Blue Nile Inc (NILE) today reported a lower quarterly profit that missed expectations as sales fell, and said the economic downturn prevented it from giving a financial outlook, sending its shares down 10.8 percent in after hours trading.

Blue Nile’s net profit fell to $3.5 million, or 24 cents a share, in the fourth quarter ended Jan. 4, from $7.5 million, or 45 cents a share, a year earlier. Analysts, on average, expected it to earn 34 cents a share, according to Reuters Estimates. Sales at the Seattle-based company fell to $85.8 million from $111.9 million a year earlier. Other jewelry retailers such as Zale’s, Finlay Enterprises, and Tiffany & Co also took a big hit to holiday revenue, as consumers cut spending on anything that was discretionary. There is speculation that diamond manufacturers that are currently contractually tied exclusively to Blue Nile thus preventing them from selling their Inventory through other Internet retailers will now look to eventually opt out so that they can diversify and add outlets for their merchandise in order to max sales.