UPDATE 3-Blue Nile profit in-line; full-yr view tops, shrs up

* Q2 EPS $0.19 versus Wall Street view $0.19

* Q2 sales down 5.2 percent

* Shares up 1.3 percent in extended trade (Recasts with CEO quote, updates shares move)

SEATTLE, Aug 6 (Reuters) - Online jewelry seller Blue Nile Inc (NILE.O) posted a quarterly profit on Thursday that matched expectations, and trumped Wall Street with its full-year forecast, sending shares up 1.3 percent in extended trade.

The company, which sells jewelry through its website to 44 countries, said it is benefiting from the pain faced by traditional jewelers who operate stores, some of whom have succumbed in the economic slump and filed for bankruptcy.

Jewelers have been among the worst affected by consumer thrift in the recession.

Whitehall Jewelers Holdings Inc (WHJHQ.PK) and Friedman's Inc were among the first jewelers to liquidate last year, while the latest victim was Finlay Enterprises Inc FNLY.OB, filing for bankruptcy in a Manhattan court late Wednesday, with plans to liquidate its assets. [ID:nBNG531226]

"There is significant disruption in the industry and this presents, perhaps, an unprecedented opportunity for Blue Nile," Chief Executive Diane Irvine said in a conference call.

"While we remain cautious about the economy and the consumer environment, we see clear signs that we are gaining market share in this environment at an accelerated rate," she said.

Later in an interview, Irvine said that while a rival's liquidation sales may cause a "little bit of noise" for the industry, Blue Nile would benefit in the long run.

Blue Nile expects sales to improve further during the rest of 2009. It forecast sales to be flat to slightly down in the third quarter, after a 5.2 percent drop in the second quarter.

For the full year, it forecast sales of $288 million to $295 million, and per-share earnings of 78 cents to 82 cents.

Analysts expect full-year sales of $284.1 million and earnings of 77 cents per share.

LOWER DIAMOND PRICES HELP

The Seattle-based company's profit fell to $2.8 million or 19 cents per share, in the second quarter ended July 5, from $3.2 million or 20 cents per share, a year earlier.

Analysts, on average, also expected 19 cents a share, according to Reuters Estimates.

Sales fell 5.2 percent to $69.9 million.

International sales accounted for more than 10 percent of quarterly sales, the company said.

Blue Nile, which ships anything from engagement rings to pearl jewelry through its website to 44 countries, had already pointed in May to "further improvement" in sales in 2009.

At that time, it said lower diamond prices were aiding its business. Blue Nile typically maintains a lean inventory, buying precious stones close to need -- an advantage as diamond prices fall.

During the second quarter, diamond prices fell by 15 to 20 percent, and those lower prices were passed on by way of lower retail prices to consumers, Blue Nile said.

Its shares were up to $51.98 in extended trade from its closing price of $51.29 on the Nasdaq.

(Reporting by Aarthi Sivaraman; Editing Bernard Orr)