Leading online diamond retailer Blue Nile reported $69.85 million in sales during the quarter ended July 5, declining 5.2 percent year-over-year decline. Net income declined to $2.84 million from $3.21 million.

The sales result is a significant improvement from the year over year sales declines the company suffered from in the fourth quarter of 2008 and the first quarter of 2009, when sales fell 23.3 percent and of 11.4 percent, respectively.

Blue Nile stated in a SEC filing that the decrease in net sales was primarily due to a decrease in the number of orders, partially offset by an increase in the average value of orders.

The engagement category, the company added, was relatively stronger than the more discretionary non-engagement jewelry category.

Net sales in the U.S. decreased by 4.3 percent to $62.8 million, while international sales declined by 12.3 percent to $7.1 million. The majority of decline in international sales was attributed to changes in foreign exchange rates. Excluding the impact of these changes, international sales declined 1.2 percent in the quarter.

Blue Nile noted historically low consumer confidence levels and continued difficulty for consumer to obtain credit to have an impact on the demand for luxury goods, including diamonds and fine jewelry.