Revenue recognition

9 Months Ended

Oct. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenue recognition

Revenue recognition

The following tables provide the Company’s revenue, disaggregated by banner, major product and channel, for the 13 and 39 weeks ended October 31, 2020 and November 2, 2019:

	13 weeks ended October 31, 2020								13 weeks ended November 2, 2019
(in millions)	North America		International		Other		Consolidated		North America		International		Other		Consolidated
Sales by banner:
Kay	$	490.5	$	—	$	—	$	490.5	$	469.5	$	—	$	—	$	469.5
Zales	251.4		—		—		251.4		223.0		—		—		223.0
Jared	232.7		—		—		232.7		211.3		—		—		211.3
Piercing Pagoda	93.7		—		—		93.7		68.3		—		—		68.3
James Allen	76.6		—		—		76.6		60.8		—		—		60.8
Peoples	37.8		—		—		37.8		37.8		—		—		37.8
International segment	—		106.9		—		106.9		—		106.4		—		106.4
Other(1)	—		—		10.7		10.7		—		—		10.6		10.6
Total sales	$	1,182.7	$	106.9	$	10.7	$	1,300.3	$	1,070.7	$	106.4	$	10.6	$	1,187.7
	39 weeks ended October 31, 2020								39 weeks ended November 2, 2019
(in millions)	North America		International		Other		Consolidated		North America		International		Other		Consolidated
Sales by banner:
Kay	$	1,149.0	$	—	$	—	$	1,149.0	$	1,581.3	$	—	$	—	$	1,581.3
Zales	618.8		—		—		618.8		791.5		—		—		791.5
Jared	546.6		—		—		546.6		720.9		—		—		720.9
Piercing Pagoda	204.4		—		—		204.4		225.1		—		—		225.1
James Allen	184.7		—		—		184.7		166.4		—		—		166.4
Peoples	83.3		—		—		83.3		126.8		—		—		126.8
International segment	—		232.8		—		232.8		—		331.8		—		331.8
Other(1)	—		—		20.8		20.8		—		—		40.0		40.0
Total sales	$	2,786.8	$	232.8	$	20.8	$	3,040.4	$	3,612.0	$	331.8	$	40.0	$	3,983.8

(1)     Includes sales from Signet’s diamond sourcing initiative.

	13 weeks ended October 31, 2020								13 weeks ended November 2, 2019
(in millions)	North America		International		Other		Consolidated		North America		International		Other		Consolidated
Sales by product:
Bridal	$	564.5	$	48.0	$	—	$	612.5	$	499.3	$	43.9	$	—	$	543.2
Fashion	400.7		19.5		—		420.2		342.4		21.3		—		363.7
Watches	33.6		33.4		—		67.0		41.2		35.5		—		76.7
Other(1)	183.9		6.0		10.7		200.6		187.8		5.7		10.6		204.1
Total sales	$	1,182.7	$	106.9	$	10.7	$	1,300.3	$	1,070.7	$	106.4	$	10.6	$	1,187.7
	39 weeks ended October 31, 2020								39 weeks ended November 2, 2019
(in millions)	North America		International		Other		Consolidated		North America		International		Other		Consolidated
Sales by product:
Bridal	$	1,295.7	$	104.9	$	—	$	1,400.6	$	1,654.3	$	139.8	$	—	$	1,794.1
Fashion	993.1		44.8		—		1,037.9		1,245.2		64.9		—		1,310.1
Watches	81.9		73.3		—		155.2		142.4		108.8		—		251.2
Other(1)	416.1		9.8		20.8		446.7		570.1		18.3		40.0		628.4
Total sales	$	2,786.8	$	232.8	$	20.8	$	3,040.4	$	3,612.0	$	331.8	$	40.0	$	3,983.8

