Blue Nile Plunges after Results

Shares of Blue Nile, Inc. (NASDAQ:NILE) are plunging over 19% in morning trade after the company reported fourth-quarter profits and revenues well below analyst estimates. The leading online retailer of diamonds and fine jewelry said Net sales for the fourth quarter decreased 2.1% to $112.3 million from $114.8 million in the fourth quarter of 2010. This was below the analyst consensus forecasts of $123.2 million.

Operating income for the quarter was $6.3 million, compared to $9.2 million in the fourth quarter of 2010. Net income for the fourth quarter totaled $4.2 million. Fourth quarter earnings per diluted share totaled $0.30, compared to $0.41 in the fourth quarter of 2010. This missed analyst estimates by 12 cents per share.

For the full year, Blue Nile reported net sales of $348.0 million, compared to $332.9 million for the full year of 2010, an increase of 4.5%. Operating income for the full year was $16.9 million compared to $21.3 million in the prior year. Net income for the year was $11.4 million and earnings per diluted share totaled $0.77.

“The fourth quarter was challenging for Blue Nile, with weakness in demand from our high end diamond customers and some of our international markets, as well as the continued impact of inflationary pressure on commodity costs. While we managed the business through these headwinds, we implemented components of a new strategy designed to accelerate growth. This plan centers around the acquisition of non-engagement customers, which we believe in the long term will feed growth in our engagement and non-engagement businesses” said Vijay Talwar, Chief Executive Officer.

“This strategy drove positive momentum, resulting in our strongest period of customer acquisition since 2007, with new customer growth of 15%. Additionally, in the fourth quarter we achieved order growth of 22% and unit growth of 30% compared to the fourth quarter of 2010. Growth in all three of these metrics accelerated in December and we believe these trends are important indicators of the long term growth potential of our business,” Mr Talwar added.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.