Blue Nile Chairman to Step Down As Company Posts 5th Consecutive Quarter of Double-Digit Growth

Blue Nile Starlight Diamond Eternity Ring in platinum

Blue Nile, Inc. said Thursday that year-over-year net sales increased 18.7 percent to $108 million for the second quarter ended June 30. Operating income for the quarter totaled $3.4 million, representing an operating margin of 3.2 percent of net sales. Net income totaled $2.2 million, or $0.17 per diluted share. It’s the fifth consecutive quarter of double-digit growth, the company said.

In addition, the Seattle-based online retailer that specializes in diamonds and diamond jewelry announced that its founder, Mark Vadon, will step down from his role as chairman and director of the board effective December 31. Blue Nile President and CEO Harvey Kanter will assume the role of chairman.

"Founding and being a part of Blue Nile for the past 14 years has been a great honor, and I am tremendously proud of the entire team for fostering our culture of innovation and obsession over each and every customer," Vadon said. "After working with Harvey and his leadership team over the last year and seeing the impressive growth trajectory of the business, the entire board and I feel confident passing the chairmanship to Harvey to continue to build a global consumer brand."

"Mark revolutionized the diamond industry and founded Blue Nile on the principle that there is a better way to buy diamonds and fine jewelry by offering unique online tools, high quality diamonds, and incredible values," Kanter added. "That is and will always be his legacy, and the company will continue to execute his vision."

Non-GAAP adjusted EBITDA for the quarter totaled $5.5 million. For the trailing 12-month period ended June 30, net cash provided by operating activities totaled $26.1 million compared to $18.7 million for the prior 12-month period. For the same period ended June 30, non-GAAP free cash flow totaled $22.9 million, as compared to $15.6 million for the prior.

Other second quarter highlights include:

* U.S. engagement net sales increased 22 percent to $63.9 million.

* U.S. non-engagement net sales increased 11.3 percent to $27 million.

* International net sales increased 19.1 percent to $17.1 million. Excluding the impact from changes in foreign exchange rates, international net sales increased 20.6 percent.

*Gross profit totaled $20.1 million. As a percent of net sales, gross profit was 18.6 percent compared to 18.9 percent for the second quarter of 2012.

* Selling, general and administrative expenses were $16.7 million, compared to $14.9 million in the second quarter of 2012. This figure includes stock-based compensation expense of $1.3 million for the second quarter in 2013 and 2012.

* Earnings per diluted share included stock based compensation expense of $0.07 compared to $0.06 for the second quarter of 2012.

* At the end of the quarter, cash and cash equivalents totaled $47.3 million.

In its financial guidance, Blue Nile said it expects third quarter net sales are expected to be between $96 million and $100 million; and earnings per diluted share to run from $0.13 to $0.17.

For the 2013 fiscal year, net sales are projected to be between $440 million and $470 million; and earnings per diluted share are projected at $0.75 to $0.85.

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Blue Nile Q1 Sales Up 16.9%, Profit Exceeds $800,000

The year has begun well for Blue Nile, Inc. The online diamond and jewelry retailer said Thursday that net sales increased 16.9 percent to $97.1 million for the first quarter ended March 31, led by a near 20-percent increase in U.S. engagement jewelry sales and overall strong growth in all markets.

Net income totaled $832,000, or $0.07 per diluted share, compared with $154,000 in the first quarter of 2012. Operating income for the period totaled $1.2 million, representing an operating margin of 1.2 percent of net sales.

Non-GAAP adjusted EBITDA for the quarter totaled $3.1 million. For the trailing 12-month period ended March 31, net cash provided by operating activities totaled $21.3 million compared to $18.4 million for the same period of the prior year. For the same trailing 12-month period, non-GAAP free cash flow totaled $18.6 million.

“We are pleased to announce significant revenue growth along with expanding profitability in the first quarter of 2013,” said Harvey Kanter, Blue Nile president and CEO. “Clearly our value proposition continues to resonate with consumers, both in the U.S. and internationally.”

Other first quarter 2013 highlights for the Seattle-based company include:

* U.S. engagement net sales increased 19 percent to $55.3 million.

* U.S. non-engagement net sales increased 7.4 percent to $24.2 million.

* International net sales increase of 24.8 percent to $17.6 million. Excluding the impact from foreign exchange rates, international net sales increased 25.9 percent.

* Gross profit totaled $17.6 million. As a percent of net sales, gross profit was 18.2 percent compared to 18.4 percent for the first quarter of 2012.