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

	13 weeks ended October 31, 2020								13 weeks ended November 2, 2019
(in millions)	North America		International		Other		Consolidated		North America		International		Other		Consolidated
Sales by channel:
Store	$	963.7	$	87.1	$	—	$	1,050.8	$	943.9	$	93.9	$	—	$	1,037.8
E-commerce	219.0		19.8		—		238.8		126.8		12.5		—		139.3
Other (1)	—		—		10.7		10.7		—		—		10.6		10.6
Total sales	$	1,182.7	$	106.9	$	10.7	$	1,300.3	$	1,070.7	$	106.4	$	10.6	$	1,187.7
	39 weeks ended October 31, 2020								39 weeks ended November 2, 2019
(in millions)	North America		International		Other		Consolidated		North America		International		Other		Consolidated
Sales by channel:
Store	$	2,170.2	$	175.8	$	—	$	2,346.0	$	3,198.4	$	294.9	$	—	$	3,493.3
E-commerce	616.6		57.0		—		673.6		413.6		36.9		—		450.5
Other (1)	—		—		20.8		20.8		—		—		40.0		40.0
Total sales	$	2,786.8	$	232.8	$	20.8	$	3,040.4	$	3,612.0	$	331.8	$	40.0	$	3,983.8

(1)     Includes sales from Signet’s diamond sourcing initiative.

The Company recognizes revenues when control of the promised goods and services are transferred to customers, in an amount that reflects the consideration expected to be received in exchange for those goods. Transfer of control generally occurs at the time merchandise is taken from a store, or upon receipt of the merchandise by a customer for an e-commerce shipment. The Company excludes all taxes assessed by government authorities and collected from a customer from its reported sales. The Company’s revenue streams and their respective accounting treatments are further 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 condensed consolidated balance sheets. These direct costs primarily include sales commissions and credit card fees. Amortization of deferred selling costs related to the Company’s warranty programs is included within selling, general and administrative expenses in the condensed consolidated statements of operations. Amortization of deferred selling costs was $8.5 million and $16.0 million during the 13 and 39 weeks ended October 31, 2020, respectively, and $8.4 million and $25.8 million during the 13 and 39 weeks ended November 2, 2019, respectively.

Unamortized deferred selling costs as of October 31, 2020, February 1, 2020 and November 2, 2019 were as follows:

(in millions)	October 31, 2020		February 1, 2020		November 2, 2019
Other current assets	$	24.0	$	23.6	$	23.5
Other assets	81.7		80.0		76.1
Total deferred selling costs	$	105.7	$	103.6	$	99.6

The North America segment sells ESP, subject to certain conditions, to perform repair work over the life of the product. Customers generally pay for ESP at the store at the time of merchandise sale. 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 period of 17 years after the sale of the warranty contract. Although claims experience varies between the Company’s national banners, thereby resulting in different recognition rates, approximately 55% of revenue is recognized within the first two years on a weighted average basis.

The North America segment also 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. The Company maintains control of the merchandise through the point of sale and provides independent advice, guidance and after-sales services 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 and physical security of the products.

Deferred revenue

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

(in millions)	October 31, 2020		February 1, 2020		November 2, 2019
ESP deferred revenue	$	983.2	$	960.0	$	919.5
Voucher promotions and other	39.6		37.7		41.0
Total deferred revenue	$	1,022.8	$	997.7	$	960.5
Disclosed as:
Current liabilities	$	258.5	$	266.2	$	267.3
Non-current liabilities	764.3		731.5		693.2
Total deferred revenue	$	1,022.8	$	997.7	$	960.5

	13 weeks ended				39 weeks ended
(in millions)	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
ESP deferred revenue, beginning of period	$	990.5	$	930.2	$	960.0	$	927.6
Plans sold(1)	83.8		78.0		193.2		264.5
Revenue recognized(2)	(91.1)		(88.7)		(170.0)		(272.6)
ESP deferred revenue, end of period	$	983.2	$	919.5	$	983.2	$	919.5

(1)    Includes impact of foreign exchange translation.

(2)    During the 13 and 39 weeks ended October 31, 2020, the Company recognized sales of $61.6 million and $115.8 million, respectively, related to deferred revenue that existed at February 1, 2020 in respect to ESP. Additionally, no ESP revenue was recognized beginning on March 23, 2020 due to the temporary closure of the Company’s stores and service centers as a result of COVID-19. As the Company began reopening stores and service centers during the second quarter of Fiscal 2021, the Company resumed recognizing service revenue as it fulfilled its performance obligations under the ESP.