Online jewelry retailer Blue Nile (NASDAQ:NILE) today posted mixed first-quarter earnings results. Sales growth came in below expectations while profits were surprisingly high.

Here's a big-picture look at how Blue Nile's headline results stacked up against Wall Street's, and management's, expectations.

Metric Expected* Actual
Revenue $109 million $106 million
Profit $0.08 per share $0.10 per share

*"Expected" is the midpoint of management's Q1 projection issued in February. It is also the average target of the nine analysts that cover the stock. Source: Yahoo! Finance and Blue Nile financial filing.

Challenging sales environment 

Engagement products are lower-margin sales for Blue Nile. Source: Blue Nile.

The business continued to grow in the first quarter, albeit at a snail's pace. Net sales inched higher by 2.6%, or about half the gain management forecast three months ago. And that was despite a hefty 9% jump in international sales.

Executives pointed to a weak overall selling environment as the primary cause of tepid revenue growth. "We drove solid performance in an industry that is experiencing overall challenges," said CEO Harvey Kanter in a press release.

All of the sales gains came from the engagement side of the business as non-engagement sales dipped slightly lower. Non-engagement products tend to carry higher profit margins, which is why management hopes to expand that division in the years ahead.

Profitability gains
Blue Nile managed higher profitability despite a sales mix that tilted toward those lower-margin jewelry items. Gross profit rose to 18.8% of sales from 18.4% a year ago. Operating margin ticked higher to 1.8% of sales from 1.6%.

Those gains translated into a healthy 10% bounce in net income. They also powered an increase in earnings to $0.10 per share, above expectations for flat profits this quarter.

Updated outlook
Blue Nile's management sees the next few quarters looking much like the one that just ended: Sales growth will be meager but profit growth should accelerate. 

Executives forecast $112 million in revenue next quarter, compared to Wall Street's $114 million target. Meanwhile, profit should be stronger than expected at $0.20 per share (analysts' average target was $0.18 per share).

For the full year, Blue Nile sees $500 million in sales powering $0.88 in per-share profit. Those figures represent 5% and 10% growth over 2014's results, respectively.