The US-based retailer’s net sales fell to US$106.6 million (AU$114.9 m) for the second quarter ended 29 June 2014 – a 1.3 per cent drop from the US$108 million (AU$116.4 m) net sales made in the previous year’s corresponding period.
However, international net sales increased by 4.8 per cent from US$17.1 million (AU$18.4 m) in 2013 to US$18 million (AU$19.4 m) in 2014 – a 6.7 per cent increase if the impact of foreign exchange rates is excluded.
The retailer’s gross profit totalled US$20.2 million (AU$21.77 m), representing 18.9 per cent of 2014’s net sales compared to the 18.6 per cent recorded for the second quarter of 2013.
In addition, US engagement net sales decreased 4.6 per cent to US$60.9 million (AU$65.65 m) compared to US$63.9 million (AU$68.88 m) in the second quarter of 2013, while US non-engagement net sales increased 2.6 per cent to US$27.7 million (AU$29.86 m) compared to US$27 million (AU$29.1 m) for last year’s corresponding period.
Commenting on Blue Nile’s second quarter performance, chairman, CEO and president Harvey Kanter stated, “The diamond price environment in Q2 materially impacted our performance. As a result we executed strategic and targeted price changes to ensure that Blue Nile’s superior value is absolutely clear to the consumer.
“With these changes we are seeing a return to growth, and when diamond prices normalise, we expect to see even greater benefits from ongoing investments we’re making in the user experience.”
Testing the waters with bricks-and-mortar
One way in which Blue Nile has reportedly been trying to improve its user experience is by allowing people to see and feel its products via an agreement with Nordstrom, a US fashion specialty retail chain with more than 260 stores in 36 US states.
Multiple media sources have reported that Blue Nile has installed displays at two Nordstrom stores, allowing potential customers to examine the online retailer’s products in a bricks-and-mortar store before being directed to complete their purchase online through the retailer’s website.
When the venture was raised during the retailer’s second quarter 2014 results conference call, Kanter stated that Blue Nile was still learning from the experience.
“We are in a learning mode and we don’t really have a view of what will happen as we move forward,” Kanter was cited as saying. “It is a test and continues to be just that.”
Blue Nile recently made headlines after it was accused of infringing upon another company’s patented “hearts and arrows” diamond cut design, however, the ongoing legal battle’s impact on the company’s finances was not explicitly mentioned in the recent results.
Blue Nile is an online jewellery retailer that was founded in Seattle. Its products include engagement and wedding rings.
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