Blue Nile Q3 Sales Up 10.1%, Net Sales Total $2.9 Million

Blue Nile, Inc. said Thursday that net sales increased 10.1% year-over-year to $98.9 million for the third quarter ended September 29. Operating income for the quarter totaled $2.5 million, representing an operating margin of 2.5% of net sales. Net income for the period totaled $2.9 million (compared with $1.7 million in the third quarter of 2012) or $0.23 per diluted share.

Non-GAAP adjusted EBITDA for the quarter totaled $4.6 million. 

"These results demonstrate once again that our strategy is working. Our third quarter sales increase of 10.1% is on top of 19.8% in the prior year and is our sixth consecutive quarter of double digit growth," said Harvey Kanter, president and CEO of the diamond and jewelry online retailer. 

Blue Nile's Board of Directors authorized the renewal of the company's share repurchase program. It has the authority to repurchase up to $100 million of its common stock over the next two years. 

Third quarter financial highlights for the Seattle-based company include the following:

* U.S. engagement net sales increased 7.1% to $57.9 million.

* U.S. non-engagement net sales increased 9.6% to $23.9 million.

* International net sales increased nearly 23% to $17.1 million. Excluding the impact from changes in foreign exchange rates, international net sales increased 27.6%.

* Gross profit totaled $18.7 million. As a percent of net sales, gross profit was 18.9% compared to 18.8% for the third quarter of 2012. 

* Selling, general and administrative expenses were $16.2 million, compared to $14.3 million in the third quarter of 2012. These expenses include stock-based compensation expense of $1.2 million, compared to $1.3 million for the third quarter 2012.

* Earnings per diluted share included stock-based compensation expense of $0.06 for the third quarter 2013 and for the third quarter 2012.

At the end of the third quarter 2013, cash and cash equivalents totaled $47.9 million.

In its outlook, Blue Nile said it expects fourth quarter net sales to be between $146 million and $161 million. Earnings per diluted share are projected at $0.37 to $0.46.

For the year, the company said it expects net sales to be between $450 million and $465 million with earnings per diluted share are projected at $0.84 to $0.93.

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Website.

Blue Nile, Inc. said Thursday that net sales increased 10.1% year-over-year to $98.9 million for the third quarter ended September 29. Operating income for the quarter totaled $2.5 million, representing an operating margin of 2.5% of net sales. Net income for the period totaled $2.9 million (compared with $1.7 million in the third quarter of 2012) or $0.23 per diluted share.

Non-GAAP adjusted EBITDA for the quarter totaled $4.6 million. 

"These results demonstrate once again that our strategy is working. Our third quarter sales increase of 10.1% is on top of 19.8% in the prior year and is our sixth consecutive quarter of double digit growth," said Harvey Kanter, president and CEO of the diamond and jewelry online retailer. 

Blue Nile's Board of Directors authorized the renewal of the company's share repurchase program. It has the authority to repurchase up to $100 million of its common stock over the next two years. 

Third quarter financial highlights for the Seattle-based company include the following:

* U.S. engagement net sales increased 7.1% to $57.9 million.

* U.S. non-engagement net sales increased 9.6% to $23.9 million.

* International net sales increased nearly 23% to $17.1 million. Excluding the impact from changes in foreign exchange rates, international net sales increased 27.6%.

* Gross profit totaled $18.7 million. As a percent of net sales, gross profit was 18.9% compared to 18.8% for the third quarter of 2012. 

* Selling, general and administrative expenses were $16.2 million, compared to $14.3 million in the third quarter of 2012. These expenses include stock-based compensation expense of $1.2 million, compared to $1.3 million for the third quarter 2012.

* Earnings per diluted share included stock-based compensation expense of $0.06 for the third quarter 2013 and for the third quarter 2012.

At the end of the third quarter 2013, cash and cash equivalents totaled $47.9 million.

In its outlook, Blue Nile said it expects fourth quarter net sales to be between $146 million and $161 million. Earnings per diluted share are projected at $0.37 to $0.46.

For the year, the company said it expects net sales to be between $450 million and $465 million with earnings per diluted share are projected at $0.84 to $0.93.

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Website.

