HAMILTON, Bermuda--(BUSINESS WIRE)--
Signet Jewelers Limited (“Signet”) (NYSE:SIG), the world's largest
retailer of diamond jewelry, today announced its results for the 13
weeks ended November 3, 2018 (“third quarter Fiscal 2019”).
Summary:
-
Same store sales ("SSS") up 1.6% versus prior-year quarter1
-
GAAP diluted earnings per share ("EPS") of $(0.74)
-
Non-GAAP diluted EPS of $(1.06)2
-
Raising Fiscal 2019 SSS guidance to flat - up 1%, and total sales of
$6.26 billion-$6.31 billion
-
Narrowing Fiscal 2019 GAAP EPS guidance to $(7.40)-$(7.07) and
non-GAAP EPS guidance to $4.15-$4.40
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Fiscal
Q3'19
1
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|
Fiscal
Q3'18
3
|
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YTD Fiscal
2019
1
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YTD Fiscal
2018
3
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Revenue ($ in millions)
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$
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1,191.7
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$
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1,156.9
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$
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4,092.4
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$
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3,959.9
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Same store sales % change1,4 |
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1.6
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%
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(5.0
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)%
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1.0
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%
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(5.4
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)%
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GAAP
|
|
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Operating income (loss) as % of sales
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(4.1
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)%
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0.5
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%
|
|
(16.6
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)%
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6.5
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%
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GAAP Diluted EPS
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$
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(0.74
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)
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$
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(0.20
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)
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$
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(10.31
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)
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$
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2.24
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Non-GAAP
(2)
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Operating income (loss) as % of sales
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(3.3
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)%
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0.5
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%
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|
0.8
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%
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6.5
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%
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Non-GAAP Diluted EPS
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$
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(1.06
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)
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$
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(0.20
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)
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$
|
(0.35
|
)
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|
$
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2.24
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(1)
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Fiscal Q3'19 and year to date Fiscal 2019 same store sales % change
calculated by aligning weeks in the quarter to same weeks in prior
year.
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(2)
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See non-GAAP reconciliation page.
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(3)
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Fiscal Q3'18 and year to date Fiscal 2018 numbers are as reported
with Q3'18 same store sales % change based on Fiscal 2018 calendar.
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(4)
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Same store sales include physical store sales and eCommerce sales,
which each incorporate the year over year growth of James Allen.
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Virginia C. Drosos, Chief Executive Officer, commented, “In the third
quarter, we delivered positive same store sales growth, with a return to
positive same store sales in our Kay banner, further momentum at
Piercing Pagoda and Zales, and double-digit increases in eCommerce
sales."
"As we enter the holiday season, amid a highly competitive market and
with key selling weeks ahead, we are keenly focused on delivering on our
holiday plans and implementing the beginning stages of our
transformation initiatives in our stores and on our websites. While
still early, we believe the initiatives underway will serve as a
foundation for our future efforts as we move along our transformation
journey."
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Change from previous year
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Third Quarter Fiscal 2019
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Same
store
sales
(1)
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Non-same
store sales,
net
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Total sales
at constant
exchange
rate
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Exchange
translation
impact
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Total
sales
as reported
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Total
sales
(in millions)
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Kay
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0.7
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%
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2.7
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|
%
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|
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3.4
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|
%
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|
|
na
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|
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3.4
|
|
%
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|
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$
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451.2
|
|
Zales
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2.8
|
|
%
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0.4
|
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%
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|
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3.2
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%
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|
na
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|
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3.2
|
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%
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|
|
$
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222.7
|
|
Jared
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—
|
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%
|
|
1.1
|
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%
|
|
|
1.1
|
|
%
|
|
|
na
|
|
|
1.1
|
|
%
|
|
|
$
|
220.5
|
|
Piercing Pagoda
|
|
16.2
|
|
%
|
|
(5.4
|
)
|
%
|
|
|
10.8
|
|
%
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|
na
|
|
|
10.8
|
|
%
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$
|
61.4
|
|
James Allen(2) |
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13.6
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%
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|
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|
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|
|
|
|
|
|
|
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$
|
52.5
|
|
Peoples
|
|
0.3
|
|
%
|
|
(2.0
|
)
|
%
|
|
|
(1.7
|
)
|
%
|
|
|
(4.2
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)%
|
|
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(5.9
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)
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%
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$
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39.8
|
|
Regional banners (3) |
|
(13.7
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)
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%
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(33.7
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)
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%
|
|
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(47.4
|
)
|
%
|
|
|
(0.2
|
)%
|
|
|
(47.6
|
)
|
%
|
|
|
$
|
16.2
|
|
North America segment
|
|
2.1
|
|
%
|
|
2.2
|
|
%
|
|
|
4.3
|
|
%
|
|
|
(0.2
|
)%
|
|
|
4.1
|
|
%
|
|
|
$
|
1,064.3
|
|
H.Samuel
|
|
(3.5
|
)
|
%
|
|
(1.9
|
)
|
%
|
|
|
(5.4
|
)
|
%
|
|
|
(1.3
|
)%
|
|
|
(6.7
|
)
|
%
|
|
|
$
|
57.4
|
|
Ernest Jones
|
|
(2.8
|
)
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%
|
|
(0.2
|
)
|
%
|
|
|
(3.0
|
)
|
%
|
|
|
(1.3
|
)%
|
|
|
(4.3
|
)
|
%
|
|
|
$
|
63.9
|
|
International segment
|
|
(3.1
|
)
|
%
|
|
(1.1
|
)
|
%
|
|
|
(4.2
|
)
|
%
|
|
|
(1.3
|
)%
|
|
|
(5.5
|
)
|
%
|
|
|
$
|
121.3
|
|
Other(4) |
|
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|
|
|
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$
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6.1
|
|
Signet
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|
1.6
|
|
%
|
|
1.7
|
|
%
|
|
|
3.3
|
|
%
|
|
|
(0.3
|
)%
|
|
|
3.0
|
|
%
|
|
|
$
|
1,191.7
|
|
|
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(1)
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The 53rd week in Fiscal 2018 has resulted in a shift in
Fiscal 2019, as the fiscal year began a week later than the previous
fiscal year. As such, same store sales for Fiscal 2019 are being
calculated by aligning the weeks of the quarter to the same weeks in
the prior year. Total reported sales continue to be calculated based
on the reported fiscal periods.
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|
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(2)
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Same store sales presented for James Allen to provide comparative
performance measure.
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|
|
(3)
|
|
Regional banners represents results for regional stores presented in
the prior year as part of the former Sterling Jewelers and Zale
Jewelry segments (including Gordon’s and Mappins).
|
|
|
|
(4)
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Includes sales from Signet’s diamond sourcing initiative.
