Revenue recognition

The following tables provide the Company’s revenue, disaggregated by major product and channel, for the 13 and 39 weeks ended November 3, 2018 and October 28, 2017:



	13 weeks ended November 3, 2018								13 weeks ended October 28, 2017
(in millions)	North America		International		Other		Consolidated		North America		International		Other		Consolidated
Sales by product:
Bridal	$	514.6	$	51.9	$	—	$	566.5	$	497.3	$	59.4	$	—	$	556.7
Fashion	332.5		23.6		—		356.1		319.1		19.8		—		338.9
Watches	45.7		41.2		—		86.9		44.9		41.2		—		86.1
Other⁽¹⁾	171.5		4.6		6.1		182.2		161.0		8.0		6.2		175.2
Total sales	$	1,064.3	$	121.3	$	6.1	$	1,191.7	$	1,022.3	$	128.4	$	6.2	$	1,156.9

	39 weeks ended November 3, 2018								39 weeks ended October 28, 2017
(in millions)	North America		International		Other		Consolidated		North America		International		Other		Consolidated
Sales by product:
Bridal	$	1,730.2	$	159.3	$	—	$	1,889.5	$	1,614.6	$	165.1	$	—	$	1,779.7
Fashion	1,223.4		76.7		—		1,300.1		1,209.9		74.8		—		1,284.7
Watches	156.7		127.1		—		283.8		155.1		121.7		—		276.8
Other⁽¹⁾	588.5		18.4		12.1		619.0		579.3		21.2		18.2		618.7
Total sales	$	3,698.8	$	381.5	$	12.1	$	4,092.4	$	3,558.9	$	382.8	$	18.2	$	3,959.9


⁽¹⁾	Other revenue primarily includes gift, beads and other miscellaneous jewelery sales, repairs, warranty and other miscellaneous non-jewelry sales.



	13 weeks ended November 3, 2018								13 weeks ended October 28, 2017
(in millions)	North America		International		Other		Consolidated		North America		International		Other		Consolidated
Sales by channel:
Store	$	952.1	$	108.5	$	—	$	1,060.6	$	952.7	$	117.3	$	—	$	1,070.0
E-commerce⁽¹⁾	112.2		12.8		—		125.0		69.6		11.1		—		80.7
Other	—		—		6.1		6.1		—		—		6.2		6.2
Total sales	$	1,064.3	$	121.3	$	6.1	$	1,191.7	$	1,022.3	$	128.4	$	6.2	$	1,156.9

	39 weeks ended November 3, 2018								39 weeks ended October 28, 2017
(in millions)	North America		International		Other		Consolidated		North America		International		Other		Consolidated
Sales by channel:
Store	$	3,316.0	$	342.5	$	—	$	3,658.5	$	3,347.5	$	350.3	$	—	$	3,697.8
E-commerce⁽¹⁾	382.8		39.0		—		421.8		211.4		32.5		—		243.9
Other	—		—		12.1		12.1		—		—		18.2		18.2
Total sales	$	3,698.8	$	381.5	$	12.1	$	4,092.4	$	3,558.9	$	382.8	$	18.2	$	3,959.9

⁽¹⁾

North America includes $52.5 million and $160.2 million in the 13 and 39 weeks ended November 3, 2018, respectively, from James Allen which was acquired during the third quarter of Fiscal 2018. In the 13 and 39 weeks ended October 28, 2017, North America includes James Allen sales of $23.7 million for the 47 day period since the date of acquisition. See Note 5 for additional information regarding the acquisition.

For the majority of the Company’s transactions, revenue is recognized when there is persuasive evidence of an arrangement, products have been delivered or services have been rendered, the sale price is fixed and determinable, and collectability is reasonably assured. The Company’s revenue streams and their respective accounting treatments are discussed below.

Merchandise sales and repairs

Store sales are recognized when the customer receives and pays for the merchandise at the store with cash, in-house customer finance, private label credit card programs, a third-party credit card or a lease purchase option. For online sales shipped to customers, sales are recognized at the estimated time the customer has received the merchandise. Amounts related to shipping and handling that are billed to customers are reflected in sales and the related costs are reflected in cost of sales. Revenues on the sale of merchandise are reported net of anticipated returns and sales tax collected. Returns are estimated based on previous return rates experienced. Any deposits received from a customer for merchandise are deferred and recognized as revenue when the customer receives the merchandise. Revenues derived from providing replacement merchandise on behalf of insurance organizations are recognized upon receipt of the merchandise by the customer. Revenues on repair of merchandise are recognized when the service is complete and the customer collects the merchandise at the store.

