Blue Nile Earnings Cheat Sheet: Margins Expand and Profit Climbs

Blue Nile, Inc. (NASDAQ:NILE) reported its results for the second quarter. Blue Nile Inc. is an online retailer of high quality diamonds and fine jewelry in the United States.

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Blue Nile Earnings Cheat Sheet for the Second Quarter

Results: Net income for the catalog and mail order house rose to $2.84 million (19 cents per share) vs. $2.80 million (19 cents per share) in the same quarter a year earlier. This marks a rise of 1.2% from the year earlier quarter.

Revenue: Rose 5.1% to $80.5 million from the year earlier quarter.

Actual vs. Wall St. Expectations: NILE fell short of the mean analyst estimate of 22 cents per share. It fell short of the average revenue estimate of $84.1 million.

Quoting Management: “While we delivered record second quarter sales and non-GAAP adjusted EBITDA, our results were impacted by rapidly rising diamond and metal prices amid a weakening consumer environment in the U.S. Despite these external headwinds, we achieved sales growth across all product categories, including double-digit sales growth in the non-engagement category. We also experienced strong growth in our international business. In addition, we generated higher gross margins for the quarter and achieved our earnings per share stated guidance while investing in marketing and our international business,” said Diane Irvine, Chief Executive Officer. “We finished the quarter with a record second quarter cash balance of $74.2 million while repurchasing $8.4 million of stock. We are keenly focused on driving growth through an enhanced customer experience, expanded product assortment, investments in our international business, and in executing our differentiated model to grow long-term value for our shareholders.”

Key Stats:

The company has now seen net income rise in three straight quarters. In the first quarter, net income rose 1.4% and in the fourth quarter of the last fiscal year, the figure rose 13.6%.

Revenue has risen the past four quarters. Revenue increased 8.3% to $80.2 million in the first quarter. The figure rose 11.5% in the fourth quarter of the last fiscal year from the year earlier and climbed 0.8% in the third quarter of the last fiscal year from the year-ago quarter.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 16 cents versus a mean estimate of net income of 15 cents per share.

Margins rose in the first quarter after falling the quarter before. Gross margin rose 0.2 percentage point to 21.3% from the quarter earlier quarter. In the fourth quarter of the last fiscal year, the figure rose 0.2 percentage point to 21.1% from the year earlier quarter.

Competitors to Watch: Zale Corporation (NYSE:ZLC), DGSE Companies, Inc. (AMEX:DGSE), Tiffany & Co. (NYSE:TIF), Birks & Mayors Inc. (AMEX:BMJ), Signet Jewelers Ltd. (NYSE:SIG), Whitehall Jewelers Hldgs. Inc. (WHJHQ), Elegant Illusions, Inc. (EILL), Finlay Enterprises, Inc. (FNLYQ), and USN Corporation (USNR).

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(Source: Xignite Financials)