UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): April 3, 2019
SIGNET
JEWELERS LIMITED
(Exact
name of registrant as specified in its charter)
Commission
File Number: 1-32349
|
Bermuda |
|
Not Applicable |
|
(State or other jurisdiction of incorporation) |
|
(IRS Employer Identification No.) |
Clarendon House
2
Church Street
Hamilton
HM11
Bermuda
(Address
of principal executive offices, including zip code)
(441)
296 5872
(Registrant's
telephone number, including area code)
(Former
name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ⃞
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ⃞
Item 2.02. Results of Operations and Financial Condition
On April 3, 2019, Signet Jewelers Limited issued a press release announcing results for the fourth quarter and full year ended February 2, 2019. A copy of the press release is attached hereto as Exhibit 99.1 to this Form 8-K.
The information in this Current Report on Form 8-K is being furnished pursuant to Item 2.02 Results of Operations and Financial Condition. In accordance with General Instruction B.2 of Form 8-K, the information in this report shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly stated by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
| (d) | Exhibits |
|
Exhibit |
|
|
Number |
Description |
|
99.1 |
Press Release of Signet Jewelers Limited, dated April 3, 2019 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
SIGNET JEWELERS LIMITED |
|||
|
Date: |
April 3, 2019 |
|
|
|
|
|
By: |
/s/ Michele Santana |
|
Name: |
Michele Santana |
||
|
Title: |
Chief Financial Officer |
||
EXHIBIT INDEX
|
Exhibit |
|
|
Number |
Description |
|
Press Release of Signet Jewelers Limited, dated April 3, 2019 |
Exhibit 99.1
Signet Jewelers Reports Fourth Quarter and Fiscal 2019 Results
HAMILTON, Bermuda--(BUSINESS WIRE)--April 3, 2019--Signet Jewelers Limited (“Signet”) (NYSE:SIG), the world's largest retailer of diamond jewelry, today announced its results for the 13 weeks (“fourth quarter Fiscal 2019”) and 52 weeks ("Fiscal 2019") ended February 2, 2019.
Fourth Quarter Fiscal 2019:
Fiscal 2019:
Fiscal 2020:
| Fiscal Q4'19(1) | Fiscal Q4'18(2) | Fiscal 2019(1) | Fiscal 2018(2) | ||||||||||||||||||
| Revenue ($ in millions) | $ | 2,154.7 | $ | 2,293.1 | $ | 6,247.1 | $ | 6,253.0 | |||||||||||||
| Same store sales % change(1),(3) | (2.0 | )% | (5.2 | )% | (0.1 | )% | (5.3 | )% | |||||||||||||
| GAAP | |||||||||||||||||||||
| Operating income (loss) as % of sales | (3.9 | )% | 14.1 | % | (12.2 | )% | 9.3 | % | |||||||||||||
| GAAP Diluted EPS | $ | (2.25 | ) | $ | 5.24 | $ | (12.62 | ) | $ | 7.44 | |||||||||||
| Non-GAAP(4) | |||||||||||||||||||||
| Operating income (loss) as % of sales | 11.2 | % | 14.1 | % | 4.4 | % | 9.3 | % | |||||||||||||
| Non-GAAP Diluted EPS | $ | 3.96 | $ | 4.28 | $ | 3.72 | $ | 6.51 | |||||||||||||
| (1) | Fiscal Q4'19 and Fiscal 2019 same store sales % change calculated by aligning weeks in the quarter to same weeks in prior year. | ||
| (2) | Fiscal Q4'18 and Fiscal 2018 numbers are as reported with Q4'18 same store sales % change based on Fiscal 2018 calendar. | ||
| (3) | Same store sales include physical store sales and eCommerce sales, which each incorporate the year-over-year growth of James Allen. | ||
| (4) | See non-GAAP reconciliation page. | ||
Virginia C. Drosos, Chief Executive Officer, commented, "In Fiscal 2019, we began our Path to Brilliance transformation journey, building foundational capabilities to drive future growth. We made progress on our Path to Brilliance initiatives, achieving double-digit eCommerce growth, delivering $85 million of net cost savings, and continuing to optimize our store footprint. However, we did not finish the year as strongly as expected due to a highly competitive promotional environment, continued consumer weakness in the UK, and lower than expected customer demand for legacy merchandise collections that impacted our holiday fourth quarter results."
