Blue Nile’s profit not as shiny as analysts expected
The Seattle Internet jeweler said its fourth-quarter profit rose 17 percent, but Wall Street expected an even bigger jump, and shares dropped in after-hours trading.
Seattle Times business reporter
Seattle-based Internet jeweler Blue Nile posted a 17 percent increase in its fourth-quarter profit Tuesday, citing “exceptional strength” in engagement-ring sales.
But Wall Street expected a bigger profit jump, and the company’s stock dropped 3 percent in after-hours trading.
Blue Nile reported a quarterly profit of $4.9 million, or 39 cents a share, well below analysts’ prediction of 47 cents. Sales rose 21 percent from a year ago to $136.1 million, also a disappointment. Analysts expected sales of more than $145 million.
Blue Nile said that while demand for engagement rings strengthened during the holiday sales season, growth of its non-wedding-related business fell short of its own expectations. The company said a weaker environment for discretionary spending was partly to blame.
Blue Nile, the world’s largest online seller of diamond engagement rings, has made expanding its product assortment a top priority over the past year to attract a larger customer base and boost profits.
During a conference call with analysts Tuesday, Chief Executive Harvey Kanter said Blue Nile over-invested in fashion-forward, or trendy, jewelry while under-investing in what he called updated classics.
“In 2013, we will focus our energies on more understandable fashion trends across a broad array of price points,” he said.
For all of 2012, Blue Nile reported a per-share profit of 63 cents, down from 77 cents in 2011, even as total sales rose 15 percent to $400 million.
Looking ahead, the company projects first-quarter sales between $94 million and $100 million, and a per-share profit of 5 to 8 cents.
Blue Nile’s stock closed Tuesday down 16 cents at $30.97. Shares dropped an additional 91 cents after-hours to $30.06 after the earnings report.
Amy Martinez: 206-464-2923 or firstname.lastname@example.org