Financial Reports: Guitar Center, Blue Nile, Red Envelope

Direct Sales Up 10.7% at Guitar Center

Westlake Village, CA-based Guitar Center (Nasdaq: GTRC) posted a 10.7% increase in direct response net sales, including revenue from the Medford, OR-based Musician’s Friend catalog, to $86.3 million in the second quarter ended June 30, up from $78 million in the previous second quarter.

Consolidated net sales increased 13.8%, to $458 million while net income rose 4%, to $13.4 million. Erick Mason, executive vice president/chief financial officer, said in a statement: “Overall, we are pleased with our performance for the quarter. We generated top line results in the middle of our expected range and net income toward the high end of our guidance.” At the end of the quarter, Mason added, the company launched GuitarCenter.com as an independent e-commerce site.

Net Sales Soar Nearly 30% At Blue Nile

Seattle-based online jeweler Blue Nile posted sales of $56.9 million, an increase of 29.9%, for the three months ended July 2. During last year’s second quarter, Blue Nile’s recorded sales of $43.8 million. On top of that, net income rose 10.7%, to $3.1 million, up from $2.8 million in last year’s second quarter.

CEO Mark Vadon said in a statement the company delivered an “exceptional” second-quarter performance. “We believe we are strategically well positioned as a result of our category leadership and our unequaled consumer value proposition. We remain focused on optimizing the significant long-term potential we have for growth and profitability.”

Red Envelope 1Q Sales Increase 7.5%

Net revenue for San Francisco-based gifts cataloger Red Envelope (Nasdaq: REDE) increased 7.5%, to $26.9 million in the first quarter ended July 2, up from $25 million last year. The company’s net loss in the first quarter was $900,000, compared to $1.8 million last year.

CEO Ken Constable said in a statement he was pleased with the first-quarter financial results: “Our on-target revenue growth and effective margin management resulted in significant leveraging of our operating expenses. We believe that this validates our conviction that we can successfully demonstrate the financial viability of our business model in fiscal 2007.”

Red Envelope also announced that Gary Korotzer, the company’s chief marketing officer, would resign Aug. 18 to return to a career in financial services. “Gary’s impact will be missed and we wish him continued success in his future endeavors,” Constable said. A search for his replacement is underway.

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