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8/3/2005
Blue Nile beats
expectations
By
KRISTEN MILLARES BOLT
SEATTLE POST-INTELLIGENCER REPORTER
Blue Nile Inc. beat Wall Street's expectations
once again yesterday by nearly doubling its profits and selling
$43.83 million of diamonds and other jewelry during its second
quarter.
The Seattle-based Internet retailer posted
profits of $2.79 million, or 15 cents per diluted share,
compared with $1.86 million, or 11 cents per diluted share,
during the same period last year.
Blue Nile raised its earnings forecast for the
year by a few pennies to between 69 and 73 cents per share.
Sales of non-engagement ring items such as
bracelets and diamond stud earrings are outstripping the growth
of engagement ring orders for Blue Nile, which began as a
boutique purely for hopeful fiances.
"Five years from now, non-engagement will be
as big as engagement," said Chief Executive Mark Vadon, who
noted that last year, engagement rings accounted for 74 percent
of the company's sales. "It is all a matter of time."
Vadon views the shift in Blue Nile's product
mix as a positive strategy targeting the U.S. jewelry market --
which he cited as 10 times the size of the U.S. engagement ring
market.
Vadon said sales grew by 25 percent because
customers are placing more orders and spending an average of
$1,441 per order, an increase of $141, or 10.9 percent, over
last year.
Though the company said its repeat and
referral business is generating heavy sales, it plans to spend
more on future marketing, including research and targeted
Internet search words, to attract new customers in an
increasingly competitive landscape. Vadon expects the company to
grow between 20 percent and 30 percent per year for the next
several years.
"We are seeing more people who want to play in
this category," Vadon said. "But we feel we are pulling away."
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