Here's a big-picture look at how Blue Nile's headline results stacked up against Wall Street's, and management's, expectations.
|Revenue||$109 million||$106 million|
|Profit||$0.08 per share||$0.10 per share|
Challenging sales environment
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.
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.
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.