Blue Nile sales up 14.9% in 2012 as overseas grows

Though CEO notes weaker than expected seasonal jewellery sales.

Blue Nile’s Q4 and full year results show net sales are up for the US online diamond and fine jewellery retailer, with the company’s full year 2012 sales totalling $400 million (£256m), up 14.9% on 2011.

The company’s full year performance, ending December 30 2012, were described as "great" by its chief executive and president Harvey Kanter. The company has also welcomed a strong return of interest from international shoppers.

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The diamond specialist’s net sales increased 21.2% to $136.1 million (£86.9m) in Q4, with operating income for the quarter totalling $7.1 million (£4.5m), representing an operating margin of 5.2% of net sales. Blue Nile’s net income totalled $4.9 million (£3.1m).

For the full year, Blue Nile reported net sales of $400 million (£256m), compared to $348 million (£222m) for the full year of 2011, an increase of 14.9%.

Operating income for the full year fell to $12.3 million (£7.8m) compared to $16.9 million (£10.7m) in the prior year. Net income for the year was $8.4 million (£5.3m).

Kanter said of the results: "The fourth quarter caps off a great year of growth at Blue Nile, building upon our sequential growth while posting greater profitability versus the prior year. Investments we made in 2012 paid off with the highest annual levels of revenue growth and customer acquisition in five years, exceptional strength in engagement sales in the US, and a return to strong growth internationally.

"While we fell short of our expected sales of non-engagement jewellery during the holiday season, in part due to a weaker environment for consumer discretionary spending, we gained valuable insight that will guide the evolution of our product mix. We believe that our strategy to accelerate this part of our business is on track."

Blue Nile’s US engagement net sales increased 31% to $73.6 million (£47m) in Q4 2012, compared to $56.2 million for the fourth quarter of 2011. Its full year engagement ring sales were up 21.7% compared to 2011, totalling $226.6 million (£114.8m).

International net sales for the fourth quarter totalled $20 million (£12.7m), compared to $15.7 million for the fourth quarter 2011, an increase of 26.8%. Full year international sales increased 11.7% to $62.4 million (£39.8m) in 2012.

Blue Nile’s gross profit for the fourth quarter totalled $25.7 million (£16.4m), while the full year gross profit was $75.1 million (£47.9m).

The company also welcomed new customers, defined as individuals who have not made a prior purchase from Blue Nile, with a numbers growing 7.8% in Q4 and 17.6% for the full year, compared to 2011.

Looking ahead Blue Nile says its expects net sales to be between $94 million and $100 million in the first quarter of 2013, ending March 31.

For the full year ending December 29 2013 Blue Nile is anticipating net sales to be between $440 million and $470 million.

The company also announced it has entered into a credit agreement with US Bank National Association, providing borrowings under a $35 million revolving credit facility maturing in 2014. The capital from this is set to provide Blue Nile with "further flexibility to pursue strategic opportunities to enhance shareholder value".



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