Morningstar Rating

Stock Research and Analysis

by Paul Swinand

Bulls Say

Blue Nile's business model creates a negative cash-conversion cycle, which allows the retailer to collect money from its customers before it's obligated to pay its suppliers.
The company has a scalable business that requires little capital investment to grow. It has expanded internationally, which represents a large untapped market.
Blue Nile has established itself as a reputable seller of high-quality and certified diamond jewelry online. Referrals and word of mouth have contributed to the growth of its business. Read more 

Bears Say

Blue Nile's business model depends on exclusive agreements with suppliers. Any changes could affect its working capital.
Blue Nile has not been able to grow at the pace of other online competitors. Yet larger retailers and department stores are experiencing strong growth online and in jewelry.
Blue Nile, through its positioning of always having the best price, has selected for customers that are price-sensitive. If diamond and jewelry prices rise quickly, Blue Nile's pricing advantage narrows because of its fast inventory turns. This does not resonate well with its customer base. Read more 

Management

Diane Irvine stepped down as CEO in late 2011. The company named a new CEO, Harvey S. Kanter, in early 2012. Kanter is making an imprint on the company with smart online marketing tactics and new merchandising hires and strategies.
Other recent management   Read more 

Profile

Founded in 1999, Blue Nile is an online retailer of diamonds and fine jewelry. Diamond engagement rings account for the majority of its sales. Through exclusive agreements   Read more 

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