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Third quarter Fiscal 2019
|
|
Third quarter Fiscal 2018
|
|
GAAP Operating income/(loss) in millions
|
|
$
|
|
% of sales
|
|
$
|
|
% of sales
|
|
North America segment
|
|
$
|
(19.5
|
)
|
|
|
(1.8
|
)
|
%
|
|
$
|
53.8
|
|
|
|
5.3
|
|
%
|
|
International segment
|
|
(4.4
|
)
|
|
|
(3.6
|
)
|
%
|
|
(1.7
|
)
|
|
|
(1.3
|
)
|
%
|
|
Other
|
|
(24.9
|
)
|
|
|
nm
|
|
(46.6
|
)
|
|
|
nm
|
|
Total GAAP operating income / (loss)
|
|
$
|
(48.8
|
)
|
|
|
(4.1
|
)
|
%
|
|
$
|
5.5
|
|
|
|
0.5
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third quarter Fiscal 2019
|
|
Third quarter Fiscal 2018
|
|
Non-GAAP Operating income/(loss) in millions
|
|
$
|
|
% of sales
|
|
$
|
|
% of sales
|
|
North America segment
|
|
$
|
(19.5
|
)
|
|
|
(1.8
|
)
|
%
|
|
$
|
53.8
|
|
|
|
5.3
|
|
%
|
|
International segment
|
|
(4.4
|
)
|
|
|
(3.6
|
)
|
%
|
|
(1.7
|
)
|
|
|
(1.3
|
)
|
%
|
|
Other
|
|
(15.0
|
)
|
|
|
nm
|
|
(46.6
|
)
|
|
|
nm
|
|
Total Non-GAAP operating income / (loss)
|
|
$
|
(38.9
|
)
|
|
|
(3.3
|
)
|
%
|
|
$
|
5.5
|
|
|
|
0.5
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Third Quarter 2019 Financial Highlights
Signet's total sales were $1.19 billion, up 3.0%, in the 13 weeks ended
November 3, 2018 on a reported basis and up 3.3% from the prior year
quarter on a constant currency basis. Total same store sales performance
was 1.6% versus the prior year quarter, inclusive of a 75 bps
unfavorable impact due to planned shifts in timing of promotions at
Zales and Peoples. Same store sales also reflected a 50 bps unfavorable
impact related to a timing shift of service plan revenue recognized as a
result of the historical claims experience shifting away from the
earlier years of the service plans to later years of the coverage
period. Incremental clearance sales to make room for new product as we
refocus our assortment had a positive impact on same store sales of 165
bps. Transition issues related to the October 2017 credit outsourcing
had an immaterial impact on same store sales in the third quarter.
The increase in total sales of $34.8 million from the prior year quarter
was positively impacted by 1) same store sales growth; 2) new revenue
recognition accounting standards; and 3) the addition of James Allen
(acquired in September 2017). These factors were partially offset by net
store closures, the negative impact of a calendar shift due to the 53rd
week in Fiscal 2018 and unfavorable foreign exchange translation.
eCommerce sales in the third quarter including James Allen were $125.0
million, up 54.9% on a reported basis. James Allen sales were $52.5
million in the quarter, up 13.6% compared to the prior year quarter, and
had a positive 50 bps impact on total company same store sales.
eCommerce sales increased across all segments and accounted for 10.5% of
third quarter sales, up from 7.0% of total sales in the prior year third
quarter.
By operating segment:
North America
-
Same store sales increased 2.1%, including the impact of initiatives
across banners to increase newness and refocus the product assortment
and James Allen sales growth which contributed 55 bps. Average
transaction value ("ATV") increased 4.5% while the number of
transactions declined 1.1%. Incremental clearance sales positively
impacted same store sales by approximately 190 bps, and a planned
shift in timing of promotions at Zales and Peoples unfavorably
impacted same store sales by 85 bps. Same store sales also reflected a
55 bps unfavorable impact related to the shift of service plan revenue
recognized as discussed above.
-
Same store sales increased at Piercing Pagoda by 16.2%, Zales by 2.8%
and Kay by 0.7%. Zales results were unfavorably impacted by 360 bps
due to a planned shift in the timing of promotions. Jared same store
sales were flat.
-
Fashion, bridal and watch sales increased in the quarter on a same
store sales basis, benefiting from a greater percentage of newness in
the core product assortment and higher clearance sales. This increase
was partially offset by declines in the Other product category driven
by a strategic reduction of owned brand beads, as well as declines in
other branded beads. Bridal performance was driven by strength in
solitaires, the Enchanted Disney Fine Jewelry® collection and the
Love's Destiny collection, partially offset by declines in the Ever
Us® collection and the Tolkowsky collection. Fashion performance was
primarily driven by gold, particularly chains and bracelets, and
diamond earrings and pendants.
International
-
International same store sales decreased 3.1%, with ATV flat with the
prior year and the number of transactions decreasing 2.7%.
-
The same store sales decline was impacted by unfavorable traffic
trends and a difficult consumer environment. Higher sales in prestige
watches were offset by lower sales in diamond jewelry and fashion
watches.
Gross margin was $371.2 million, or 31.1% of sales, up 330 basis points.
Factors impacting gross margin rate include 1) a positive 350 bps impact
related to no longer recognizing bad debt expense and late charge
income; 2) a negative 40 bps impact related to the discontinuation of
credit insurance; 3) a negative 30 bps impact related to James Allen,
which carries a lower gross margin rate; 4) a negative 30 bps impact
related to a timing shift of revenue recognized on service plans; and 5)
a positive 20 bps impact related to adopting new revenue recognition
accounting standards, including higher revenue share payments associated
with the prime credit outsourcing arrangement. The residual factors
impacting gross margin include unfavorable mix including higher
clearance inventory sales offset by transformation cost savings and
lower store occupancy costs due to store closures.
SGA was $410.3 million, or 34.4% of sales, compared to $375.9 million,
or 32.5% of sales in the prior year. Prior year SGA included $8.1
million in transaction costs related to the acquisition of R2Net. SGA
increased primarily due to 1) a $26 million increase in credit costs
related to the transition to an outsourced credit model; 2) a $16
million increase in advertising expense; and 3) a $5 million increase in
incentive compensation expense. Increases in SGA were partially offset
by transformation cost savings, net of investments.
Other operating income was $0.2 million compared to $72.5 million in the
prior year third quarter. The decrease is primarily due to the sale of
the prime accounts receivable in the third quarter of Fiscal 2018, which
resulted in less interest income earned from a reduced receivable
portfolio.