Drosos continued, “Using important learnings from Year One of our transformation, as we look forward to Fiscal 2020, we are accelerating initiatives to further develop the seamless and personalized OmniChannel jewelry experience that Signet can uniquely provide. This includes: 1) reinvigorating our product assortment in-store and online with more exclusive pieces and customization; 2) increasing targeted messaging and promotional effectiveness; 3) improving our eCommerce and mobile technology; and 4) enhancing full service offerings like repairs and piercings. Higher levels of investment in these growth initiatives are expected to be funded by aggressively addressing our cost structure and more efficiently managing our inventory. We expect these initiatives to improve the trajectory of our same store sales, operating margins and cash flow generation, and to bolster our balance sheet over the course of our multi-year transformation journey."
| Change from previous year | |||||||||||||||||||||||||||||
|
Fourth Quarter Fiscal 2019 |
Same store |
Non-same |
Impact of |
Total sales |
Exchange |
Total sales |
Total sales |
||||||||||||||||||||||
| Kay | (1.6 | )% | 2.1 | % | (3.4 | )% | (2.9 | )% | — | % | (2.9 | )% | $ | 837.4 | |||||||||||||||
| Zales | 2.0 | % | (2.3 | )% | (4.2 | )% | (4.5 | )% | — | % | (4.5 | )% | $ | 461.4 | |||||||||||||||
| Jared | (8.4 | )% | 2.8 | % | (4.4 | )% | (10.0 | )% | — | % | (10.0 | )% | $ | 382.2 | |||||||||||||||
| Piercing Pagoda | 17.1 | % | (3.7 | )% | (4.5 | )% | 8.9 | % | — | % | 8.9 | % | $ | 99.1 | |||||||||||||||
| James Allen | (1.4 | )% | — | % | — | % | (1.4 | )% | — | % | (1.4 | )% | $ | 63.5 | |||||||||||||||
| Peoples | 2.1 | % | (0.9 | )% | (4.6 | )% | (3.4 | )% | (4.8 | )% | (8.2 | )% | $ | 74.3 | |||||||||||||||
| Regional banners(2) | (15.4 | )% | (31.4 | )% | (3.1 | )% | (49.9 | )% | (0.3 | )% | (50.2 | )% | $ | 25.0 | |||||||||||||||
| North America segment | (1.4 | )% | (0.2 | )% | (3.7 | )% | (5.3 | )% | (0.2 | )% | (5.5 | )% | $ | 1,942.9 | |||||||||||||||
| H.Samuel | (5.8 | )% | (1.1 | )% | (4.5 | )% | (11.4 | )% | (4.5 | )% | (15.9 | )% | $ | 102.8 | |||||||||||||||
| Ernest Jones | (8.9 | )% | 1.3 | % | (5.2 | )% | (12.8 | )% | (4.6 | )% | (17.4 | )% | $ | 92.2 | |||||||||||||||
| International segment | (7.3 | )% | 0.1 | % | (4.8 | )% | (12.0 | )% | (4.6 | )% | (16.6 | )% | $ | 195.0 | |||||||||||||||
| Other(3) | 479.3 | % | $ | 16.8 | |||||||||||||||||||||||||
| Signet | (2.0 | )% | 0.4 | % | (3.8 | )% | (5.4 | )% | (0.6 | )% | (6.0 | )% | $ | 2,154.7 | |||||||||||||||
| (1) | 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. | ||
| (2) | 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). | ||
| (3) | Includes sales from Signet’s diamond sourcing initiative. | ||
| Change from previous year | |||||||||||||||||||||||||||||
|
Fiscal 2019 |
Same store |
Non-same |
Impact of |
