Blue Nile Posts 23.3% Leap in Sales, Names New CEO

Online diamond jewelry retailer Blue Nile posted fantastic fourth quarter and annual fiscal results, with net sales growing 23.3 percent to $111.9 million and net income totaling $7.5 million, an increase of 31.1 percent, in the fourth quarter. Its full year net sales of $319.3 million were an increase of 26.9 percent from fiscal 2006.

Blue Nile’s net income for the year increased 33.6 percent to $17.5 million, as the online retailer establishes itself as more than just the de facto alternative to traditional stores across the U.S. The sharp rise in fourth quarter sales stands in stark contrast to those of most other jewelry retailers who suffered from a weak holiday season.

Operating income also soared; for the quarter, it rose 24.0 percent to $10.1 million and 35.4 percent to $22.4 million for the full year.

“We delivered outstanding sales growth, even stronger earnings growth, and ended the year with a very healthy cash balance of $123 million,” said founder Mark Vadon. “We expanded our market share domestically and made significant progress in our international business. As we enter 2008, we are well positioned to enhance our category leadership,” continued Vadon.

Nevertheless, Vadon expressed caution as the U.S. is entering a recession and diamond jewelry is losing market share to other luxury items and gadgets.

“Given the current economic environment, however, we believe it is prudent to be extremely cautious in our expectations for the year. There is tremendous uncertainty in the luxury retail sector, which is experiencing a widely reported consumer slowdown,” he concluded.

Blue Nile announced plans to repurchase up to an additional $100 million of the company’s common stock over 24 months. Its current repurchase authorization now totals $150 million.

The company also announced that Vadon has assumed the new role of executive chairman and that Diane Irvine has been named the new CEO, effective February 7, 2008.

Irvine began her tenure at Blue Nile as chief financial officer eight years ago and was later promoted to president.

“Diane joined me during Blue Nile’s first year in business to pursue the dream of building an iconic consumer brand that would transform the fine jewelry market for consumers. We are well on our way to making that dream a reality,” said Vadon.