In the third quarter, Signet's GAAP operating income/(loss) was $(48.8)
million or (4.1)% of sales, compared to $5.5 million, or 0.5% of sales
in the prior year third quarter. The operating income margin decline was
driven by a $46 million unfavorable impact related to the outsourcing of
credit, unfavorable banner mix, higher advertising, the unfavorable
impact of the timing shift on revenue recognized on service plans,
higher incentive compensation expense and $9.5 million in restructuring
charges due to store closure costs, severance and professional fees
related to the Path to Brilliance transformation plan. These declines
were partially offset by transformation cost savings.
Non-GAAP operating loss was $(38.9) million, or (3.3)% of sales,
compared to $5.5 million, or 0.5% of sales in prior year third quarter.
Non-GAAP operating loss excluded $9.5 million in restructuring charges
related to the Path to Brilliance transformation plan and $0.4 million
in transaction costs related to the non-prime credit outsourcing.
Income tax benefit was $29.2 million compared to income tax benefit of
$7.2 million in the prior year third quarter. The current quarter GAAP
effective tax rate was driven primarily by pre-tax earnings mix by
jurisdiction in the quarter. On a non-GAAP basis, income tax benefit was
$2.8 million for an effective tax rate of 5.7%, driven by pre-tax
earnings mix by jurisdiction.
GAAP diluted earnings per share ("EPS") of $(0.74) includes an income
tax benefit recognized in connection with the charges associated with
the Path to Brilliance transformation plan and transaction costs related
to the sale of non-prime receivables. Using a normalized effective tax
rate, our non-GAAP loss per share was ($1.06).
GAAP and non-GAAP EPS in the quarter is based on net loss available to
common shareholders as the preferred shares are anti-dilutive and
excluded from the ending share count due to the level of third quarter
net loss.
Balance Sheet and Statement of Cash Flows
Net cash provided by operating activities was $313.5 million year to
date and free cash flow was $220.1 million, including $445.5 million in
proceeds from the sale of the non-prime receivables. Excluding these
proceeds, adjusted year to date free cash flow was $(225.4) million.
Cash and cash equivalents were $130.7 million, compared to $113.4
million at the prior year quarter-end.
Net accounts receivable, including accounts receivable held for sale,
were $14.1 million as of November 3, 2018, compared to $640.1 million at
the prior year quarter-end. The decrease in receivables was primarily
driven by the sale of the non-prime portfolios.
Net inventories were $2.65 billion, up 7.3% compared to $2.47 billion at
the prior year quarter-end. Our inventory balance reflects our strategy
to exit low-priced owned branded beads and increase investments in
bridal and certain fashion collections. The increase in inventory was
primarily due to investments in bridal merchandise, particularly at Kay,
as well as new on-trend designs in fashion. The bridal investments
include an increase in larger carat weight and premium diamonds and
fancy shapes as well as core assortment including branded collections.
Short-term debt was $322.6 million, an increase of $30.8 million,
compared to $291.8 million in the prior year quarter end. Current year
quarter short-term debt includes $282 million of revolver borrowings.
Prior year short-term debt included $256 million in borrowings on the
revolver. Long-term debt was $660.4 million, down $36.4 million,
compared to $696.8 million in the prior year quarter end.
Fiscal year to date, Signet has repurchased 8.8 million shares at an
average cost per share of $55.06 or $485 million. As of November 3,
2018, there was $165.6 million remaining under Signet’s share repurchase
authorization.
Signet Path to Brilliance Expected Savings and Restructuring Costs
In March of 2018, the Company announced a three-year Signet Path to
Brilliance transformation plan to reposition the Company to be a share
gaining, OmniChannel jewelry category leader. The Company continues to
expect its transformation plan to deliver $200 million - $225 million of
net cost savings over the next three fiscal years. The Company's
estimates for pre-tax charges over the next three fiscal years is a
range of $170 million - $190 million, of which $80 million - $95 million
are expected to be cash charges.
In Fiscal 2019, the Company expects net costs savings of $85 million -
$100 million, with further incremental net cost savings of $115 million
- $125 million by the end of the three-year program. Approximately two
thirds of the Fiscal 2019 cost savings have been achieved year to date.
In Fiscal 2019, the Company's preliminary estimates for pre-tax charges
related to cost reduction activities and inventory charges ranges from
$129 million - $134 million, of which $40 million - $45 million are
expected to be cash charges.
|
|
|
|
|
|
Fiscal 2019 Financial Guidance
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2019
|
|
Current Guidance
|
|
Prior Guidance
|
|
Same store sales (excludes impact of
revenue recognition
accounting standard
change)
|
|
flat - up 1.0%
|
|
down 1.5% - flat
|
|
Total sales
|
|
$6.26 billion - $6.31 billion
|
|
$6.2 billion - $6.3 billion
|
|
GAAP diluted EPS
|
|
$(7.40) - $(7.07)
|
|
$(7.47) - $(7.09)
|
|
Non-GAAP diluted EPS
|
|
$4.15 - $4.40
|
|
$4.05 - $4.40
|
|
|
|
|
|
|
Weighted average common shares - basic
|
|
55 million
|
|
55 million
|
|
Weighted average common shares - diluted
|
|
62 million
|
|
62 million
|
|
Capital expenditures
|
|
$165 million - $185 million
|
|
$165 million - $185 million
|
|
Net selling square footage
|
|
Approximately -5%
|
|
-4% - -5%
|
|
|
|
|
|
The above current Fiscal 2019 GAAP guidance reflects the following
assumptions:
-
Same store sales guidance now includes an unfavorable impact of 20 bps
related to a timing shift of service plan revenue recognized as a
result of historical claims experience shifting away from the earlier
years of the service plans to later years of the coverage period
-
Impact of previously closed stores, which had annual sales of $150
million in Fiscal 2018
-
Application of new revenue recognition accounting standard results in
an increase to sales revenue of approximately $111 million for amounts
previously reflected as an offset to operating expenses. Prior year
will not be adjusted for comparative purposes
-
The Company plans to close more than 200 stores in Fiscal 2019 and
open approximately 30 stores for a net selling square footage decline
of approximately 5%
-
Transformation program net savings goal of $85 million - $100 million.