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Blue Nile Chairman to Step Down As Company Posts 5th Consecutive Quarter of Double-Digit Growth

Blue Nile Starlight Diamond Eternity Ring in platinum

Blue Nile, Inc. said Thursday that year-over-year net sales increased 18.7 percent to $108 million for the second quarter ended June 30. Operating income for the quarter totaled $3.4 million, representing an operating margin of 3.2 percent of net sales. Net income totaled $2.2 million, or $0.17 per diluted share. It’s the fifth consecutive quarter of double-digit growth, the company said.

In addition, the Seattle-based online retailer that specializes in diamonds and diamond jewelry announced that its founder, Mark Vadon, will step down from his role as chairman and director of the board effective December 31. Blue Nile President and CEO Harvey Kanter will assume the role of chairman.

"Founding and being a part of Blue Nile for the past 14 years has been a great honor, and I am tremendously proud of the entire team for fostering our culture of innovation and obsession over each and every customer," Vadon said. "After working with Harvey and his leadership team over the last year and seeing the impressive growth trajectory of the business, the entire board and I feel confident passing the chairmanship to Harvey to continue to build a global consumer brand."

"Mark revolutionized the diamond industry and founded Blue Nile on the principle that there is a better way to buy diamonds and fine jewelry by offering unique online tools, high quality diamonds, and incredible values," Kanter added. "That is and will always be his legacy, and the company will continue to execute his vision."

Non-GAAP adjusted EBITDA for the quarter totaled $5.5 million. For the trailing 12-month period ended June 30, net cash provided by operating activities totaled $26.1 million compared to $18.7 million for the prior 12-month period. For the same period ended June 30, non-GAAP free cash flow totaled $22.9 million, as compared to $15.6 million for the prior.

Other second quarter highlights include:

* U.S. engagement net sales increased 22 percent to $63.9 million.

* U.S. non-engagement net sales increased 11.3 percent to $27 million.

* International net sales increased 19.1 percent to $17.1 million. Excluding the impact from changes in foreign exchange rates, international net sales increased 20.6 percent.

*Gross profit totaled $20.1 million. As a percent of net sales, gross profit was 18.6 percent compared to 18.9 percent for the second quarter of 2012.

* Selling, general and administrative expenses were $16.7 million, compared to $14.9 million in the second quarter of 2012. This figure includes stock-based compensation expense of $1.3 million for the second quarter in 2013 and 2012.

* Earnings per diluted share included stock based compensation expense of $0.07 compared to $0.06 for the second quarter of 2012.

* At the end of the quarter, cash and cash equivalents totaled $47.3 million.

In its financial guidance, Blue Nile said it expects third quarter net sales are expected to be between $96 million and $100 million; and earnings per diluted share to run from $0.13 to $0.17.

For the 2013 fiscal year, net sales are projected to be between $440 million and $470 million; and earnings per diluted share are projected at $0.75 to $0.85.

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Web site.

Blue Nile Starlight Diamond Eternity Ring in platinum

Blue Nile, Inc. said Thursday that year-over-year net sales increased 18.7 percent to $108 million for the second quarter ended June 30. Operating income for the quarter totaled $3.4 million, representing an operating margin of 3.2 percent of net sales. Net income totaled $2.2 million, or $0.17 per diluted share. It’s the fifth consecutive quarter of double-digit growth, the company said.

In addition, the Seattle-based online retailer that specializes in diamonds and diamond jewelry announced that its founder, Mark Vadon, will step down from his role as chairman and director of the board effective December 31. Blue Nile President and CEO Harvey Kanter will assume the role of chairman.

"Founding and being a part of Blue Nile for the past 14 years has been a great honor, and I am tremendously proud of the entire team for fostering our culture of innovation and obsession over each and every customer," Vadon said. "After working with Harvey and his leadership team over the last year and seeing the impressive growth trajectory of the business, the entire board and I feel confident passing the chairmanship to Harvey to continue to build a global consumer brand."

"Mark revolutionized the diamond industry and founded Blue Nile on the principle that there is a better way to buy diamonds and fine jewelry by offering unique online tools, high quality diamonds, and incredible values," Kanter added. "That is and will always be his legacy, and the company will continue to execute his vision."

Non-GAAP adjusted EBITDA for the quarter totaled $5.5 million. For the trailing 12-month period ended June 30, net cash provided by operating activities totaled $26.1 million compared to $18.7 million for the prior 12-month period. For the same period ended June 30, non-GAAP free cash flow totaled $22.9 million, as compared to $15.6 million for the prior.

