Blue Nile Q1 Net Sales $50.7 Million, 14.9% Increase from 2005

Blue Nile reported net sales of $50.7 million in the first quarter of 2006, compared to net sales of $44.1 million in the first quarter of 2005, an increase of 14.9 percent. Net income in the first quarter totaled $2.4 million, compared to $2.6 million in 2005.

Gross profit for the first quarter of 2006 was $10.4 million, compared to $9.7 million in the first quarter of 2005, an increase of 7 percent. Gross profit as a percentage of net sales was 20.5 percent in the first quarter of 2006 compared to 22 percent in the first quarter of 2005. Despite the drop in profits, the company still beat Wall Street estimates, which led to an increase in share prices following the announcement.

"Our first quarter net sales growth reflects our focus on providing an exceptional experience for our customers," said Mark Vadon, CEO. "We are pleased with the sales growth we achieved in the first quarter, despite the challenging cost environment for online marketing, while performing at a high level of execution for our customers and operating efficiently throughout the business. Our trailing twelve month free cash flow results at the end of the first quarter highlight the strong cash flow generation capabilities of our business model."

Mr. Vadon added, "Through the balance of 2006, we will focus on enhancing the Blue Nile customer experience and building upon our market leadership position in online diamond and jewelry retailing. We will remain disciplined in our focus on profitable growth."

The company also released sales expectations for the second quarter, which ends July 2, and for full year 2006.

Second quarter net sales are expected to be between $51 million and $54 million.

For 2006, net sales are expected to be between $230 million and $245 million.