Approximately two-thirds of the savings goal was achieved year-to-date
-
Operating profit impact of negative $134 million - $138 million due to
the outsourcing of prime and non-prime accounts receivable
-
One-time pre-tax charges of $129 million - $134 million related to the
transformation plan
-
Pre-tax charge associated with the credit transaction of $167 million
-
Capital expenditures driven largely by Kay off-mall stores, store
remodeling and IT initiatives
-
Expected GAAP tax benefit in the range of $103 million - $109 million
including the impact of impairment charges, the loss associated with
the sale of the non-prime receivables, inclusive of the servicing fee
and related transaction costs, and restructuring charges
-
Interest expense of approximately $40 million
-
Share repurchases of $485 million completed in the first half of
Fiscal 2019
-
For purposes of calculating both GAAP and non-GAAP EPS, the Company
expects to apply a share count that excludes the preferred shares for
the full year and a share count including the preferred shares for the
fourth quarter
Non-GAAP EPS guidance of $4.15 - $4.40 excludes restructuring charges
associated with the transformation plan, the loss associated with the
sale of the non-prime receivables and the goodwill and intangible
impairment charge. Non-GAAP EPS is computed using a normalized tax rate
of approximately 3% - 4%. The revaluation of deferred tax assets
associated with the United States tax reform may result in discrete
adjustments within subsequent quarters which are excluded from the
calculation of non-GAAP EPS in Fiscal 2019.
|
|
|
|
Fourth Quarter Fiscal 2019 Financial Guidance:
|
|
|
|
|
|
|
Fourth Quarter Fiscal 2019
|
|
|
|
Same store sales (excludes impact of revenue recognition accounting
standard
change)
|
|
down 1.5% - up 1.0%
|
|
Total sales
|
|
$2.17 billion - $2.22 billion
|
|
GAAP diluted EPS
|
|
$
|
3.02 - $3.33
|
|
Non-GAAP diluted EPS
|
|
$
|
4.35 - $4.59
|
|
|
|
|
Weighted average common shares - diluted
|
|
58.9 million
|
|
|
|
The above fourth quarter Fiscal 2019 GAAP guidance reflects the
following assumptions:
-
Same store sales guidance now includes an unfavorable impact of 30 bps
related to a timing shift of service plan revenue recognized as a
result of historical claims experience shifting away from the earlier
years of the service plans to later years of the coverage period
-
Impact of previously closed stores, which had annual sales of $52
million in the fourth quarter of Fiscal 2018
-
Application of new revenue recognition accounting standard results in
an increase to sales revenue of approximately $36 million for amounts
previously reflected as an offset to operating expenses. Prior year
will not be adjusted for comparative purposes
-
Lack of a 53rd week in the current year fourth quarter. The 53rd week
contributed $84 million in sales in the fourth quarter of Fiscal 2018
-
An operating profit impact of approximately a negative $2 million to a
positive $2 million as compared to the fourth quarter of Fiscal 2018
related to the credit outsourcing. This impact includes: 1) no finance
or late charge income; 2) no bad debt expense; 3) credit outsourcing
expenses and 4) higher revenue sharing related to the prime
outsourcing arrangement
-
Restructuring charges of approximately $30 - $35 million related to
Signet Path to Brilliance restructuring program
-
GAAP and non-GAAP EPS guidance is calculated using net income before
preferred dividend and applying fully diluted share count
Non-GAAP EPS guidance of $4.35 - $4.59 excludes restructuring charges
associated with the transformation. Non-GAAP EPS is computed using a
normalized tax rate of approximately 3% - 4%. The revaluation of
deferred tax assets associated with the United States tax reform may
result in discrete adjustments within subsequent quarters which are
excluded from the calculation of non-GAAP EPS in Fiscal 2019.
Conference Call:
A conference call is scheduled today at 8:30 a.m. ET and a simultaneous
audio webcast is available at www.signetjewelers.com.
The call details are:
Toll Free Dial-in: 833-245-9657
International Dial-in: +1 647-689-4229
Access code: 8682929
A replay and transcript of the call will be posted on Signet's website
as soon as they are available and will be accessible for one year.
Holiday Sales Press Release Timing:
Signet Jewelers intends to announce its holiday sales results via a
press release before market open on Thursday, January 17, 2019. In light
of the 53rd week in Fiscal 2018, this holiday release will be
distributed one week later versus prior year. As previously announced,
the company will not be hosting a holiday sales results conference call.
About Signet and Safe Harbor Statement:
Signet Jewelers Limited is the world's largest retailer of diamond
jewelry. Signet operates nearly 3,500 stores primarily under the name
brands of Kay Jewelers, Zales, Jared The Galleria Of Jewelry, H.Samuel,
Ernest Jones, Peoples, Piercing Pagoda, and JamesAllen.com. Further
information on Signet is available at www.signetjewelers.com.
See also www.kay.com,
www.zales.com,
www.jared.com,
www.hsamuel.co.uk,
www.ernestjones.co.uk,
www.peoplesjewellers.com,
www.pagoda.com,
and www.jamesallen.com.
This release contains statements which are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995. These statements, based upon management’s beliefs and expectations
as well as on assumptions made by and data currently available to
management, appear in a number of places throughout this document and
include statements regarding, among other things, Signet’s results of
operation, financial condition, liquidity, prospects, growth, strategies
and the industry in which Signet operates. The use of the words
“expects,” “intends,” “anticipates,” “estimates,” “predicts,”
“believes,” “should,” “potential,” “may,” “forecast,” “objective,”
“plan,” or “target,” and other similar expressions are intended to
identify forward-looking statements. These forward-looking statements
are not guarantees of future performance and are subject to a number of
risks and uncertainties, including, but not limited to, our ability to
implement Signet's transformation initiative, the effect of US federal
tax reform and adjustments relating to such impact on the completion of
our quarterly and year-end financial statements, changes in
interpretation or assumptions, and/or updated regulatory guidance
regarding the US federal tax reform, the benefits and outsourcing of the
credit portfolio sale including technology disruptions, future financial
results and operating results, the impact of weather-related incidents
on Signet’s business, the benefits and integration of R2Net, general
economic conditions, potential regulatory changes or other developments
following the United Kingdom’s announced intention to negotiate a formal
exit from the European Union, a decline in consumer spending, the
merchandising, pricing and inventory policies followed by Signet, the
reputation of Signet and its banners, the level of competition in the
jewelry sector, the cost and availability of diamonds, gold and other
precious metals, regulations relating to customer credit, seasonality of
Signet’s business, financial market risks, deterioration in customers’
financial condition, exchange rate fluctuations, changes in Signet’s
credit rating, changes in consumer attitudes regarding jewelry,
management of social, ethical and environmental risks, the development
and maintenance of Signet’s omni-channel retailing, security breaches
and other disruptions to Signet’s information technology infrastructure
and databases, inadequacy in and disruptions to internal controls and
systems, changes in assumptions used in making accounting estimates
relating to items such as extended service plans and pensions, risks
related to Signet being a Bermuda corporation, the impact of the
acquisition of Zale Corporation on relationships, including with
employees, suppliers, customers and competitors, an adverse decision in
legal or regulatory proceedings, deterioration in the performance of
individual businesses or of the Company's market value relative to its
book value, resulting in impairments of fixed assets or intangible
assets or other adverse financial consequences, including tax
consequences related thereto, especially in view of the Company’s recent
market valuation and our ability to successfully integrate Zale
Corporation’s operations and to realize synergies from the transaction.
