BlueNile posts first annual net profits on sales of $72 million for 2002

Three-and-a-half-year-old Internet jeweler BlueNile.com posted its first full-year net profit on sales of $72 million for the year ended Dec. 31, a 48% increase over 2001 sales, the company reported today. The privately held Seattle-based company did not disclose numbers on profits.

For the fourth quarter, Blue Nile reported net sales of $30 million, an increase of 78% over the year-ago quarter. It was the company’s second consecutive quarterly net profit, and the fifth consecutive quarterly operating profit, BlueNile says.

Blue Nile’s core business, the sale of diamond jewelry and in particular diamond engagement rings, is built on delivering the best customer experience possible, with the idea that the satisfied buyer of an engagement ring will be back for birthdays, anniversaries and other gift-giving occasions. In addition to certified diamonds priced at about 40% below retail, Blue Nile says it takes pains to deliver quality throughout the shopping experience, right down to the inspector who examines every piece of jewelry and jewelry box prior to shipment to ensure consistent presentation. As a result, says a company spokesman, unlike most Internet pure-plays, Blue Nile’s primary marketing channel and means of customer acquisition has become word of mouth.

“Blue Nile was created to be a reinvention of the traditional jewelry retail model,” says CEO Mark Vadon. “Our growth during one of the most challenging retail environments in decades proves our business is not only resonating with consumers, but fulfilling its promise of becoming one of the leading online retailers.”