Total sales |
Exchange |
Total sales |
Total sales |
||||||||||||||||||||||
| Kay | (1.4 | )% | 2.2 | % | (1.2 | )% | (0.4 | )% | na | (0.4 | )% | $ | 2,417.8 | ||||||||||||||||
| Zales | 4.8 | % | (1.9 | )% | (1.6 | )% | 1.3 | % | na | 1.3 | % | $ | 1,260.7 | ||||||||||||||||
| Jared | (4.6 | )% | 1.8 | % | (1.5 | )% | (4.3 | )% | na | (4.3 | )% | $ | 1,141.4 | ||||||||||||||||
| Piercing Pagoda | 13.1 | % | (3.0 | )% | (1.4 | )% | 8.7 | % | na | 8.7 | % | $ | 302.5 | ||||||||||||||||
| James Allen | 14.6 | % | $ | 223.7 | |||||||||||||||||||||||||
| Peoples | 1.8 | % | (1.9 | )% | (1.6 | )% | (1.7 | )% | (1.5 | )% | (3.2 | )% | $ | 208.5 | |||||||||||||||
| Regional banners(2) | (12.7 | )% | (34.7 | )% | (0.9 | )% | (48.3 | )% | (0.1 | )% | (48.4 | )% | $ | 87.1 | |||||||||||||||
| North America segment | 0.5 | % | 1.3 | % | (1.3 | )% | 0.5 | % | — | % | 0.5 | % | $ | 5,641.7 | |||||||||||||||
| H.Samuel | (4.8 | )% | (1.5 | )% | (1.6 | )% | (7.9 | )% | 0.5 | % | (7.4 | )% | $ | 284.0 | |||||||||||||||
| Ernest Jones | (5.6 | )% | 0.9 | % | (1.7 | )% | (6.4 | )% | 0.8 | % | (5.6 | )% | $ | 292.5 | |||||||||||||||
| International segment | (5.2 | )% | (0.3 | )% | (1.7 | )% | (7.2 | )% | 0.7 | % | (6.5 | )% | $ | 576.5 | |||||||||||||||
| Other(3) | 37.0 | % | $ | 28.9 | |||||||||||||||||||||||||
| Signet | (0.1 | )% | 1.4 | % | (1.4 | )% | (0.1 | )% | — | % | (0.1 | )% | $ | 6,247.1 | |||||||||||||||
| (1) | 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. | ||
| (2) | 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). | ||
| (3) | Includes sales from Signet’s diamond sourcing initiative. | ||
| Fourth quarter Fiscal 2019 | Fourth quarter Fiscal 2018 | ||||||||||||||||||
| GAAP Operating income/(loss) in millions | $ | % of sales | $ | % of sales | |||||||||||||||
| North America segment | $ | (60.1 | ) | (3.1 | )% | $ | 305.9 | 14.9 | % | ||||||||||
| International segment | 31.0 | 15.9 | % | 35.0 | 15.0 | % | |||||||||||||
| Other | (54.4 | ) | nm | (17.4 | ) | nm | |||||||||||||
| Total GAAP operating income / (loss) | $ | (83.5 | ) | (3.9 | )% | $ | 323.5 | 14.1 | % | ||||||||||
| Fourth quarter Fiscal 2019 | Fourth quarter Fiscal 2018 | ||||||||||||||||||
| Non-GAAP Operating income/(loss) in millions | $ | % of sales | $ | % of sales | |||||||||||||||
| North America segment | $ | 222.0 | 11.4 | % | $ | 305.9 | 14.9 | % | |||||||||||
| International segment | 31.0 | 15.9 | % | 35.0 | 15.0 | % | |||||||||||||
| Other | (11.7 | ) | nm | (17.4 | ) | nm | |||||||||||||
| Total Non-GAAP operating income / (loss) | $ | 241.3 | 11.2 | % | $ | 323.5 | 14.1 | % | |||||||||||
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 intended to reposition the company to be the OmniChannel jewelry category leader. This plan is expected to enhance the company’s cost competitiveness while providing a source of funding for future growth initiatives.
