—including stubbornly high unemployment and volatile financial markets—currently weighing on the economy.”

The 13-percent growth in the quarter was primarily a function of an increase in the number of buyers (up 22 percent), the Reston, Va.-based company said. About 74 percent of all Internet users made at least one online purchase during the quarter.

A total of 40 percent of e-commerce transactions included free shipping, down from a peak of 49 percent in the fourth quarter of 2010. Free shipping rates tend to peak during the holiday season.

Internet Retail Sales Up 14%

U.S. e-commerce sales in the second quarter of 2011 increased 14 percent, year-over-year, to $37.5 billion, according to digital measuring company comScore Inc. This growth rate represented the seventh consecutive quarter of positive year-over-year growth and third consecutive quarter of double-digit growth rates.

“The second quarter of 2011 saw a continuation of this year’s solid double-digit growth trends in online spending, well ahead of the rate of growth in consumers’ overall spending,” said comScore chairman Gian Fulgoni. “As a result, it’s clear that consumers are continuing to shift to the online channel, with almost $1 in every $10 of discretionary spending now occurring online.”

The Reston, Va.-based company reports that growth rate in the quarter was primarily a function of an increase in the number of buyers (up 16 percent), with 70 percent of all Internet users making at least one online purchase in the quarter.

Fulgoni said that consumers are being won over by the convenience and lower prices of the e-commerce platform over other retail.

“At the same time, we are constantly reminded of an overall macroeconomic situation that is not indicative of a strong recovery,” Fulgoni added. “With economic growth remaining soft, the unemployment rate stubbornly high and financial markets in turmoil, consumers are less optimistic today than they have been in preceding quarters, which raises concerns for the future. We believe the third quarter will be an important indicator of which direction this economy is really headed and what that will mean for consumer spending.”

Other second quarter highlights include:

* The top-performing online product categories were: Consumer Electronics (excl. PC peripherals), Computer Hardware, Computer Software, and Event Tickets. Each category grew at least 15 percent vs. year ago.

* The top 25 online retailers accounted for 66.4 percent of dollars spent online, down from 67.7 percent a year ago and down from a peak of 69.9 percent in Q3 2010, as small and mid-sized retailers continue to regain lost market share.