Blue Nile Q1 Sales +3.6%, Profit Drops

Colored diamonds from Blue Nile

(IDEX Online News) – A small increase in sells was not enough to make up for lower markups, leading to a decline in Blue Nile's first quarter profits. The online jewelry retailer yesterday (Wednesday) announced that net sales for the period reached $83.1 million, a 3.6 percent increase over the first quarter of 2011. Gross profit fell 9.7 percent.

Internationally, net sales increased 9.3 percent, and reached approximately 17 percent of our total sales for the quarter.

The company also said that increased marketing efforts meant that orders from new customers increased approximately 20 percent during the three-month period.

In the U.S., the value of sales increased by 2.5 percent to $69 million for the first quarter of the year. In 2011, this figure stood at $67.3 million.

By category, net sales of engagement rings in the U.S. increased to $46.4 million, compared to $45 million. U.S. non-engagement net sales were $22.6 million, up marginally compared to the first quarter of 2011.

With the help of strong foreign currencies (0.8 percent), international net sales increased a strong 9.3% to $14.1 million from $12.9 million in the first quarter of 2011,  

Despite increased sales, gross profit decreased 9.7 percent to $15.3 million in the quarter compared to $16.9 million in the first quarter of 2011.

The decrease resulted primarily from lower mark-up on engagement products initiated in January to stimulate sales growth. The company said product sales mix also contributed to the lower gross profit.

Sales of engagement products grew faster than non-engagement jewelry, totaling 69.6 percent of total revenue, a small drop from 68.8 percent in the first quarter of 2011.