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In Texas in late March. But square cut or pear formed, These rocks don't free their form. Diamonds are a girl's very best friend. When requested by an analyst about the influence of price stage activity on margins, Vadon did concede there was a trade off growth price for downward stress on margins above $100,000 gross margin fell to the solitary digits. Even though unit volume and unit costs increased, gross profit as a percentage of internet sales was 19.5% in the quarter finished April one, down 90 basis factors from the prior yr. Administration said the decrease in gross revenue as a percentage of net revenue was mainly because of to retail cost reductions in diamonds that had been instituted halfway via the quarter ended April two, 2006 to enhance gross profit (euphemism for saying that price cuts had been initiated on some products to stimulate or else sluggish revenue) In our see, higher diamond prices from suppliers adversely impacted gross margin, as well. Operating earnings as a proportion of net sales increased 20 basis points in the quarter to 5.four%, due to greater quantity sales and a 100 foundation stage reduction in SG (which management attributed to their ability to "leverage the cost structure"). Blue Nile has traditionally invested about four percent of revenues on marketing and marketing, a degree that management says will continue for the foreseeable future. This is slightly reduce than the typical impartial specialty jeweler who spends about five % of revenue on promotions and tiffany jewelry marketing. Tiffany Co. spends about six.2 percent of revenues on advertising. Contrary to management's see, we believe SG will come below pressure in future quarters. The Company is looking to broaden internationally, which indicates a develop out its infrastructure success functions and electronic commerce services. On the conference contact, CFO Irvine stated, all categories were very powerful. Wedding ceremony bands are tremendous, most likely our quantity two item category. Then if you look at non diamond jewelry, we had great growth there. Sterling silver tiffany bracelet carried out tiffany and co canada extremely nicely, great development during the quarter. Yet, in its 10Q regulatory submitting, Blue Nile commented that net revenue and outcomes of functions had been nonetheless highly dependent on the demand for diamonds and diamond jewellery, particularly engagement rings. In fact, much more than 90% of company is still in diamonds, 70

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