In Fiscal 2019, the company realized $85 million of net cost savings. In Fiscal 2020, the company expects net cost savings of $60 million - $70 million including: 1) procurement savings in merchandise and indirect spend; 2) consolidation of facilities; and 3) payroll savings as a result of implementing simplified organization structures. The company continues to expect its transformation plan to deliver $200 million - $225 million of net cost savings in Fiscal Years 2019-2021, inclusive of the $85 million achieved in Fiscal 2019.
In Fiscal 2019, the Company incurred pre-tax charges of $126 million, of which $41 million were cash charges. In Fiscal 2020, the Company’s preliminary estimates for pre-tax charges related to cost reduction activities ranges from $55 million - $70 million, of which $46 million - $58 million are expected to be cash charges. The company's estimates for pre-tax charges in the three fiscal years is a range of $200 million - $220 million, of which $105 million - $115 million are expected to be cash charges.
The company continues to strategically reduce and reposition its real estate footprint to increase store productivity and allow for more focused, impactful investments in compelling, digitally enabled new store designs, as well as targeted store appearance updates across the portfolio. In Fiscal 2019, the company closed 262 stores. In Fiscal 2020, the company expects to close more than 150 stores, with limited new store openings primarily consisting of repositions to off-mall locations. By the end of Fiscal 2020, the company expects it will have reduced its store base by 13% over a three-year period.
Expense savings related to store closures are not included in the Path to Brilliance transformation plan net cost savings target of $200 million - $225 million.
Goodwill and Intangible Asset Impairment
The company recorded a non-cash goodwill and intangible asset impairment pre-tax charge of $286.7 million in the fourth quarter that will have no impact on the company’s day-to-day operations, debt covenants or liquidity. Revised long-term projections for James Allen resulted from a higher than expected unfavorable impact related to sales tax collection due to the U.S. Supreme Court South Dakota v. Wayfair, Inc. sales tax nexus case, as well as a more competitive online jewelry marketplace. These revised projections combined with a higher discount rate driven by risk premium utilized in the valuation of James Allen resulted in lower than previously projected discounted long-term future cash flows for this business. As a result, there was a $261.4 million write-down to the James Allen goodwill and intangible asset balances.
The remaining impairment charge of $25.3 million is attributable to intangibles associated with the Zale acquisition and goodwill recognized as part of the acquisition of the company's diamond polishing factory in Botswana.
Fourth Quarter Fiscal 2019 Financial Highlights:
Signet's total sales were $2.15 billion, down $138.4 million or down 6.0%, in the 13 weeks ended February 2, 2019 on a reported basis and down 5.4% on a constant currency basis. Total same store sales performance decreased 2.0% year-over-year, inclusive of: 1) a favorable impact of approximately 60 bps related to incremental clearance; 2) a favorable impact of 35 bps due to planned shifts in timing of promotions at Zales and Peoples; and 3) a 25 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.
North America payment plan participation rate, including both credit and leasing sales, was 50.1% versus 49.7% in the prior year fourth quarter.
The decrease in total sales of $138.4 million from the prior year quarter was positively impacted by the new US GAAP revenue recognition accounting standard, offset by the comparison against: 1) a 14th week in Fiscal 2018; 2) net store closures; and 3) unfavorable foreign exchange translation. The 14th week generated $84.3 million in sales in Fiscal 2018.
eCommerce sales in the fourth quarter were $260.6 million, up 5.4% year over year. eCommerce sales accounted for 12.1% of fourth quarter sales, up from 11.2% of total sales in the prior year fourth quarter. Brick and mortar same store sales declined 3.0% in the fourth quarter.
By operating segment:
North America
International
GAAP gross margin was $877.8 million, or 40.7% of sales, up 60 bps versus the prior year quarter. Factors impacting gross margin rate include: 1) a positive 250 bps impact related to no longer recognizing bad debt expense and late charge income; 2) a negative 40 bps impact related to an inventory write-down; 3) a negative 30 bps impact related to adopting the new US GAAP revenue recognition accounting standard, including higher revenue share payments associated with the prime credit outsourcing arrangement; and 4) a negative 10 bps impact related to a timing shift of revenue recognized on service plans. The residual factors impacting gross margin rate include deleverage from lower sales and the impact of promotional and incremental clearance sales partially offset by transformation cost savings.
