Blue Nile CEO steps down
By Michelle Graff www.nationaljeweler.com
Seattle--Diane Irvine, who has been one of the leaders of online diamond retailer Blue Nile Inc. since its inception, has resigned, the company announced on Tuesday. Her resignation becomes effective Friday.
The company did not give a reason for Irvine’s departure.
Vijay Talwar, senior vice president and general manager of international, will serve as interim CEO.
In a conference call held Tuesday evening, Mark Vadon, chairman of Blue Nile’s board of directors, said he will be “taking a more active role” in the business and also will be leading the search for a permanent CEO.
He said going forward, Blue Nile will be investing more heavily in both its international and non-bridal jewelry businesses, an interesting move for the company that made its mark on the industry by offering diamond engagement rings at prices well below those of brick-and-mortar retailers.
“Right now we see some extraordinary opportunities in front of us,” Vadon said.
The announcement of Irvine’s resignation was made in tandem with the company’s third quarter financials.
Sales were up 11 percent to $75 million for Blue Nile, a record third quarter and beating the company’s expectations of sales between $71.5 million and $74 million. Gross profit was up slightly, from $14.6 million to $14.8 million, a 1 percent increase.
The company reported a double-digit increase in engagement rings sales but declining margins, as it opted not to pass the full cost of rising metals and diamond prices onto its consumers. During Tuesday’s call, Talwar said while they have seen a “small decline” in diamond prices, they remain 20 to 40 percent higher than they were at this time last year.
Blue Nile reported similar results last quarter.
The company is bearish on the future of the engagement ring market.
Vadon called it a “tough market” due to the number of younger consumers who are out of work or cannot obtain credit. “That market’s under pressure,” he said.
“When we look at the industry we see marriages declining and the spend on the engagement product declining fairly significantly over the past few years,” Chief Financial Officer David Binder said.
Sales of non-engagement jewelry, meanwhile, climbed 25 percent, a market Blue Nile views as larger, with more repeat buying and higher margins. “We are intent on building out our non-bridal business,” Talwar said.
International sales, another segment of the business where Blue Nile sees potential, were up 55 percent to $14.4 million, a record third quarter. Sales outside of the United States now represent 19 percent of Blue Nile’s total sales, up from 14 percent a year ago. Asia-Pacific is the company’s strongest region.
Year-to-date, Blue Nile’s sales are up 8 percent, from $218.1 million to $235.7 million. Gross profit is up 5 percent, from $46.6 million to $48.9 million.
Talwar said they expect to have the “biggest holiday season in the history of Blue Nile” this year. The company projects sales of $121 million to $125 million for the fourth quarter ended Jan. 1, 2012.
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