May 12, 2005, 12:00 AM

Odimo`s Q1 sales rise 22% year-over-year, but diamond sales crimp margins

Jewelry and gift retailer Odimo, operator of Diamond.com, Ashford.com and WorldofWatches.com, said first quarter net sales rose 22.4% to $12.8 million. But gross profits as a percent of net sales declined due to a higher proportion of diamond sales.

Jewelry and gift retailer Odimo Inc., operator of Diamond.com, Ashford.com and WorldofWatches.com, said net sales rose 22.4% to $12.8 million for the first quarter ended March 31, up from $10.4 million a year ago. Net loss also improved by 58%, to $2.7 million from $6.4 million, helped by a 63% drop in general and administrative expenses to $2.5 million from $6.7 million, Odimo said.

Q1 gross profit rose 6% to $3.3 million from $3.1 million in the year-ago quarter. But gross profit as a percent of net sales declined to 25.4%, compared to 29.4% a year ago,

But gross profits as a percent of net sales declined due to a higher proportion of diamond sales, which sell at a lower margin than other luxury goods, the Sunrise, FL-based company said.

Marketing expenses rose 54.4% in the quarter to $1.7 million from $1.1 million a year ago, reflecting Odimo¡¦s focus on customer acquisition and increasing repeat sales through retention marketing programs.

Fulfillment costs rose as a percent of net sales to 6.9% from 6.4% a year ago, Odimo said.

"We will continue to focus on our growth strategy of attracting new customers, expanding our diamond and diamond jewelry sales, and pursuing operating efficiencies as we move forward with our on-line business strategy in 2005 within a challenging marketing and advertising environment," said Alan Lipton, CEO.

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