For the three months ended 4 October 2015, Blue Nile achieved an overall net sales increase of 4 per cent to US$109.9 million (AU$153.4 m) compared to the US$105.8 million (AU$147.6 m) recorded in the third quarter ended 28 September 2014.
Gross profit for the period was US$21.2 million (AU$29.6 m), which, as a percentage of sales, increased on last year’s results from 17.8 percent to 19.3 per cent.
Conversely, international net sales fell 7.2 per cent from US$21.5 million (AU$30 m) in 2014 to US$19.9 million (AU$27.8 m) this year, which was said to represent 19.2 per cent of the company’s total revenue.
In an earnings conference call, Blue Nile chief financial officer David Binder attributed the sales drop to the strengthening US dollar, adding that “weakness was most significant” in Australia and Canada where the local currency value had experienced a steep decline.
Excluding the impact of foreign exchange rates, the company’s international net sales increased 3 per cent.
US net sales for Blue Nile’s engagement category increased 6.9 per cent to US$65 million (AU$90.7 m), although CEO and president Harvey Kanter noted in the conference call that the company was continuing to struggle with high-end sales (ie, those greater than US$25,000 [AU$34,885]).
Earlier this year, Kanter said that despite the historic volatility of the high-end sector, “we expect growth in this area to return”; however, during the most recent conference call, he stated that the segment “has been a challenge long enough to be somewhat the new normal”.
US non-engagement net sales also rose 6.7 per cent to US$25 million (AU$34.9 m).
Commenting on the results, Kanter said, “Importantly, we expanded profitability while at the same time investing in initiatives to drive greater long-term growth. These initiatives, which include online and offline marketing and the webroom concept, focus on building awareness and generating a greater level of trust for buying diamonds and fine jewellery online.”
Kanter also elaborated on plans he revealed earlier this year at a New York conference, stating that the company was aiming to launch three to four ‘webroom’ stores at undetermined locations in the first half of 2016, although he emphasised that the webrooms were not yet a “material” part of the business.
Blue Nile launched its first webroom in June this year at the Roosevelt Field Mall in Garden City, New York. The stores allow customers to physically examine a limited amount of stock and consult diamond jewellery consultants before making purchases online via in-store tablets, and are designed to convert offline consumers into online customers.
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