Non-GAAP gross margin was $876.8 million, or 40.7% of sales, and excluded a $1.0 million benefit due to a change in inventory reserve initially recognized in the second quarter of Fiscal 2019 that was excluded from non-GAAP gross margin.
GAAP SGA was $647.2 million, or 30.0% of sales, compared to $634.5 million, or 27.7% of sales in the prior year. Factors impacting SGA include: 1) a $42 million, or 200 bps, increase in credit costs related to the transition to an outsourced credit model; 2) an $11 million, or 50 bps, charge related to the resolution of a previously disclosed regulatory matter; and 3) a $3 million, or 10 bps, decrease in incentive compensation. Increases in SGA were partially offset by transformation net cost savings and lower store staff costs primarily due to closed stores. Prior year SGA included $30.5 million in expense related to the 14th week.
Non-GAAP SGA was $636.2 million, or 29.5% of sales, and excluded an $11.0 million charge related to the resolution of a previously disclosed regulatory matter.
Other operating income was $0.7 million compared to $39.5 million in the prior year fourth quarter. The decrease is due to the sale of the accounts receivable portfolio resulting in no interest income earned in the current year quarter.
Operating loss was $83.5 million or (3.9)% of sales, compared to operating income of $323.5 million, or 14.1% of sales in the prior year fourth quarter. The prior year operating income includes a favorable impact from the 53rd week of $9.3 million. Factors impacting operating loss include: 1) a goodwill and intangible impairment charge of $286.7 million; 2) $27.1 million in restructuring charges due to store closure costs, severance and professional fees related to the Path to Brilliance transformation plan; 3) an $11.0 million charge related to the resolution of a previously disclosed regulatory matter; 4) a $13 million net unfavorable impact related to the outsourcing of credit; and 5) an $8.8 million inventory write-down. The residual factors impacting operating loss include the impact of lower sales, higher promotions, and clearance, partially offset by transformation cost savings.
Non-GAAP operating income was $241.3 million, or 11.2% of sales, compared to $323.5 million, or 14.1% of sales in prior year fourth quarter. Non-GAAP operating income excluded: 1) a $286.7 million goodwill and intangibles impairment charge; 2) $27.1 million in restructuring charges related to the Path to Brilliance transformation plan; and 3) an $11 million charge related to resolution of a previously disclosed regulatory matter.
Income tax expense was $13.9 million compared to income tax benefit of $37.8 million in the prior year fourth quarter. The higher effective tax rate in the current year quarter was driven primarily by 1) the impact of the non-deductible goodwill impairment charge; 2) pre-tax earnings mix by jurisdiction; and 3) an out of period correction related to a deferred tax liability associated with the Zale acquisition. The prior year fourth quarter tax benefit was driven by the favorable impact of the Tax Cuts and Jobs Act of 2017 together with pre-tax earnings mix by jurisdiction.
On a non-GAAP basis, income tax was a $1.2 million benefit in the fourth quarter, driven by pre-tax earnings mix by jurisdiction. Non-GAAP income tax benefit excludes the out of period income tax adjustment.
GAAP EPS was $(2.25), including: 1) a $4.78 charge related to a goodwill and intangible asset impairment; 2) a $0.37 charge related to the Path to Brilliance transformation plan; and 3) a $0.20 charge related to the resolution of a previously disclosed regulatory matter. Excluding these charges, EPS was $3.96 on a non-GAAP basis.
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 fourth quarter net loss.
Non-GAAP EPS in the quarter is based on non-GAAP net income before preferred dividends, with the preferred shares included in diluted share count due to the level of fourth quarter non-GAAP net income.
Fiscal 2019 Financial Highlights:
Signet's total sales were $6.2 billion, down $5.9 million or 0.1%, compared to Fiscal 2018. Total same store sales performance was down 0.1% versus the prior year inclusive of: 1) a favorable impact of approximately 155 bps related to incremental clearance; and 2) a 20 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.
North America payment plan participation rate, including both credit and leasing sales, was 51.7% versus 52.3% in the prior year.