For a discussion of these and other risks and uncertainties which could
cause actual results to differ materially from those expressed in any
forward-looking statement, see the "Risk Factors" section of Signet's
Fiscal 2018 Annual Report on Form 10-K filed with the SEC on April 2,
2018 and quarterly reports on Form 10-Q filed with the SEC. Signet
undertakes no obligation to update or revise any forward-looking
statements to reflect subsequent events or circumstances, except as
required by law.
GAAP to Non-GAAP Reconciliations
The following information provides reconciliations of the most
comparable financial measures calculated and presented in accordance
with accounting principles generally accepted in the U.S. (“GAAP”) to
presented non-GAAP financial measures. The company believes that
non-GAAP financial measures, when reviewed in conjunction with GAAP
financial measures, can provide more information to assist investors in
evaluating historical trends and current period performance. For these
reasons, internal management reporting also includes non-GAAP measures.
Items may be excluded from GAAP financial measures when the company
believes this provides greater clarity to management and investors.
These non-GAAP financial measures should be considered in addition to,
and not superior to or as a substitute for the GAAP financial measures
presented in this earnings release and the Company’s financial
statements and other publicly filed reports. In addition, our non-GAAP
financial measures may not be the same as or comparable to similar
non-GAAP measures presented by other companies.
In discussing financial results, the Company refers to free cash flow
which is not in accordance with GAAP and is defined as the net cash
provided by operating activities less purchases of property, plant and
equipment. Management considers adjusted free cash flow, defined as free
cash flow excluding proceeds from the sale of the non-prime receivables,
as helpful in understanding how the business is generating cash from its
operating and investing activities that can be used to meet the
financing needs of the business. Adjusted free cash flow is an indicator
used by management frequently in evaluating its overall liquidity and
determining appropriate capital allocation strategies. Free cash flow
and adjusted free cash flow do not represent the residual cash flow
available for discretionary expenditure.
|
|
|
|
|
|
|
39 weeks ended
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
November 3, 2018
|
|
October 28, 2017
|
|
Net cash provided by operating activities
|
|
|
|
|
|
|
|
|
|
|
$313.5
|
|
|
$1,482.3
|
|
|
Purchase of property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
(93.4
|
)
|
|
|
(166.1
|
)
|
|
|
Free cash flow
|
|
|
|
|
|
|
|
|
|
|
$220.1
|
|
|
$1,316.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39 weeks ended
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
November 3, 2018
|
|
October 28, 2017
|
|
Free cash flow
|
|
|
|
|
|
|
|
|
|
|
$220.1
|
|
|
$1,316.2
|
|
|
Proceeds from sale of prime receivables
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(960.2
|
)
|
|
|
Proceeds from sale of non-prime receivables
|
|
|
|
|
|
|
|
|
|
|
(445.5
|
)
|
|
|
—
|
|
|
Adjusted free cash flow
|
|
|
|
|
|
|
|
|
|
|
$(225.4
|
)
|
|
|
$356.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
|
|
November 3, 2018
|
|
October 28, 2017
|
|
November 3, 2018
|
|
October 28, 2017
|
|
Gross margin
|
|
$371.2
|
|
|
$321.1
|
|
|
$1,283.0
|
|
|
$1,270.2
|
|
|
Restructuring charges - cost of sales
|
|
—
|
|
|
—
|
|
|
63.2
|
|
|
—
|
|
|
Non-GAAP gross margin
|
|
$371.2
|
|
|
$321.1
|
|
|
$1,346.2
|
|
|
$1,270.2
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
|
|
November 3, 2018
|
|
October 28, 2017
|
|
November 3, 2018
|
|
October 28, 2017
|
|
Total GAAP operating income/ (loss)
|
|
$(48.8
|
)
|
|
$5.5
|
|
|
$(681.1
|
)
|
|
$256.4
|
|
|
Charges related to transformation plan
|
|
9.5
|
|
|
—
|
|
|
98.8
|
|
|
—
|
|
|
Loss related to goodwill and intangible impairment
|
|
—
|
|
|
—
|
|
|
448.7
|
|
|
—
|
|
|
Loss related to sale of non-prime receivables
|
|
0.4
|
|
|
—
|
|
|
167.4
|
|
|
—
|
|
|
Total non-GAAP operating income / (loss)
|
|
$(38.9
|
)
|
|
$5.5
|
|
|
$33.8
|
|
|
$256.4
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
|
|
November 3, 2018
|
|
October 28, 2017
|
|
November 3, 2018
|
|
October 28, 2017
|
|
North America segment GAAP operating income /
(loss)
|
|
$(19.5
|
)
|
|
$53.8
|
|
|
$(561.0
|
)
|
|
$350.2
|
|
|
Charges related to transformation plan
|
|
—
|
|
|
—
|
|
|
53.7
|
|
|
—
|
|
|
Loss related to goodwill and intangible impairment
|
|
—
|
|
|
—
|
|
|
448.7
|
|
|
—
|
|
|
Loss related to sale of non-prime receivables
|
|
—
|
|
|
—
|
|
|
160.4
|
|
|
—
|
|
|
North America segment non-GAAP operating income
/ (loss)
|
|
$(19.5
|
)
|
|
$53.8
|
|
|
$101.8
|
|
|
$350.2
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
|
|
November 3, 2018
|
|
October 28, 2017
|
|
November 3, 2018
|
|
October 28, 2017
|
|
International segment GAAP operating income /
(loss)
|
|
$(4.4
|
)
|
|
$(1.7
|
)
|
|
$(18.1
|
)
|
|
$(1.9
|
)
|
|
Charges related to transformation plan
|
|
—
|
|
|
—
|
|
|
3.8
|
|
|
—
|
|
|
International segment non-GAAP operating income /
(loss)
|
|
$(4.4
|
)
|
|
$(1.7
|
)
|
|
$(14.3
|
)
|
|
$(1.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
|
|
November 3, 2018
|
|
October 28, 2017
|
|
November 3, 2018
|
|
October 28, 2017
|
|
Other segment GAAP operating income / (loss)
|
|
$(24.9
|
)
|
|
$(46.6
|
)
|
|
$(102.0
|
)
|
|
$(91.9
|
)
|
|
Charges related to transformation plan
|
|
9.5
|
|
|
—
|
|
|
41.3
|
|
|
—
|
|
|
Loss related to sale of non-prime receivables
|
|
0.4
|
|
|
—
|
|
|
7.0
|
|
|
—
|
|
|
