Blue Nile CEO says business sparkles abroad

Irvine said Blue Nile, which sells diamonds, fine jewelry and engagement rings online, has seen sales affected by sluggish spending from consumers, who face rising gas prices and tightening credit.

Irvine, who spoke at William Blair & Co.'s annual growth stock conference in Chicago, acknowledged the importance of the U.S. market, which she said makes up half of the world market for diamonds. Blue Nile will continue building domestic market share through marketing and referrals from customers who have already purchased diamonds from the company.

Irvine touted new markets in Europe and the Asia Pacific region, noting that Blue Nile recorded $17 million in international sales in 2007, more than double the $8 million it posted in 2006.

"Over the long-term, we believe international will be half or more of our total business," Irvine said.

Citi Investment Research analyst Mark S. Mahaney, who recently met with management, including Irvine, said he hasn't noticed any material short-term changes in Nile's marketing strategy, despite a weak U.S. economy. It appears the company remains focused on expanding market share, he said.

Mahaney, who rates the stock "Hold," still believes business remains "challenging," noting that management did not provide specific commentary on trends in the second quarter.

Citing figures from online traffic research firm comScore Inc., Mahaney said unique visitor traffic to the company's U.S. Web sites declined 5 percent and 29 percent versus a year ago in April and May, respectively.

"Anecdotally, we believe that jewelry and bridal-related industry trends have been soft year-to-date," Mahaney wrote in a client note.

In the first quarter, Blue Nile's profit fell 19 percent, but still beat Wall Street expectations.