Extended service plans and lifetime warranty agreements (“ESP”)

The Company recognizes revenue related to ESP sales in proportion to when the expected costs will be incurred. The deferral period for ESP sales is determined from patterns of claims costs, including estimates of future claims costs expected to be incurred. Management reviews the trends in claims to assess whether changes are required to the revenue and cost recognition rates utilized. A significant change in estimates related to the time period or pattern in which warranty-related costs are expected to be incurred could materially impact revenues. All direct costs associated with the sale of these plans are deferred and amortized in proportion to the revenue recognized and disclosed as either other current assets or other assets in the consolidated balance sheets. Unamortized deferred selling costs as of November 3, 2018, February 3, 2018 and October 28, 2017 were as follows:



(in millions)	November 3, 2018		February 3, 2018		October 28, 2017
Deferred ESP selling costs
Other current assets	$	30.0	$	30.9	$	29.3
Other assets	87.1		89.5		86.0
Total deferred ESP selling costs	$	117.1	$	120.4	$	115.3

The North America segment sells ESP, subject to certain conditions, to perform repair work over the life of the product. Revenue from the sale of the lifetime ESP is recognized consistent with the estimated pattern of claim costs expected to be incurred by the Company in connection with performing under the ESP obligations. Lifetime ESP revenue is deferred and recognized over a maximum of 17 years of the sale of the warranty contract. During the third quarter of Fiscal 2019 review of actual claims experience associated with lifetime ESP sold, a shift in claims trends was identified away from the earlier years of the plans. Although claims experience varies between our national banners, thereby resulting in different recognition rates, approximately 55% of revenue is recognized within the first two years on a weighted average basis (February 3, 2018: 58%).

The North America segment sells a Jewelry Replacement Plan (“JRP”). The JRP is designed to protect customers from damage or defects of purchased merchandise for a period of three years. If the purchased merchandise is defective or becomes damaged under normal use in that time period, the item will be replaced. JRP revenue is deferred and recognized on a straight-line basis over the period of expected claims costs.

Signet also sells warranty agreements in the capacity of an agent on behalf of a third-party. The commission that Signet receives from the third-party is recognized at the time of sale less an estimate of cancellations based on historical experience.

Sale vouchers

Certain promotional offers award sale vouchers to customers who make purchases above a certain value, which grant a fixed discount on a future purchase within a stated time frame. The Company accounts for such vouchers by allocating the fair value of the voucher between the initial purchase and the future purchase using the relative-selling-price method. Sale vouchers are not sold on a stand-alone basis. The fair value of the voucher is determined based on the average sales transactions in which the vouchers were issued, when the vouchers are expected to be redeemed and the estimated voucher redemption rate. The fair value allocated to the future purchase is recorded as deferred revenue.

Consignment inventory sales

Sales of consignment inventory are accounted for on a gross sales basis as the Company is the primary obligor providing independent advice, guidance and after-sales service to customers. The products sold from consignment inventory are indistinguishable from other products that are sold to customers and are sold on the same terms. Supplier products are selected at the discretion of the Company. The Company is responsible for determining the selling price, physical security of the products and collections of accounts receivable.

Deferred revenue

Deferred revenue is comprised primarily of ESP and sale voucher promotions and other as follows:



(in millions)	November 3, 2018		February 3, 2018		October 28, 2017
ESP deferred revenue	$	892.8	$	916.1	$	882.8
Voucher promotions and other	32.0		41.4		33.6
Total deferred revenue	$	924.8	$	957.5	$	916.4

Disclosed as:
Current liabilities	$	253.1	$	288.6	$	270.3
Non-current liabilities	671.7		668.9		646.1
Total deferred revenue	$	924.8	$	957.5	$	916.4



	13 weeks ended						39 weeks ended
(in millions)	November 3, 2018			October 28, 2017			November 3, 2018			October 28, 2017
ESP deferred revenue, beginning of period	$	906.6		$	902.2		$	916.1		$	905.6
Plans sold⁽¹⁾	72.3			72.9			259.2			266.3
Revenue recognized	(86.1		)	(92.3		)	(282.5		)	(289.1		)
ESP deferred revenue, end of period	$	892.8		$	882.8		$	892.8		$	882.8


⁽¹⁾	Includes impact of foreign exchange translation.