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Blue Nile and WebMD Expand Offerings

Posted on Friday, May 10th 2013

According to recent IDEX research, last year sales of fine jewelry and watches in the U.S. reached a record high of $71.3 billion, growing 6% over the year. For the year, sales of fine jewelry grew 6% to $61.9 billion in the U.S.

Blue Nile’s Financials
Online jeweler Blue Nile’s (Nasdaq: NILE) Q1 revenues grew 17% over the year to $97.1 million, ahead of the Street’s projections of $96.9 million. EPS of $0.07 grew 600% over the previous year and was also ahead of the Street’s outlook of $0.13 for the quarter.

Nile continued to push their non-engagement ring business during the quarter by offering several discounts to make the segment more attractive. During the quarter, U.S. engagement net sales grew 19% to $55.3 million and U.S. non-engagement net sales grew 7% to $24.2 million. International sales are also up, and revenues from international operations grew 25% over the year to $17.6 million.

For the current year, Blue Nile expects revenues of $440 million-$470 million, compared with the Street’s projections of $454.8 million. EPS projections of $0.75-$0.85 for the year were also in line with the market’s projections of $0.82.

BlueNile Expands Offerings
Over the past few quarters, Nile has focused on carefully managing their product strategy, especially by developing their non-engagement segment. They realigned their product offerings for the holiday and Valentine’s Day seasons to adapt to consumer demand. They also increased the sales of wedding bands during the season by refining their pricing, promotion, and messaging strategy. They will continue to work on improving their product placement by evolving their life cycle marketing, improving the user experience, and providing a better storefront through photography and other online tools.

Within the non-engagement diamond segment, they expanded the product range available to the consumers by providing jewelry across price points. They plan to continue to build on this assortment and will focus on improving targeted marketing and website presence.

The U.S. government recently moved one step closer to imposing an online sales tax. At present, online retailers are expected to collect sales tax in states in which they have a physical presence. But with the new ruling, they would have to charge the tax based on the state in which the consumer resides, irrespective of the retailer’s physical presence. An implementation of the new rule could mean that Blue Nile will lose some of their competitive advantage as their prices will seem more at par with those of local retailers. Currently, on high-priced items like jewelry Blue Nile sells, the absence of even a marginal sales tax makes prices more attractive.

Their stock is trading at $31.52 with a market capitalization of $393.43 million. It touched a 52-week high of $43.54 in September 2012.

WebMD’s Financials
Another online player, WebMD’s (Nasdaq: WBMD) Q1 revenues grew 5% over the year to $113 million, ahead of the Street’s target of $114.3 million. Loss of $0.03 per share was significantly ahead of the market’s projected loss of $0.15 per share.

By segment, public portal advertising sponsorship revenues grew from $87.8 million a year ago to $93.4 million. Private portal services revenues remained flat at $19.3 million.

During the quarter, the number of monthly unique visitors grew 23% over the year to 132 million. Page views grew 10% over the year to 2.78 billion, and 34% of the page views in the U.S. were accessed through a mobile site. Traffic to Medscape and their Professional Network also grew to 3.1 million physician visits per month.

According to comScore’s recent rankings, they remained the leading website in the health category and were also ranked the leader in mobile health destinations online. The agency ranked them 33rd on all sites on the Internet across all categories.

For the year, WebMD projects revenues of $450 million-$470 million with a loss of $0.26-$0.03 per share. The Street projects a loss of $0.30 for the year.

WebMD’s Expanding Portfolio
WebMD continued to invest in creating improved content for their website. They are developing a new channel, the Health Care Reform Center, which will be offer valuable insights into choosing a suitable health plan for consumers. The channel will be launched this fall to coincide with the next phase of the Affordable Care Act implementation, and the goal is to help consumers better understand the impact of the Affordable Care Act.

During the year they will work on offering a more personalized experience to their consumers so as to deliver increased user engagement. They will also invest in their mobile offerings by deploying new mobile sponsorship products for their advertisers. They are investing in differentiating their advertising and sponsorship products by offering access to a more targeted audience for their advertisers. Finally, they are investing in establishing their networks as a suite of services that will help in information exchange and communication between patients and physicians.

WebMD’s stock is trading at $27.94 with a market capitalization of $1.37 billion. It touched a 52-week high of $30.69 in May 2012.

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