Other second quarter highlights include:

* U.S. engagement net sales increased 22 percent to $63.9 million.

* U.S. non-engagement net sales increased 11.3 percent to $27 million.

* International net sales increased 19.1 percent to $17.1 million. Excluding the impact from changes in foreign exchange rates, international net sales increased 20.6 percent.

*Gross profit totaled $20.1 million. As a percent of net sales, gross profit was 18.6 percent compared to 18.9 percent for the second quarter of 2012.

* Selling, general and administrative expenses were $16.7 million, compared to $14.9 million in the second quarter of 2012. This figure includes stock-based compensation expense of $1.3 million for the second quarter in 2013 and 2012.

* Earnings per diluted share included stock based compensation expense of $0.07 compared to $0.06 for the second quarter of 2012.

* At the end of the quarter, cash and cash equivalents totaled $47.3 million.

In its financial guidance, Blue Nile said it expects third quarter net sales are expected to be between $96 million and $100 million; and earnings per diluted share to run from $0.13 to $0.17.

For the 2013 fiscal year, net sales are projected to be between $440 million and $470 million; and earnings per diluted share are projected at $0.75 to $0.85.

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Web site.

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Jeff Cooper Unveils Bridal Jewelry App

Bridal jewelry designer, Jeff Cooper, has introduced an app for iPhones and iPads that allows brides-to-be the opportunity to virtually try on the company’s designs. It’s now available through the iTunes App Store.

For those looking for bridal rings, the app allows future brides to go through the inventory of Jeff Cooper to virtually try on rings, allows for photo sharing and connects them with an authorized retailer.

The mirroring function puts the jewelry on the person in real time. While trying on, customers can click on the pricing icon, compare similar and matching items, and watch a product video.

For David Cooper, president of Jeff Cooper, the app brings the company’s jewelry directly to more people.

“We're excited to be bringing our designs to an even wider audience,” he said.

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Website.

Bridal jewelry designer, Jeff Cooper, has introduced an app for iPhones and iPads that allows brides-to-be the opportunity to virtually try on the company’s designs. It’s now available through the iTunes App Store.

For those looking for bridal rings, the app allows future brides to go through the inventory of Jeff Cooper to virtually try on rings, allows for photo sharing and connects them with an authorized retailer.

The mirroring function puts the jewelry on the person in real time. While trying on, customers can click on the pricing icon, compare similar and matching items, and watch a product video.

For David Cooper, president of Jeff Cooper, the app brings the company’s jewelry directly to more people.

“We're excited to be bringing our designs to an even wider audience,” he said.

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Website.

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Jean Dousset Finds Niche with Custom Diamond Engagement Rings

Jean Dousset in his showroom next to a portrait of great-great grandfather, Louis-François Cartier.

In the luxury jewelry world, pedigree means something and there are few who can claim to be a descendent of Louis-François Cartier, the founder of one of the world’s most renowned jewelry and watch brands. Jean Dousset, owner of Jean Dousset Diamonds can make this claim.

However, the French born jeweler didn’t rest on his Cartier name recognition. He worked his way through stints at some of the best known French high jewelry houses in the world, beginning at the epicenter of French style, Place Vendôme, with Chumet. This was followed with stops at Boucheron and Van Cleef & Arpels before first going on his own with an online jewelry business in 2005. 

The Eva cushion engagement ring.

In 2010, he opened a showroom on the edge of Beverly Hills, Calif., on Santa Monica Boulevard. About half of his work comes through the store and the rest is done online through his website. In 2012, he produced approximately 70 rings, mostly engagement, which is his specialty, although he does other custom pieces as well. What may a bit surprising is that his inspiration for creating a custom high jewelry business was Blue Nile. He said the success of the online diamond and diamond jewelry company left a void in the business of provide service oriented high jewelry.

“Blue Nile was whole selling diamonds and they were really offering mountings as a must but not really as a message of design,” he said sitting behind an antique desk inside his showroom. “So I thought that might be an interesting void to fill … offering design, branding, craftsmanship, service.”

Whether he is working with clients in person or online the process is the same. He personally selects three diamonds through his dealers and then explains to the client the strong points of each stone. The clients select which diamond they prefer then he creates the mounting using his drawings and builds them from scratch. Again, the client will have their choice of mountings to select. If it’s online he’ll shoot high-definition videos of the diamonds and mountings for the client to view. 

