Shares of Blue Nile, the Seattle online diamond and jewelry retailer, are down more than 20 percent in Thursday morning trading after the company posted “disappointing” Q4 results, according to CEO and President Harvey Kanter.
Net sales for the quarter were $150 million, down 4.8 percent from the year-ago quarter, falling short of analyst expectations of $165.5 million. This was particularly disappointing, given that the fourth quarter represents the company’s important period of holiday jewelry sales. While net sales for the year were $480.1 million, up 1.4 percent from last year, they still failed to meet Wall Street predictions of $498 million for the year.
Net income for the quarter was $5 million, or $0.43 per share, on track with Wall Street expectations. However, net income for the year was $10.5 million, or $0.90 per share, again missing analyst predictions of $1.05 per share.
Kanter explained that Blue Nile’s poor revenue growth for the year was because customers were making fewer big ticket purchases of jewelry and because of the weakness of foreign currency. He also noted that Blue Nile’s core engagement products were selling for less.
Despite disheartening net sales for the quarter and for the year, Kanter did note that earnings per share for the year was still at an eight-year high.
“In spite of these challenges, we sold a record number of engagement rings, expanded gross margin rate, and drove success in our new Webroom,” Kanter said. “As we look out on 2016, we will push harder on elements that are working: engagement ring units, wedding band attach rates, continued expansion of margin, and the Webroom concept.”
The Webroom Kanter refers to is a physical store for Blue Diamond, opened in a Long Island mall in June of last year. According to Kanter, customers are wary about buying jewelry online, so its physical store has helped to build trust, since customers can see and handle the jewels they will be purchasing in the Webroom. Blue Nile has plans to build four more stores in the coming year.
Ultimately, shares of Blue Nile are down down 33 percent for the year, trading at $24.86 and putting the company’s market value at at $284.25 million.