Nile, Monster Bank On International

The Federal Open Market Committee believes that the U.S. recovery has slowed in recent months, and employers remained reluctant to add to payrolls. With unemployment at 9.5% in June, retailers, especially luxury retailers, are beginning to see sales weaken. May’s research report released by SpendingPulse found luxury retail sales in the month to have fallen 3.9% over the year.

The online jeweler Blue Nile (NASDAQ:NILE) was one of the retailers to have lower sales in June compared to the rest of the year as consumers pulled back on luxury spending. For the recently reported second quarter, revenues grew 9.7% over the year to $76.6 million but missed the market’s forecasted $80.8 million. EPS of $0.19 was also significantly short of the market’s projected $0.23.

While June was weak, for the overall quarter orders grew 3.5% to 39,407 and the average price per order rose 6% to $1,944. Nile did not break down numbers, but it claims that the strongest growth came from the non-engagement-ring category.

Blue Nile has been focusing on expanding its geographic footprint, especially in Asia. International sales grew 28.2% over the year to $9.1 million. On a constant currency basis, sales would have grown 21% over the year. The company aims to expand its international operations to twelve new countries in Europe and Asia-Pacific and will offer delivery services to customers in Australia, Belgium, France, Germany, Hong Kong, Japan, the Netherlands, New Zealand, Singapore, Spain, Switzerland, and Taiwan.

Earlier last quarter, it launched its Chinese website; China is a market projected to grow to $33 billion and to surpass the United States as the market leader in jewelry. India is another promising area, with a domestic jewelry market pegged at $16 billion. While Indians have traditionally been gold-driven consumer, tastes are shifting toward diamond and platinum jewelry. India is among the top three diamond-consuming nations of the world, and it may be a region worth exploring for Blue Nile. The company will, however, have to worry about delivery logistics in the region.

Meanwhile, entering Europe may not be easy, either. The continent is seeing a much slower economic recovery, and markets observers estimate retail sales in the euro zone to have remained flat in June after rising in May. The sixteen countries in the euro zone reported only 0.2% growth in the first quarter. Further, Blue Nile will have to worry about competing with the likes of Piaget and Chopard in the fashion-conscious markets of Switzerland and France.

The company projects revenues of $325 million–$335 million for the year with EPS of $0.94–$1.00. The market was expecting revenues of $349 million and EPS of $1.02.

The stock is trading at $41.28 with a market capitalization of $595 million. It touched a 52-week low of $41.00 earlier last week.

Meanwhile, Monster’s employment index saw employment levels maintain a healthy 21% growth rate over the year in July. In June, the index had reported 24% growth, which was attributable to traditionally higher summer hiring activity. Among the twenty industries tracked by the index, online recruitment activity rose in eight between June and July, and eighteen showed growth trends on an annual basis.

Despite this growth, Monster (NYSE:MWW) failed to meet the market’s expectations for the quarter. Q2 revenues of $215 million were down 4% over the year and missed the market’s projected $216 million consensus. Earnings, however improved, and the company broke even in the quarter compared with the market’s estimated loss of $0.05 per share.

Careers revenues of $184 million were down 3% over the year but remained flat sequentially. Within the segment, North America revenues fell 5% over the year to $97 million but managed to remain flat sequentially. International Career revenues fell 2% over the year but grew 1% sequentially to $87 million. Revenues from Internet Advertising & Fees fell 6% over the year and over the quarter to $31 million.

Monster is seeing enough traction in international bookings. During the quarter, overall bookings rose 19% with Asia registering a 57% increase in bookings, followed by a 20% increase in Europe and a 15% increase in North America. Korea was the biggest growth competitor with bookings rising 86% over the year, followed by Sweden’s 79% growth.

Monster is focusing on developing additional product and services powered by its Sixth Sense semantic search technology, which it claims is superior to other engines for analyzing and processing resume and profile data. The company is developing solutions that allow customers to use their technology to source and hire candidates not only from Monster but from all other sources as well. It is also developing solutions that will assist customers in talent management and not just talent acquisition.

Earlier last quarter, it acquired Yahoo!s HotJobs for $255 million and is looking to complete this acquisition during the third quarter. I hope that once the acquisition is complete, Monster will be able to use its cash balance of $289 million to acquire other freelance marketplaces such as eLance, oDesk, and Guru and other job search engines such as Indeed, SimplyHired, and even LinkedIn.

For Q3, Monster expects revenues to be $218 million–$228 million with earnings expected to be in the range of a loss of $0.02 to a profit of $0.02. The market was expecting revenues of $230.1 million with break-even margins. For the full year, Monster predicted revenues of $890 million–$925 million with a loss of $0.06–$0.14 per share. Analysts were expecting revenues of $902.1 million with a loss of $0.15 per share.

The stock is trading at $11.67 with a market capitalization of $1.5 billion. It touched a 52-week low of $10.96 earlier last month.