The total sales decline was positively impacted by the new US GAAP revenue recognition accounting standard and the addition of James Allen (acquired in September 2017). These factors were offset by net store closures and the negative impact of a comparison against a 53rd week in the prior year.
eCommerce sales at banner websites and James Allen were $682.4 million, up 39.0% on a reported basis. James Allen sales were $223.7 million for the year and had a positive 50 bps impact on total company same store sales. eCommerce sales increased across all divisions and accounted for 10.9% of full year sales, up from 8.0% of total sales in the prior year. Brick and mortar same store sales declined 1.6% for the year.
By operating segment:
North America
International
Balance Sheet and Statement of Cash Flows:
Net cash provided by operating activities for Fiscal 2019 was $697.7 million or $252.2 million, excluding the proceeds of the sale of the company's non-prime receivables to CarVal Investors and Castlelake LP in June 2018. Free cash flow for Fiscal 2019 was $564.2 million, or $118.7 million, excluding the proceeds of the sale of non-prime receivables.
Cash and cash equivalents were $195.4 million as of February 2, 2019, compared to $225.1 million at prior-year end.
Net accounts receivable were $19.5 million, compared to $692.5 million at the end of the prior year. The decline was due primarily to the sale of the non-prime accounts.
In Fiscal 2019, Signet deployed cash of $485.0 million to repurchase outstanding common stock, or 8.8 million shares, at an average cost of $55.06 per share. This share repurchase was primarily funded by $445.5 million in proceeds from the sale of the non-prime receivables. As of February 2, 2019, there was $165.6 million remaining under Signet’s share repurchase authorization.
Net inventories were $2.4 billion, up 4.8%, compared to $2.3 billion at the end of the prior year. The increase was primarily driven by greater investments in bridal inventory, particularly at Kay, and gold fashion items, as well as holiday sales below expectations.
Long-term debt was $649.6 million, down $38.6 million, compared to $688.2 million in the prior year period, primarily due to the principal repayment of $31.3 million on the term loan.
Financial Guidance:
| Fiscal 2020 | |||
| Same store sales | Down 2.5% - flat | ||
| Total sales | $6.0 billion - $6.1 billion | ||
| GAAP operating income | $190 million - $245 million | ||
| Non-GAAP operating income | $260 million - $300 million | ||
| GAAP diluted EPS | $1.86 - $2.66 | ||
| Non-GAAP diluted EPS | $2.87 - $3.45 | ||
| Weighted average common shares - basic | 51.8 million | ||
| GAAP tax rate | 12.0% - 15.5% including discrete tax items | ||
| Non-GAAP tax rate | 16.0% - 17.5% including discrete tax items | ||
| Capital expenditures | $135 million - $155 million | ||
| Net selling square footage | down 2.5% - down 3.5% | ||
The above Fiscal 2020 guidance reflects the following assumptions:
| Q1 2020 | |||
| Same store sales | Down 1.5% - Down 0.5% | ||
| Total sales | $1.42 billion - $1.44 billion | ||
| GAAP operating income | ($25) million - ($12) million | ||
| Non-GAAP operating income | $3 million - $10 million | ||
| GAAP diluted EPS | ($0.78) - ($0.54) | ||
| Non-GAAP diluted EPS | ($0.28) - $(0.17) | ||
| Weighted average common shares - basic | 51.6 million | ||
The above Q1 2020 guidance reflects the following assumptions:
Quarterly Dividend:
Signet’s Board of Directors declared a quarterly cash dividend of $0.37 per share for the first quarter of Fiscal 2020, payable on May 31, 2019 to shareholders of record on May 3, 2019, with an ex-dividend date of May 2, 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: 5059335
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.
