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Blue Nile Expanding, WebMD Going Mobile

Posted on Tuesday, Mar 23rd 2010

News from the National Retail Federation was no doubt a pleasant surprise: for the 2009 holiday season, retail sales grew 1.1% to $446.8 million over the previous year’s November and December sales, compared with the 1% decline that the federation had projected earlier. Holiday sales were driven by the apparel segment, in which December sales grew 7% over the year. The health and personal care segment saw sales grow 5% over the year, and sporting goods, hobby, book & music store sales grew 4% over the year.

The federation projects growth of 2.5% in retail sales for 2010. Things are already improving: January sales grew 0.5% over December and 3.2% over the previous year. February numbers grew 0.3% sequentially and 4% over the previous year. But, while consumers seem to be spending, the 9.7% unemployment rate remains a cause for concern.

Online jeweler Blue Nile (NASDAQ:NILE) saw significant growth in the previous quarter, but it missed the market’s expectations despite boasting of its best Thanksgiving weekend ever. Q4 revenues rose 20% over the year to $102.9 million, compared with the market’s expectations of $106.2 million. EPS of $0.35 was also lower than the Street’s projected EPS of $0.38. International sales in the quarter grew 69.6% to a record $11.7 million.

For the year, the company recorded revenues of $302.1 million with EPS of $0.84. A year ago, it earned revenues of $295.3 million with EPS of $0.75. For the full year, international sales grew 20% to $33.2 million.

In the coming years, Blue Nile is looking at expanding its market share not only within the United States, but also in other countries. The company currently claims 4.5% of the U.S. engagement ring market, and it is targeting to expand its share to 15%. Blue Nile also plans to grow its presence in the Asian market, where it sees significant growth opportunities.

Blue Nile has been trying to up-sell to reach a ratio of 50:50 for engagement ring and non-engagement ring clientele. The company has brought in additional inventory of silver, colored gemstone jewelry, and pearls in the recent years to achieve that, but the shift in ratio has yet to be seen. For 2009, 69% of revenues came from engagement rings, flat compared with previous years.

For the current quarter, Blue Nile expects EPS of $0.14-$0.16 on revenues of $71.5 million-$75 million. The market was looking for revenues of $74.7 million and EPS of $0.20.

The stock is trading at $54.63 with a market capitalization of $791 million, a significant improvement from the lows of $25.42 it was trading at a year ago.

WebMD (NASDAQ:WBMD), the online health information provider, had another good run. Q4 revenues grew 25% over the year to $138.1 million and exceeded the market’s expected target of $134.9 million. Earnings for the quarter were $1.39 per share compared with $0.11 earned a year ago.

Full-year revenues grew 17% to $438.5 million while EPS fell from $5.88 a year ago to $2.07.

Industry observers estimate that overall, the U.S. online ad market fell 5% over the year in the last quarter of 2009. Yet, WebMD managed to post significant 32% growth in ad revenues in the quarter. Public portal advertising and sponsorship revenues grew to $114.9 million for the quarter. Traffic to the WebMD Health Network grew 16% over the year to reach an average of 62.5 million unique users per month. Total traffic of 1.5 billion page views grew 17% over the year. During the quarter the company recorded completion of 1.8 million continuing medical education (CME) programs, growth of 19% over the year.

Private portal services revenues remained flat at $23.2 million. Over the year, WebMD added four large employers and health plans to its private health and benefits portal consumer base. It ended the year with 138 consumers.

The company expects revenues of $510 million-$525 million for the year compared with the market’s expectations of $501.7 million. EPS for the year is expected at $0.68-$0.80. For the current quarter, WebMD projects revenues of $103 million-$106 million with EPS of 2%-3.5% of revenues.

The company continued to expand its mobile reach and recently launched a new version for Medscape Mobile. The Medscape Mobile application now provides access to in-depth clinical reference articles on diseases, conditions, and procedures, and complete reference information on over 7,000 brand-name, generic, and OTC medications. The application references include medical images and procedure videos. The leader in mobile medical reference is Epocrates, a company that would be good for WebMD to acquire. Epocrates was nearing $100 million in revenues for the year 2009.

WebMD recently announced its intention to buy back 5.8 million shares at a purchase price of $46.80 per share.

The stock is trading at 52-week high levels of $46.53 with a market capitalization of $2.5 billion.

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Nice info. Retail is hot obviously now.

Arpan Kar Tuesday, March 23, 2010 at 5:14 AM PT