Blue Nile reports fall in profits as sales boom

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Online jeweller shows 1.4% drop in Q2 profits from reduced margins.

Diamond and fine jewellery online retailer Blue Nile has reported a 1.4 percent drop in second-quarter profits, despite record sales.

Blue Nile net sales increased by 10 percent to $76.6 million (£48 million) in Q2 2010, as the company posted profits of $2.8 million (£1.76 million), down from $2.84 million (£1.78 million)  in the same period last year.

The online retailer saw total orders during the quarter increase by approximately 3.5 percent to 39,407, with the average price of a ticket for the quarter rising by around six percent to $1,944 (£1,210).

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Q2 also saw the Company repurchased 213,001 shares of its common stock for $10.0 million (£6.3 million).

Blue Nile chief executive Diane Irvine said: "We delivered record second quarter sales and non-GAAP adjusted EBITDA in what remains a challenging consumer environment. While we experienced high growth throughout most of the quarter, we saw a slowdown in consumer demand in the month of June.

"Consumers overall began to pull back on high ticket purchases, unlike earlier in the year, based on economic concerns such as high unemployment levels and market volatility. Despite this, we are confident that our competitive position remains stronger than ever based upon our differentiated business model and unique consumer proposition, which allows us to provide the highest quality diamonds and fine jewellery to our customers at tremendous values. This positions us well to continue to gain market share in the industry, regardless of overall consumer trends."

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