About Signet and Safe Harbor Statement:
Signet Jewelers Limited is the world's largest retailer of diamond jewelry. Signet operates approximately 3,300 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; 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; our ability to successfully integrate Zale Corporation and R2Net’s operations and to realize synergies from the Zale and R2Net transactions; general economic conditions; potential regulatory changes, global economic conditions or other developments related to the United Kingdom’s announced intention to negotiate a formal exit from the European Union; a decline in consumer spending or deterioration in consumer financial position; the merchandising, pricing and inventory policies followed by Signet; Signet’s relationships with suppliers and ability to obtain merchandise that customers wish to purchase; the reputation of Signet and its banners; the level of competition and promotional activity in the jewelry sector; the cost and availability of diamonds, gold and other precious metals; changes in the supply and consumer acceptance of gem quality lab created diamonds; regulations relating to customer credit; seasonality of Signet’s business; the success of recent changes in Signet’s executive management team; the performance of and ability to recruit, train, motivate and retain qualified sales associates; the impact of weather-related incidents on Signet’s business, financial market risks; 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 OmniChannel retailing; the ability to optimize Signet’s real estate footprint; 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 credit outsourcing fees, 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; Signet’s ability to protect its intellectual property; changes in taxation benefits, rules or practices in the US and jurisdictions in which Signet’s subsidiaries are incorporated, including developments related to the tax treatment of companies engaged in Internet commerce; and an adverse development in legal or regulatory proceedings or tax matters, any new regulatory initiatives or investigations, and ongoing compliance with regulations and any consent orders or other legal or regulatory decisions.
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 2019 Annual Report on Form 10-K filed with the SEC on April 3, 2019 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 US (“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 useful supplementary information to management and investors in assessing the operating performance of our business.
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 that 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.
For the fourth quarter Fiscal 2019 and Fiscal 2019, the company has added discussion of non-GAAP gross margin and non-GAAP SGA. The company believes that presenting non-GAAP gross margin and non-GAAP SGA is useful to investors as it eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall profitability or operating performance.
| (in millions) | Fiscal 2019 | Fiscal 2018 | |||||||||
| Net cash provided by operating activities | $ | 697.7 | $ | 1,940.5 | |||||||
| Proceeds from sale of in-house finance receivables | 445.5 | 952.5 | |||||||||
| Operating cash flow (excluding sale of in-house finance receivables) | $ | 252.2 | $ | 988.0 | |||||||
| (in millions) | Fiscal 2019 | Fiscal 2018 | |||||||||
| Net cash provided by operating activities | $ | 697.7 | $ | 1,940.5 | |||||||
| Purchase of property, plant and equipment | (133.5 | ) | (237.4 | ) | |||||||
| Free cash flow | 564.2 | 1,703.1 | |||||||||
| Proceeds from sale of in-house finance receivables | 445.5 | 952.5 | |||||||||
| Adjusted Free cash flow (excluding sale of in-house finance receivables) | $ | 118.7 | $ | 750.6 | |||||||
| (in millions) |
13 weeks ended |
14 weeks ended |
Fiscal 2019 | Fiscal 2018 | |||||||||||||||||
| Gross margin | $ | 877.8 | $ | 919.8 | $ | 2,160.8 | $ | 2,190.0 | |||||||||||||
