RAPAPORT... Blue Nile's third-quarter sales rose 2.4 percent to $66.9 million and its net income rose 10.3 percent to $2.6 million. The online retailer's international sales grew 27.5 percent to $8.8 million, while sales for its U.S. operations fell 0.7 percent to $58.1 million, with the latter figure based on Rapaport calculations.

Blue Nile's gross profit for the quarter totaled $14.8 million and, as a percentage of sales, improved 180 basis points to 22.1 percent compared with 20.3 percent for the third quarter of 2008. The etailer also cited gross margin improvement, which was largely derived from improved product sourcing in both the diamond and jewelry categories. Blue Nile's operating margin expanded 80 basis points to comprise 5.8 percent of net sales compared with only 5 percent one year ago. The net cash provided by its operating activities totaled $23.4 million for the 12-month period that ended October 4, 2009.

“Our third-quarter results were excellent and reflect continued positive momentum in the business," Diane Irvine, Blue Nile's chief executive officer (CEO), said. "We returned to top line growth and delivered strong profitability. The Blue Nile brand is resonating with consumers in the current environment, and we are gaining market share. As we look toward the important holiday season, we are well positioned with a broad selection of diamond engagement rings and fine jewelry and a newly redesigned website to showcase these products.”

Marc Stolzman, Blue Nile's chief financial officer (COO), remarked that business during the third quarter improved sequentially and that the company expects the trend to continue through fourth quarter.

"Based on our third-quarter results and our expectations for the fourth quarter, we are raising our guidance. We are projecting fourth-quarter net sales between $100 million and $109 million and diluted earnings per share in the range of 35 cents and 39 cents," Stolzman stated. 

LH