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Blue Nile's 3Q sales up 2.4 percent

November 06, 2009

Seattle--Third-quarter net sales exceeded online diamond seller Blue Nile Inc.'s expectations, increasing 2.4 percent to $66.9 million on the strength of bridal and international sales.

"Our third-quarter results were excellent and reflect continued positive momentum in the business," Blue Nile Chief Executive Officer Diane Irvine said in a media release. "The Blue Nile brand is resonating with consumers in the current environment, and we are gaining market share. As we look toward the important holiday season, we are well-positioned with a broad selection of diamond engagement rings and fine jewelry and a newly redesigned Web site to showcase these products."

In the United States, third-quarter sales decreased 0.5 percent to $58.1 million, an improvement from the trending of the past three quarters, when sales were down 24.6 percent in fourth-quarter 2008, 12.2 percent in first-quarter 2009 and 4.3 percent in second-quarter 2009, Chief Financial Officer Marc Stolzman pointed out in a conference call.

International sales increased 27.4 percent (34.8 percent on a constant exchange rate basis) to a record $8.8 million for the period.

"We're especially pleased with our Q3 results in the context of the overall environment for retail jewelry in the U.S., which remains very troubled," Irvine said during the conference call.

In 2008, there was a 5 percent contraction in retail jewelry capacity in the United States, Irvine said, and experts predict similar results in 2009.

The total number of jewelry businesses--retailers, wholesalers and manufacturers--that have gone out of business in the first nine months of the year has increased 60 percent from the same period in 2008, she added.

Other highlights for Blue Nile in the third quarter included a gross margin of 22.1 percent, which Irvine noted in the call was the company's highest margin level in nearly four years.

In addition, during the call, Blue Nile also touted its redesigned Web site, which launched on Sept. 1.

Encouraged by its third-quarter results, Blue Nile raised its financial guidance for the fourth quarter, projecting net sales between $100 million and $109 million.

Blue Nile executives will be in New York City on Nov. 30, the day known as "Cyber Monday" in a nod to the start of the online holiday shopping season, to open the Nasdaq Stock Market Inc. .
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