The Riviera cushion engagement ring.

“The biggest thing now is people are highly educated about diamonds. They understand diamonds by browsing the Internet. There’s a lot of resources and that is great. They do their due diligence. They know what the 4Cs are,” he said. “They come with a certain amount of knowledge. The four Cs are trade guidelines to define the price of diamond ... but they do not say anything about the beauty of a diamond. The beauty of a diamond comes from its cut. The way the rough is taken down to a polished stone. So if you put four stones with the exact same cut, say four cushion cuts same price, same 4Cs there will be one stone that will be much more desirable. That’s the stone I’m looking for.”

He continued, “I work backward through their budget because it’s essential. Prices vary so much we need to know what people feel comfortable spending for their ring. So they share that with me and I try to optimize that budget to deliver them the best 4Cs but most importantly the most beautiful cuts. And that’s just a matter of taste and experience. That’s the way for me to distinguish myself from everybody else. I work very hard at that. And I also want to make that the cornerstone my reputation.”

In addition to his specialization in engagement rings, custom design and personal service; he also works primarily with cushion-cut diamonds of approximately 2-carats. He does so because round diamonds have largely been commoditized by Blue Nile and other similar mass marketers and thus makes it easy for people to buy their own stones once they are educated. 

The Victoria cushion engagement ring.

“I’m big on cushions, again, because of the Internet. It’s very hard to compete on round diamonds,” he said. “Because of the cut distinction and finesse of selecting a (cushion-cut diamond), there’s really an argument for me to make for people to work with me and trust me in making that search for them. It would be incredibly difficult for anybody to find a great cushion by themselves without knowledge, without experience just by looking at the 4Cs. If they are not exposed to what a great cut is, then they just don’t know what to look for so my hope is once I present them with my taste, my selection of stones, then they can benchmark anything they see to that.”

He said his focus is on engagement rings because that is the foundation of the jewelry business.

“You have to start with what truly creates the original idea of jewelry, which is a man and woman is buying something that’s significant and the engagement ring is just that,” he said. “It is still the core message of even the bigger brands … but the truth is that today the bridal business, those big famous brands, do not cater to that market. It’s too time consuming for them. There’s not enough profit in it. But they must still advertise and create bridal collection, because that’s where it all begins.”

He hopes to grow into other areas but he doesn’t seem to be in a hurry. He is more interested in differentiating himself in the marketplace, creating a place that few occupy. His traditional French high jewelry training makes this type of business a natural fit for him. He says in his own small way he wants to give his customers the same quality and service of the French luxury jewelry houses but do it in a more casual way and do it with an emphasis on value.

“On the rooftop of Place Vendôme, each of the jewelers have 25 or 30 hands working (ona piece of jewelry). They all have very distinct and specific responsibilities. There’s woman who is outstanding at polishing pieces with cotton strings…. All of this is to deliver the kind of product that they do. So I’m humbly in my own means, trying to incorporate as many of those steps into how I work. It’s a decision I made that I want to stick with to really establish those cornerstone values. Well-crafted and well-made jewelry doesn’t have to be expensive. It’s how much you really care about delivering a really outstanding product. Handcrafted jewelry is about people who are skilled, experienced, with a desire to execute really well. That is something I feel very strongly about.”

Jean Dousset Diamonds, 10100 Santa Monica Blvd., Los Angeles, CA 90067

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Web site.

Jean Dousset in his showroom next to a portrait of great-great grandfather, Louis-François Cartier.

In the luxury jewelry world, pedigree means something and there are few who can claim to be a descendent of Louis-François Cartier, the founder of one of the world’s most renowned jewelry and watch brands. Jean Dousset, owner of Jean Dousset Diamonds can make this claim.

However, the French born jeweler didn’t rest on his Cartier name recognition. He worked his way through stints at some of the best known French high jewelry houses in the world, beginning at the epicenter of French style, Place Vendôme, with Chumet. This was followed with stops at Boucheron and Van Cleef & Arpels before first going on his own with an online jewelry business in 2005. 

The Eva cushion engagement ring.

