Blue Nile beat analysts’ estimates for earnings in the third quarter but missed on the sales side. The online jewelry company delivered earnings per share of 17 cents, better than the expected 16 cents, but net sales of $109.9 million were lighter than the estimated $111 million.

Net sales did increase 4 percent over last year’s third-quarter sales of $105.8 million. Net income totaled $2 million, versus $1.7 million a year ago. Net income of 17 cents a share was higher than last year’s 14 cents a share.

“Today we announced another quarter of continued growth and heightened profitability, delivering double-digit increases in net income and earnings per share,” said Harvey Kanter, Blue Nile Chairman, chief executive officer and president. “Importantly, we expanded profitability while at the same time investing in initiatives to drive greater long-term growth. These initiatives, which include online and offline marketing and the Webroom concept, focus on building awareness and generating a greater level of trust for buying diamonds and fine jewelry online.”

U.S. sales for engagement sets increased 6.9 percent for the third quarter and non-engagement sets increased 6.7 percent. Sales at high price points were weak, meaning items above $50,000. But sales on items below $25,000 were strong, showing that the value proposition is resonating. Wedding bands returned to double-digit growth.

International sales of $19.9 million dropped from $21.5 million, or 7.2 percent year-over-year. The company faced challenges with the strong dollar. Australia and Canada were weak due to their own weaker currencies. The company is ramping up marketing spending in China. Expenses increased to $18.2 million, higher than last year’s $16.3 million.

The guidance the company gave for the fourth quarter was promising, with revenue expected to be in the range of $158 million to $168 million, whereas the FactSet consensus is estimated to be $165 million. Earnings per share for the fourth quarter are projected to be between 41 cents and 47 cents, while the FactSet estimate is for 44 cents.

On the earnings conference call when asked about the promotional environment for the holiday, Kanter said, “Business is not particularly robust in the category.”

Year-to-date, the stock has dropped 6.28 percent, but in the last six months has staged a comeback, gaining more than 23 percent in value.

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