Online jewelry retailer Blue Nile (NASDAQ:NILE) today posted fourth-quarter earnings results that covered the critical holiday shopping season. The announcement didn't provide much good news for investors looking for a rebound in the business. In fact, revenue and profit both came in below management's, and Wall Street's, expectations. Let's take a look at the results.

Nile Diamond

Image source: Blue Nile.

Weaker-than-expected results
Sales grew by 8% to $157 million. While that's an uptick over the 7% gain Blue Nile logged in the prior quarter, it isn't what CEO Harvey Kanter and his executive team meant when they forecast back in October, "accelerating growth" in the holiday quarter. Management was instead expecting revenue to jump by 13% to $166 million. Profit growth also didn't go according to plan; Blue Nile earned $4.8 million in net income, or about even with the prior year. Earnings were $0.41 per share, below the $0.44 that management was targeting.

Blue Nile's profitability slipped as well, suggesting that competition remains fierce in both its main categories of engagement and non-engagement jewelry. Operating margin fell to 4.4% of sales from 4.9% the prior year.

The company did manage to improve its non-engagement sales pace. That category bounced back from a 2% drop in the third quarter to a 6% gain this past quarter. But Blue Nile sold just 8% more diamond engagement products over the holidays, which is surprising considering management's optimism that it could log much stronger fourth-quarter growth in that category.

Some of the slowdown came from Blue Nile's volatile international business, which grew by 16% in the quarter as compared to the prior quarter's 26% spike. International sales, particularly from China, hit a record high 20% of revenue in the third quarter. But in the fourth quarter that figure fell back down to 15%. The company's strategy to make big gains in the Chinese market apparently didn't work out as expected this quarter.

Still, management highlighted the fact that Blue Nile outgrew competitors over the holidays. "While these results are below our expectations, the above-industry growth demonstrates that we made progress and gained share," said Kanter in a press release.

Outlook for the year
Management's fresh outlook for 2015 shows that management sees more headwinds in the industry through the year. Blue Nile sees annual revenue of $496 million at the midpoint of guidance, representing 5% growth over 2014's results. Wall Street was looking for about double that growth pace to $523 million. Meanwhile, profit is now likely to be about $0.88 per share rather than the $1 per share that Wall Street had been projecting.

Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool recommends Blue Nile. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.