In 2010, he opened a showroom on the edge of Beverly Hills, Calif., on Santa Monica Boulevard. About half of his work comes through the store and the rest is done online through his website. In 2012, he produced approximately 70 rings, mostly engagement, which is his specialty, although he does other custom pieces as well. What may a bit surprising is that his inspiration for creating a custom high jewelry business was Blue Nile. He said the success of the online diamond and diamond jewelry company left a void in the business of provide service oriented high jewelry.

“Blue Nile was whole selling diamonds and they were really offering mountings as a must but not really as a message of design,” he said sitting behind an antique desk inside his showroom. “So I thought that might be an interesting void to fill … offering design, branding, craftsmanship, service.”

Whether he is working with clients in person or online the process is the same. He personally selects three diamonds through his dealers and then explains to the client the strong points of each stone. The clients select which diamond they prefer then he creates the mounting using his drawings and builds them from scratch. Again, the client will have their choice of mountings to select. If it’s online he’ll shoot high-definition videos of the diamonds and mountings for the client to view. 

The Riviera cushion engagement ring.

“The biggest thing now is people are highly educated about diamonds. They understand diamonds by browsing the Internet. There’s a lot of resources and that is great. They do their due diligence. They know what the 4Cs are,” he said. “They come with a certain amount of knowledge. The four Cs are trade guidelines to define the price of diamond ... but they do not say anything about the beauty of a diamond. The beauty of a diamond comes from its cut. The way the rough is taken down to a polished stone. So if you put four stones with the exact same cut, say four cushion cuts same price, same 4Cs there will be one stone that will be much more desirable. That’s the stone I’m looking for.”

He continued, “I work backward through their budget because it’s essential. Prices vary so much we need to know what people feel comfortable spending for their ring. So they share that with me and I try to optimize that budget to deliver them the best 4Cs but most importantly the most beautiful cuts. And that’s just a matter of taste and experience. That’s the way for me to distinguish myself from everybody else. I work very hard at that. And I also want to make that the cornerstone my reputation.”

In addition to his specialization in engagement rings, custom design and personal service; he also works primarily with cushion-cut diamonds of approximately 2-carats. He does so because round diamonds have largely been commoditized by Blue Nile and other similar mass marketers and thus makes it easy for people to buy their own stones once they are educated. 

The Victoria cushion engagement ring.

“I’m big on cushions, again, because of the Internet. It’s very hard to compete on round diamonds,” he said. “Because of the cut distinction and finesse of selecting a (cushion-cut diamond), there’s really an argument for me to make for people to work with me and trust me in making that search for them. It would be incredibly difficult for anybody to find a great cushion by themselves without knowledge, without experience just by looking at the 4Cs. If they are not exposed to what a great cut is, then they just don’t know what to look for so my hope is once I present them with my taste, my selection of stones, then they can benchmark anything they see to that.”

He said his focus is on engagement rings because that is the foundation of the jewelry business.

“You have to start with what truly creates the original idea of jewelry, which is a man and woman is buying something that’s significant and the engagement ring is just that,” he said. “It is still the core message of even the bigger brands … but the truth is that today the bridal business, those big famous brands, do not cater to that market. It’s too time consuming for them. There’s not enough profit in it. But they must still advertise and create bridal collection, because that’s where it all begins.”

He hopes to grow into other areas but he doesn’t seem to be in a hurry. He is more interested in differentiating himself in the marketplace, creating a place that few occupy. His traditional French high jewelry training makes this type of business a natural fit for him. He says in his own small way he wants to give his customers the same quality and service of the French luxury jewelry houses but do it in a more casual way and do it with an emphasis on value.

“On the rooftop of Place Vendôme, each of the jewelers have 25 or 30 hands working (ona piece of jewelry). They all have very distinct and specific responsibilities. There’s woman who is outstanding at polishing pieces with cotton strings…. All of this is to deliver the kind of product that they do. So I’m humbly in my own means, trying to incorporate as many of those steps into how I work. It’s a decision I made that I want to stick with to really establish those cornerstone values. Well-crafted and well-made jewelry doesn’t have to be expensive. It’s how much you really care about delivering a really outstanding product. Handcrafted jewelry is about people who are skilled, experienced, with a desire to execute really well. That is something I feel very strongly about.”

Jean Dousset Diamonds, 10100 Santa Monica Blvd., Los Angeles, CA 90067

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Web site.

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