Accounts receivable

3 Months Ended

May 04, 2019

Receivables [Abstract]

Accounts receivable

Accounts receivable

During Fiscal 2018, Signet announced a strategic initiative to outsource its North America private label credit card programs and sell the existing in-house finance receivables. In October 2017, Signet, through its subsidiary Sterling Jewelers Inc. (“Sterling”), completed the sale of the prime-only credit quality portion of Sterling’s in-house finance receivable portfolio to Comenity Bank (“Comenity”). In June 2018, the Company completed the sale of the non-prime in-house accounts receivable to CarVal Investors (“CarVal”) and the appointed minority party, Castlelake, L.P. (“Castlelake”).

In addition, for a five-year term, Signet will remain the issuer of non-prime credit with investment funds managed by CarVal and Castlelake purchasing forward receivables at a discount rate determined in accordance with their respective agreements. Signet will hold the newly issued non-prime credit receivables on its balance sheet for two business days prior to selling the receivables to the respective counterparty in accordance with the agreements. Receivables issued by the Company but pending transfer to CarVal and Castlelake as of period end are classified as “held for sale” and included in the accounts receivable caption in the condensed consolidated balance sheets. As of May 4, 2019, the accounts receivable, held for sale were recorded at fair value. See Note 16 for additional information regarding the assumptions utilized in the calculation of fair value of the finance receivables held for sale.

The following table presents the components of Signet’s accounts receivable:

(in millions)	May 4, 2019		February 2, 2019		May 5, 2018
Accounts receivable, held for investment	$	15.3	$	19.5	$	6.8
Accounts receivable, held for sale	$	7.8	$	4.2	$	484.6
Accounts receivable	$	23.1	$	23.7	$	491.4

In March 2018, the eligible non-prime in-house accounts receivables that met the criteria for sale were reclassified from "held for investment" to "held for sale". Accordingly, the receivables were recorded at the lower of cost (par) or fair value as of the date of the reclassification with subsequent adjustments to the asset fair value as required through the closing date of the transaction. During the 13 weeks endedMay 5, 2018, total valuation losses of $141.0 million and other transacted-related costs of $2.1 million were recorded within credit transaction, net in the condensed consolidated statement of operations.

Accounts receivable, held for investment is comprised primarily of accounts receivable related to the insurance loss replacement business in the International segment and receivables related to the sale of diamonds from its polishing factory deemed unsuitable for Signet's needs in the Other segment.