BUSINESSWEEK'S HOT GROWTH COMPANIES

Hot Growth Special Report 2006 >

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10

Blue Nile (NILE)

Think this Seattle-based online jewelry store isn't shaking up the diamond business? Ask Zale (ZLC), whose brick-and-mortar stores have been among the Net retailer's biggest victims. Blue Nile is now the largest seller of engagement rings in the U.S. Zale replaced its CEO amid 25% profit declines. The key is Blue Nile's hyper-low operating costs: the company's single warehouse sells as much jewelry as nearly 200 stores would combined. That means prices are often 35% less than competitors' and operating margins are still better. Sales rose 20%, and profits climbed 32% in 2005. Nile, however, has its own issues: It has seen pressure on its gross margins in recent quarters, and struggled to manage advertising costs. Wall Street is divided on its stock. Citigroup analyst Mark Mahaney calls Blue Nile the best small-cap Net stock. But CNBC's Jim Cramer, asked recently on the air about NILE, bellowed "EXPENSIVE."

Company Info

2005 Rank

NR

Market Value*
($ Millions)

603.1

Sales*
($ Millions)

209.7

Sales Growth
(3-yr. avg. annual)

40.2 %

Profits*
($ Millions)

12.9

Profit Growth
(3-yr. avg. annual)

69.5 %

Return on Inv. Capital (3-yr.)

39.1 %

Share Price
12-Mo. Hi/Lo

44/25

Share Price
As of 4/28/06

35

Return on Equity

16.1 %

P/E Ratio

50

No. of Employees

146

Industry Internet Retail
CURRENT
MARKET INFO

NILE >

COMPANY WEB SITE >
Location Seattle
Phone 206 336-6700
*Trailing 12 months
Stock price data as of 4/28/06
DATA: Standard & Poor's Compustat

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Company Snapshot

Blue Nile engages in the online retailing of diamonds, jewelry, and watches in the U.S., Britain, and Canada. The company's products include rings, wedding bands, earrings, necklaces, pendants, bracelets, and watches. It offers its products under the brand name "Blue Nile" through its Web sites, www.bluenile.com, www.bluenile.co.uk, and www.bluenile.ca. The company was founded in 1999. It was formerly known as RockShop.com, and changed its name to Internet Diamonds in June, 1999, and later to Blue Nile in November, 1999. The company is headquartered in Seattle..


Data provided by Capital IQ
 
Mark C. Vadon

Mark C. Vadon, 36

Chairman, Chief Executive Officer and President


Total Compensation*

$ 362,645

Total Options Value*

$ 11,075,130

* Fiscal Year 2005

DEGREES HELD
Harvard University - BA, Stanford University - MBA


Executive Bio

Mark Vadon co-founded Blue Nile and has been president, chief executive officer, and chairman of the board since the company's inception in March, 1999. From December, 1992, to March, 1999, Vadon was a consultant for Bain & Co., a management consulting firm. Vadon holds a BA in social studies from Harvard University and an MBA from Stanford University.


Management Team

Key Executives

Mark C. Vadon; Terri Maupin; Diane M. Irvine; Darrell Cavens; Dwight Gaston; Susan S. Bell

Board Directors

W. Eric Carlborg; Brian McAndrews; Joanna A. Strober; Joseph Jimenez; Mary Alice Taylor; Mark C. Vadon; Diane M. Irvine; Anne Saunders


Executive Data provided by Capital IQ