August 5, 2010 / 8:51 PM / 9 years ago

UPDATE 2-Blue Nile misses, warns of spending slowdown

* Q2 EPS $0.19 versus Street view $0.23

* Q2 sales up 9.7 percent

* Sees 2010 EPS $0.94 to $1

* Shares fall nearly 12 percent

(Adds comparisons on outlook, sales detail)

SAN FRANCISCO, Aug 5 (Reuters) - Blue Nile NILE.O on Thursday posted lower net income that missed Wall Street estimates, and the online diamond retailer warned of a slowdown in demand after people bought fewer high-priced items in June.

Shares fell nearly 12 percent in after-hours trading after losing 3.5 percent in regular trade on the Nasdaq stock market.

Blue Nile has taken market share from brick-and-mortar competitors amid turbulence in the jewelry market, including recent bankruptcies and weak sales.

But the company gave a 2010 profit and sales outlook that fell below analysts’ expectations.

It projected 2010 earnings per share to range from 94 cents to $1, with sales between $325 million and $335 million.

That was below the $1.02 earnings per share on sales of $349 million expected, on average, by Wall Street.

Second-quarter net profit was $2.8 million, or 19 cents per share, compared with $2.84 million, or 19 cents per share, a year earlier.

Analysts on average expected earnings of 23 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 9.7 percent to $76.6 million, with the strongest growth from diamond bands not intended as engagement rings, earrings and necklaces.

International sales, a smaller part of the company’s business, rose 28 percent to $9.1 million.

Blue Nile warned of a slowdown in June.

“Consumers overall began to pull back on high-ticket purchases, unlike earlier in the year, based on economic concerns such as high unemployment and market volatility,” said Chief Executive Diane Irvine in a statement.

In May, luxury retailers such as Tiffany & Co (TIF.N) and Signet Jewelers Ltd (SIG.N) cited a recovery in spending by high-income shoppers.

Shares of Blue Nile fell 11.86 percent after-hours to $41.90 after closing at $47.54 on the Nasdaq. (Reporting by Alexandria Sage; Editing by Robert MacMillan, Phil Berlowitz)

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