Other segment non-GAAP operating income / (loss)
|
|
$(15.0
|
)
|
|
$(46.6
|
)
|
|
$(53.7
|
)
|
|
$(91.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
|
|
|
|
|
|
|
|
|
|
|
November 3, 2018
|
|
October 28, 2017
|
|
|
|
|
|
|
|
|
|
|
|
GAAP effective tax rate
|
|
49.4
|
%
|
|
64.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Charges related to transformation plan
|
|
(4.0
|
)%
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss related to sale of non-prime receivables
|
|
(0.2
|
)%
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP quarterly impact of annual tax benefit1 |
|
(39.5
|
)%
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP effective tax rate
|
|
5.7
|
%
|
|
64.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
|
|
|
|
|
|
|
|
|
|
|
November 3, 2018
|
|
October 28, 2017
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted EPS
|
|
$(0.74
|
)
|
|
$(0.20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges related to transformation plan1 |
|
0.14
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss related to sale of non-prime receivables1 |
|
0.01
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP quarterly impact of annual tax benefit1 |
|
(0.47
|
)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Diluted EPS
|
|
$(1.06
|
)
|
|
$(0.20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Q4'19
Guidance Low
End
|
|
Fiscal Q4'19
Guidance High
End
|
|
Q4 GAAP Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
$3.02
|
|
|
$3.33
|
|
|
Charges related to transformation plan1 |
|
|
|
|
|
|
|
|
|
|
0.48
|
|
|
0.41
|
|
|
GAAP quarterly impact of annual tax benefit1 |
|
|
|
|
|
|
|
|
|
|
0.85
|
|
|
0.85
|
|
|
Q4 Non-GAAP Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
$4.35
|
|
|
$4.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2019
Guidance Low
End
|
|
Fiscal 2019
Guidance High
End
|
|
2019 GAAP Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
$(7.40
|
)
|
|
$(7.07
|
)
|
|
Charges related to transformation plan1 |
|
|
|
|
|
|
|
|
|
|
1.90
|
|
|
1.83
|
|
|
Loss related to goodwill and intangible impairment1 |
|
|
|
|
|
|
|
|
|
|
7.59
|
|
|
7.56
|
|
|
Loss related to sale of non-prime receivables1 |
|
|
|
|
|
|
|
|
|
|
2.06
|
|
|
2.08
|
|
|
2019 Non-GAAP Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
$4.15
|
|
|
$4.40
|
|
1Reconciliation of GAAP and non-GAAP charges and losses
includes related tax impact.
Additional Information Regarding Credit Outsourcing
From a financial perspective, Signet received nearly $1.4 billion due to
the combined sale of its prime and non-prime receivables portfolios.
While the outsourcing of our credit portfolio lowers our operating
profit, it also lowers share count and interest expense as proceeds from
the sale transactions have been used to pay down debt and repurchase
shares. Additionally, the transactions result in lower working capital
requirements going forward as Signet has no need for funding accounts
receivable for future sales to its prime customers and will only hold
non-prime receivables temporarily for two business days.
From an earnings perspective, after the prime and non-prime portfolio of
receivables were reclassified to held for sale and subsequently sold,
Signet no longer earns finance or late charge income on those accounts
and no longer incurs bad debt expense. Signet will continue to pay some
minimal fees directly to Genesis for new account originations, while all
other servicing costs are included in the discount on forward
receivables sold to investment funds managed by CarVal and Castlelake.
The discount on forward receivables will be partially offset by the
elimination of the costs related to our former in-house credit
operations.
In Fiscal 2018 there was a reduction in operating income of $21 million
in the fourth quarter solely reflecting the impact of the initial credit
outsourcing of prime receivables to ADS and servicing of non-prime
receivables to Genesis. Our Fiscal 2019 non-GAAP guidance embeds an
approximately $152 - $156 million incremental year-over-year reduction
in operating income reflecting a combination of (1) an additional 8
months of impacts of the prime outsourcing; (2) 2 months of servicing
costs on the non-prime portfolio receivables; and (3) 7 months of the
impacts from the future discount rate associated with new credit sales
that investment funds managed by CarVal Investors and Castlelake will
purchase. For Fiscal 2020, we expect a zero - $5 million positive
year-over-year impact on operating income. The 2020 estimate is based on
a contractual step up in revenue share profit percentage associated with
the prime outsourcing and an assumed discount rate for the CarVal and
Castlelake arrangement, and could change if the discount rate were to
reset higher or lower under certain review provisions in the agreement.
|
|
|
|
|
|
|
|
(in millions)
|
|
Fiscal 2018
|
|
Fiscal 2019E
|
|
Fiscal 2020E
|
|
Operating profit impact
|
|
$
|
18
|
|
|
$
|
(134
|
)-$(138)
|
|
$
|
(129
|
)-$(138)
|
|
Operating profit impact year-over-year change
|
|
$
|
(21
|
)
|
|
$
|
(152
|
)-$(156)
|
|
$
|
0-$5
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of prime and non-prime receivables
|
|
$
|
952
|
|
|
$
|
445.5
|
|
|
|
—
|
|
|
|
|
|
Note: Proceeds are shown pre-transaction costs. Estimated operating
profit impact is based on anticipated levels of credit sales and
accounts receivable.
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Fiscal Q1'19
|
|
Fiscal Q2'19
|
|
Fiscal Q3'19
|
|
Fiscal Q4'19
|
|
Operating profit impact year over year change
|
|
$
|
(69
|
)
|
|
$
|
(39
|
)
|
|
$
|
(46
|
)
|
|
$
|
2-$(2
|
)
|
|
|
|
|
Note: Q4 estimated operating profit impact is based on anticipated
levels of credit sales and accounts receivable.