* Selling, general and administrative expenses for the first quarter 2013 were $16.5 million, compared to $15.1 million in the first quarter of 2012. This includes stock-based compensation expense of $1.1 million for the first quarter of 2013 and 2012.

* Earnings per diluted share for the first the period included stock based compensation expense of $0.05 compared to $0.05 for the first quarter of 2012.

* Cash and cash equivalents totaled $40.5 million.

In its guidance Blue Nile said it expects net sales in the second quarter to be between $100 million and $105 million with earnings per diluted share are projected at $0.13 to $0.17.

The company also said that net sales for fiscal year 2013 (ending December 29) are expected to be between $440 million and $470 million with earnings per diluted share projected at $0.75 to $0.85.

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Blue Nile Q4 Sales Down 2.1%

Online diamond and jewelry retailer, Blue Nile, Inc., said Wednesday that net sales for the fourth quarter decreased 2.1 percent, year-over-year, to $112.3 million due to a decline in high-end diamond sales and a rise in commodity prices.

Operating income for the quarter, ended January 1, was $6.3 million, compared to $9.2 million in the fourth quarter of 2010. Net income for the fourth quarter totaled $4.2 million. Non-GAAP adjusted EBITDA for the fourth quarter was $8.4 million, compared to $11.6 million for the fourth quarter last year.
For the full year, Blue Nile reported net sales increase of 4.5 percent to $348 million. Operating income for the full year was $16.9 million compared to $21.3 million in the prior year.

Net cash provided by operating activities totaled $15.4 million for the year. Non-GAAP free cash flow for the year was $10.1 million.

"The fourth quarter was challenging for Blue Nile, with weakness in demand from our high end diamond customers and some of our international markets, as well as the continued impact of inflationary pressure on commodity costs,” said Vijay Talwar, Blue Nile CEO.

Talwar added that the Seattle-based company began implementing parts of a new strategy to attract customers outside of its engagement core business.

“This strategy drove positive momentum, resulting in our strongest period of customer acquisition since 2007, with new customer growth of 15 percent, Talwar said. “Additionally, in the fourth quarter we achieved order growth of 22 percent and unit growth of 30 percent compared to the fourth quarter of 2010. Growth in all three of these metrics accelerated in December and we believe these trends are important indicators of the long term growth potential of our business.”

The company also announced it plans to repurchase up to $100 million of its common stock over 24 months.

In its outlook the company said it expects first quarter net sales to be between $81 million and $84 million and earnings per diluted share to be $0.04 to $0.07.

Net sales for the year are expected to be between $384 million and $417 million or $0.70 to $0.85 per diluted share.

Financial Highlights include:

* U.S. engagement net sales for the fourth quarter and full year 2011 were $56.2 million and $186.2 million, respectively, down from the fourth quarter and full year 2010, which were $59.8 million and $189.5 million, respectively.
    
* U.S. jewelry net sales for the fourth quarter and full year 2011 were $40.4 million and $105.9 million, respectively. U.S. jewelry net sales for the fourth quarter and full year 2010 were $39.7 million and $100.1 million, respectively.
     
* International net sales for the fourth quarter and full year 2011 were $15.7 million and $55.9 million respectively. International net sales for the fourth quarter and full year 2010 were $15.3 million and $43.3 million, respectively. Excluding the impact from changes in foreign exchange rates, international sales increased 23.3% for the fiscal year.
    
* In the fourth quarter, orders, which are defined as customer orders that have been shipped, grew 22 percent from the fourth quarter of 2010.
    
* New customers, which are defined as individuals who have not made a prior purchase from Blue Nile, grew 15 percent in the fourth quarter of 2011 compared to the fourth quarter of 2010.
    
* Gross profit for the quarter totaled $23.2 million. As a percent of net sales, gross profit was 20.7 percent compared to 22 percent for the fourth quarter of 2010. Gross profit for the year totaled $72.1 million.
    
* Selling, general and administrative expenses for the quarter were $16.9 million, compared to $16.1 million in the fourth quarter of 2010. The increase is primarily related to marketing to drive new customer acquisition and new personnel to support expansion of our product assortment and order growth. Selling, general and administrative expense for the quarter includes stock-based compensation expense of $1.2 million, compared to $1.6 million in the fourth quarter of the prior year.
    
* Net income per diluted share for the quarter includes stock-based compensation expense of $0.06, compared to $0.07 for the fourth quarter of 2010.
    
* Cash and cash equivalents at the end of the fiscal year totaled $89.4 million compared to $113.3 million at the end of fiscal year 2010. 
    
* Full year 2011 capital expenditures totaled $5.4 million compared to $1.8 million for the full year 2010.