Last week, the company reported results and guidance that fell short of consensus estimates (reported by numerous media outlets, including this AP article). This Reuters article also noted that results missed recent bullish commentary from Blue Nile's CEO:
- "Expectations had been high for the Seattle-based Web retailer after bullish comments in recent months from Chief Executive Diane Irvine, who had said December revenues were projected to rise 26 percent."
Despite the Market's disappointment, results were respectable -- headlines from the release:
- Reports Fourth Quarter Net Sales Up 20% to $102.9 Million
- Non-GAAP Adjusted EBITDA Increases 38% to $10.6 Million
- Full Year Non-GAAP Free Cash Flow Grows to $36.7 Million
We continue to favor unloved, low P/E and/or low P/FCF multiple merchandise such as 1-800-Flowers.com (FLWS, $1.89 - post last week here) and Bidz.com (BIDZ, $1.93). The latter's business model is far more discretionary than Blue Nile's engagement ring centered model and conditions remain difficult, yet we believe things can get better for the company. Plus, we have protection from low multiples with plenty of room to expand whenever fundamentals turn and the Market takes notice.
Disclosure: long PETS, BIDZ, FLWS.
© 2009 Jeffrey Walkenhorst
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