|
|
|
|
Condensed Consolidated Income Statements (Unaudited)
|
|
|
|
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
|
(in millions, except per share amounts)
|
|
November 3,
2018
|
|
October 28,
2017
|
|
November 3,
2018
|
|
October 28,
2017
|
|
Sales
|
|
$
|
1,191.7
|
|
|
$
|
1,156.9
|
|
|
$
|
4,092.4
|
|
|
$
|
3,959.9
|
|
|
Cost of sales
|
|
(820.5
|
)
|
|
(835.8
|
)
|
|
(2,746.2
|
)
|
|
(2,689.7
|
)
|
|
Restructuring charges - cost of sales
|
|
—
|
|
|
—
|
|
|
(63.2
|
)
|
|
—
|
|
|
Gross margin
|
|
371.2
|
|
|
321.1
|
|
|
1,283.0
|
|
|
1,270.2
|
|
|
Selling, general and administrative expenses
|
|
(410.3
|
)
|
|
(375.9
|
)
|
|
(1,337.9
|
)
|
|
(1,237.7
|
)
|
|
Credit transaction, net
|
|
(0.4
|
)
|
|
(12.2
|
)
|
|
(167.4
|
)
|
|
2.6
|
|
|
Restructuring charges
|
|
(9.5
|
)
|
|
—
|
|
|
(35.6
|
)
|
|
—
|
|
|
Goodwill and intangible impairments
|
|
—
|
|
|
—
|
|
|
(448.7
|
)
|
|
—
|
|
|
Other operating income, net
|
|
0.2
|
|
|
72.5
|
|
|
25.5
|
|
|
221.3
|
|
|
Operating income (loss)
|
|
(48.8
|
)
|
|
5.5
|
|
|
(681.1
|
)
|
|
256.4
|
|
|
Interest expense, net
|
|
(10.6
|
)
|
|
(16.6
|
)
|
|
(28.9
|
)
|
|
(42.7
|
)
|
|
Other non-operating income
|
|
0.3
|
|
|
—
|
|
|
1.4
|
|
|
—
|
|
|
Income (loss) before income taxes
|
|
(59.1
|
)
|
|
(11.1
|
)
|
|
(708.6
|
)
|
|
213.7
|
|
|
Income taxes
|
|
29.2
|
|
|
7.2
|
|
|
159.1
|
|
|
(45.7
|
)
|
|
Net income (loss)
|
|
$
|
(29.9
|
)
|
|
$
|
(3.9
|
)
|
|
$
|
(549.5
|
)
|
|
$
|
168.0
|
|
|
Dividends on redeemable convertible preferred shares
|
|
(8.2
|
)
|
|
(8.2
|
)
|
|
(24.6
|
)
|
|
(24.6
|
)
|
|
Net income (loss) attributable to common shareholders
|
|
$
|
(38.1
|
)
|
|
$
|
(12.1
|
)
|
|
$
|
(574.1
|
)
|
|
$
|
143.4
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.74
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(10.31
|
)
|
|
$
|
2.24
|
|
|
Diluted
|
|
$
|
(0.74
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(10.31
|
)
|
|
$
|
2.24
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
51.5
|
|
|
60.1
|
|
|
55.7
|
|
|
64.0
|
|
|
Diluted
|
|
51.5
|
|
|
60.1
|
|
|
55.7
|
|
|
64.1
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
$
|
0.37
|
|
|
$
|
0.31
|
|
|
$
|
1.11
|
|
|
$
|
0.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheets (Unaudited)
|
|
|
|
|
|
|
|
|
(in millions, except par value per share amount)
|
|
November 3,
2018
|
|
February 3,
2018
|
|
October 28,
2017
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
130.7
|
|
|
$
|
225.1
|
|
|
$
|
113.4
|
|
|
Accounts receivable, held for sale
|
|
4.8
|
|
|
—
|
|
|
—
|
|
|
Accounts receivable, net
|
|
9.3
|
|
|
692.5
|
|
|
640.1
|
|
|
Other receivables
|
|
58.3
|
|
|
87.2
|
|
|
80.3
|
|
|
Other current assets
|
|
159.9
|
|
|
158.2
|
|
|
145.0
|
|
|
Income taxes
|
|
—
|
|
|
2.6
|
|
|
17.3
|
|
|
Inventories
|
|
2,647.1
|
|
|
2,280.5
|
|
|
2,466.1
|
|
|
Total current assets
|
|
3,010.1
|
|
|
3,446.1
|
|
|
3,462.2
|
|
|
Non-current assets:
|
|
|
|
|
|
|
|
Property, plant and equipment, net of accumulated depreciation of
$1,283.4,
$1,197.6 and $1,162.7, respectively
|
|
810.4
|
|
|
877.9
|
|
|
855.1
|
|
|
Goodwill
|
|
509.0
|
|
|
821.7
|
|
|
867.1
|
|
|
Intangible assets, net
|
|
340.2
|
|
|
481.5
|
|
|
410.4
|
|
|
Other assets
|
|
168.6
|
|
|
171.2
|
|
|
169.1
|
|
|
Deferred tax assets
|
|
36.2
|
|
|
1.4
|
|
|
1.3
|
|
|
Retirement benefit asset
|
|
33.0
|
|
|
39.8
|
|
|
35.5
|
|
|
Total assets
|
|
$
|
4,907.5
|
|
|
$
|
5,839.6
|
|
|
$
|
5,800.7
|
|
|
Liabilities and Shareholders’ equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Loans and overdrafts
|
|
$
|
322.6
|
|
|
$
|
44.0
|
|
|
$
|
291.8
|
|
|
Accounts payable
|
|
339.6
|
|
|
237.0
|
|
|
324.9
|
|
|
Accrued expenses and other current liabilities
|
|
431.3
|
|
|
448.0
|
|
|
430.5
|
|
|
Deferred revenue
|
|
253.1
|
|
|
288.6
|
|
|
270.3
|
|
|
Income taxes
|
|
19.1
|
|
|
19.6
|
|
|
—
|
|
|
Total current liabilities
|
|
1,365.7
|
|
|
1,037.2
|
|
|
1,317.5
|
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
Long-term debt
|
|
660.4
|
|
|
688.2
|
|
|
696.8
|
|
|
Other liabilities
|
|
233.2
|
|
|
239.6
|
|
|
244.4
|
|
|
Deferred revenue
|
|
671.7
|
|
|
668.9
|
|
|
646.1
|
|
|
Deferred tax liabilities
|
|
12.7
|
|
|
92.3
|
|
|
143.8
|
|
|
Total liabilities
|
|
2,943.7
|
|
|
2,726.2
|
|
|
3,048.6
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
Series A redeemable convertible preferred shares of $.01 par value:
authorized
500 shares, 0.625 shares outstanding (February 3, 2018 and
October
28, 2017: 0.625 shares outstanding)
|
|
614.8
|
|
|
613.6
|
|
|
613.1
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
Common shares of $0.18 par value: authorized 500 shares, 51.9
shares
outstanding (February 3, 2018: 60.5 outstanding;
October 28, 2017: 60.4
outstanding)
|
|
15.7
|
|
|
15.7
|
|
|
15.7
|
|
|
Additional paid-in capital
|
|
294.2
|
|
|
290.2
|
|
|
285.6
|
|
|
Other reserves
|
|
0.4
|
|
|
0.4
|
|
|
0.4
|
|
|
Treasury shares at cost: 35.3 shares (February 3, 2018: 26.7
shares;
October 28, 2017: 26.8 shares)
|
|
(2,418.0
|
)
|
|
(1,942.1
|
)
|
|
(1,945.2
|
)
|
|
Retained earnings
|
|
3,763.5
|
|
|
4,396.2
|
|
|
4,074.9
|
|
|
Accumulated other comprehensive loss
|
|
(306.8
|
)
|
|
(260.6
|
)
|
|
(292.4
|
)
|
|
Total shareholders’ equity
|
|
1,349.0
|
|
|
2,499.8
|
|
|
2,139.0
|
|
|
Total liabilities, redeemable convertible preferred shares and
shareholders’
equity
|
|
$
|
4,907.5
|
|
|
$
|
5,839.6
|
|
|
$
|
5,800.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Cash Flows (Unaudited)
|
|
|
|
|
|
39 weeks ended
|
|
(in millions)
|
|
November 3,
2018
|
|
October 28,
2017
|
|
Cash flows from operating activities
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(549.5
|
)
|
|
$
|
168.0
|
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
138.4
|
|
|
147.1
|
|
|
Amortization of unfavorable leases and contracts
|
|
(5.9
|
)
|
|
(10.8
|
)
|
|
Pension benefit
|
|
(0.7
|
)
|
|
(3.6
|
)
|
|
Share-based compensation
|
|
15.5
|
|
|
11.0
|
|
|
Deferred taxation
|
|
(113.2
|
)
|
|
41.7
|
|
|
Credit transaction, net
|
|
160.4
|
|
|
(30.9
|
)
|
|
Goodwill and intangible impairments
|
|
448.7
|
|
|
—
|
|
|
Restructuring charges
|
|
80.2
|
|
|
—
|
|
|
Amortization of debt discount and issuance costs
|
|
1.5
|
|
|
3.2
|
|
|
Other non-cash movements
|
|
(4.1
|
)
|
|
1.5
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Decrease in accounts receivable held for investment
|
|
37.6
|
|
|
286.1
|
|
|
Decrease in accounts receivable held for sale
|
|
17.5
|
|
|
—
|
|
|
Proceeds from sale of in-house finance receivables
|
|
445.5
|
|
|
960.2
|
|
|
Decrease in other assets and other receivables
|
|
31.9
|
|
|
17.1
|
|
|
(Increase) decrease in inventories
|
|
(456.6
|
)
|
|
4.6
|
|
|
Increase in accounts payable
|
|
106.5
|
|
|
39.7
|
|
|
Decrease in accrued expenses and other liabilities
|
|
(7.3
|
)
|
|
(5.4
|
)
|
|
Decrease in deferred revenue
|
|
(31.8
|
)
|
|
(29.5
|
)
|
|
Increase (decrease) in income taxes payable
|
|
2.0
|
|
|
(115.3
|
)
|
|
Pension plan contributions
|
|
(3.1
|
)
|
|
(2.4
|
)
|
|
Net cash provided by operating activities
|
|
313.5
|
|
|
1,482.3
|
|
|
Investing activities
|
|
|
|
|
|
Purchase of property, plant and equipment
|
|
(93.4
|
)
|
|
(166.1
|
)
|
|
Proceeds from sale of assets
|
|
5.5
|
|
|
—
|
|
|
Purchase of available-for-sale securities
|
|
(0.6
|
)
|
|
(1.7
|
)
|
|
Proceeds from sale of available-for-sale securities
|
|
9.0
|
|
|
0.9
|
|
|
Acquisition of R2Net Inc., net of cash acquired
|
|
—
|
|
|
(332.4
|
)
|
|
Net cash used in investing activities
|
|
(79.5
|
)
|
|
(499.3
|
)
|
|
Financing activities
|
|
|
|
|
|
Dividends paid on common shares
|
|
(59.8
|
)
|
|
(57.7
|
)
|
|
Dividends paid on redeemable convertible preferred shares
|
|
(23.4
|
)
|
|
(26.9
|
)
|
|
Repurchase of common shares
|
|
(485.0
|
)
|
|
(460.0
|
)
|
|
Proceeds from term loans
|
|
—
|
|
|
350.0
|
|
|
Repayments of term loans
|
|
(22.3
|
)
|
|
(365.7
|
)
|
|
Proceeds from securitization facility
|
|
—
|
|
|
1,745.9
|
|
|
Repayments of securitization facility
|
|
—
|
|
|
(2,345.9
|
)
|
|
Proceeds from revolving credit facility
|
|
698.0
|
|
|
605.0
|
|
|
Repayments of revolving credit facility
|
|
(416.0
|
)
|
|
(405.0
|
)
|
|
Repayments of bank overdrafts
|
|
(10.1
|
)
|
|
(5.9
|
)
|
|
Other financing activities
|
|
(2.1
|
)
|
|
(4.5
|
)
|
|
Net cash used in financing activities
|
|
(320.7
|
)
|
|
(970.7
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
225.1
|
|
|
98.7
|
|
|
(Decrease) increase in cash and cash equivalents
|
|
(86.7
|
)
|
|
12.3
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(7.7
|
)
|
|
2.4
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
130.7
|
|
|
$
|
113.4
|
|
Real Estate Portfolio:
Signet has a diversified real estate portfolio. On November 3, 2018,
Signet had 3,478 stores totaling 4.9 million square feet of selling
space. In the third quarter, store count decreased by 15 and square feet
of selling space decreased 0.3%. Compared to year end Fiscal 2018, store
count decreased by 78 and square feet of selling space decreased 1.9%.
|
|
|
|
|
|
|
|
|
|
Store count by banner
|
|
February 3, 2018
|
|
Openings
|
|
Closures
|
|
November 3, 2018
|
|
Kay
|
|
1,247
|
|
|
30
|
|
|
(31
|
)
|
|
1,246
|
|
Zales
|
|
704
|
|
|
3
|
|
|
(24
|
)
|
|
683
|
|
Peoples
|
|
129
|
|
|
1
|
|
|
(6
|
)
|
|
124
|
|
Jared
|
|
274
|
|
|
1
|
|
|
(5
|
)
|
|
270
|
|
Piercing Pagoda
|
|
598
|
|
|
—
|
|
|
(16
|
)
|
|
582
|
|
Regional banners
|
|
100
|
|
|
—
|
|
|
(21
|
)
|
|
79
|
|
North America segment
|
|
3,052
|
|
|
35
|
|
|
(103
|
)
|
|
2,984
|
|
H.Samuel
|
|
301
|
|
|
—
|
|
|
(6
|
)
|
|
295
|
|
Ernest Jones
|
|
203
|
|
|
3
|
|
|
(7
|
)
|
|
199
|
|
International segment
|
|
504
|
|
|
3
|
|
|
(13
|
)
|
|
494
|
|
Signet
|
|
3,556
|
|
|
38
|
|
|
(116
|
)
|
|
3,478
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20181206005257/en/
Investors:
Randi Abada
SVP Corporate Finance Strategy &
Investor Relations
+1-330-668-3489
randi.abada@signetjewelers.com
Media:
David Bouffard
VP Corporate Affairs
+1-330-668-5369
david.bouffard@signetjewelers.com
Source: Signet Jewelers Limited