| Restructuring charges - cost of sales | (1.0 | ) | — | 62.2 | — | ||||||||||||||||
| Non-GAAP gross margin | $ | 876.8 | $ | 919.8 | $ | 2,223.0 | $ | 2,190.0 | |||||||||||||
| (in millions) |
13 weeks ended |
14 weeks ended |
Fiscal 2019 | Fiscal 2018 | |||||||||||||||||
| Selling, general and administrative expense | $ | (647.2 | ) | $ | (634.5 | ) | $ | (1,985.1 | ) | $ | (1,872.2 | ) | |||||||||
| Charge related to regulatory resolution | 11.0 | — | 11.0 | — | |||||||||||||||||
| Non-GAAP selling, general and administrative expense | $ | (636.2 | ) | $ | (634.5 | ) | $ | (1,974.1 | ) | $ | (1,872.2 | ) | |||||||||
| (in millions) |
13 weeks ended |
14 weeks ended |
Fiscal 2019 | Fiscal 2018 | |||||||||||||||||
| Total GAAP operating income/ (loss) | $ | (83.5 | ) | $ | 323.5 | $ | (764.6 | ) | $ | 579.9 | |||||||||||
| Charges related to transformation plan | 27.1 | — | 125.9 | — | |||||||||||||||||
| Loss related to goodwill and intangible impairment | 286.7 | — | 735.4 | — | |||||||||||||||||
| Loss related to sale of non-prime receivables | — | — | 167.4 | — | |||||||||||||||||
| Charge related to regulatory resolution | 11.0 | — | 11.0 | — | |||||||||||||||||
| Total non-GAAP operating income | $ | 241.3 | $ | 323.5 | $ | 275.1 | $ | 579.9 | |||||||||||||
| (in millions) |
13 weeks ended |
14 weeks ended |
Fiscal 2019 | Fiscal 2018 | |||||||||||||||||
| North America segment GAAP operating income/ (loss) | $ | (60.1 | ) | $ | 305.9 | $ | (621.1 | ) | $ | 656.1 | |||||||||||
| Charges related to transformation plan | (1.0 | ) | — | 52.7 | — | ||||||||||||||||
| Loss related to goodwill and intangible impairment | 283.1 | — | 731.8 | — | |||||||||||||||||
| Loss related to sale of non-prime receivables | — | — | 160.4 | — | |||||||||||||||||
| North America segment non-GAAP operating income | $ | 222.0 | $ | 305.9 | $ | 323.8 | $ | 656.1 | |||||||||||||
| (in millions) |
13 weeks ended |
14 weeks ended |
Fiscal 2019 | Fiscal 2018 | |||||||||||||||||
| International segment GAAP operating income/ (loss) | $ | 31.0 | $ | 35.0 | $ | 12.9 | $ | 33.1 | |||||||||||||
| Charges related to transformation plan | — | — | 3.8 | — | |||||||||||||||||
| International segment non-GAAP operating income | $ | 31.0 | $ | 35.0 | $ | 16.7 | $ | 33.1 | |||||||||||||
| (in millions) |
13 weeks ended |
14 weeks ended |
Fiscal 2019 | Fiscal 2018 | |||||||||||||||||
| Other segment GAAP operating income/ (loss) | $ | (54.4 | ) | $ | (17.4 | ) | $ | (156.4 | ) | $ | (109.3 | ) | |||||||||
| Charges related to transformation plan | 28.1 | — | 69.4 | — | |||||||||||||||||
| Loss related to goodwill impairment | 3.6 | — | 3.6 | — | |||||||||||||||||
| Loss related to sale of non-prime receivables | — | — | 7.0 | — | |||||||||||||||||
| Charge related to regulatory resolution | 11.0 | — | 11.0 | — | |||||||||||||||||
| Other segment non-GAAP operating income | $ | (11.7 | ) | $ | (17.4 | ) | $ | (65.4 | ) | $ | (109.3 | ) | |||||||||
| (in millions) |
13 weeks ended |
14 weeks ended |
Fiscal 2019 |
Fiscal 2018 | |||||||||||||
| GAAP effective tax rate | 14.8 | % | (12.1 | )% | 18.1 | % | 1.5 | % | |||||||||
| Charges related to transformation plan | 6.1 | % | — | % | (3.7 | )% | — | % | |||||||||
| Loss related to goodwill and intangible impairment 1 | 31.1 | % | — | % | (8.0 | )% | — | % | |||||||||
| Loss related to sale of non-prime receivables | — | % | — | % | (6.5 | )% | — | % | |||||||||
| Charge related to regulatory resolution | 1.9 | % | — | % | 0.2 | % | — | % | |||||||||
| GAAP quarterly impact of annual tax benefit | (53.4 | )% | — | % | — | % | — | % | |||||||||
| Impact of revaluation of deferred taxes under Tax Cut and Jobs Act | — | % | 20.7 | % | — | % | 12.3 | % | |||||||||
| Non-GAAP effective tax rate | 0.5 | % | 8.6 | % | 0.1 | % | 13.8 | % | |||||||||
|
1 The loss related to goodwill and intangible impairment includes the impact of an immaterial out of period adjustment resulting from a reduction to a deferred tax liability associated with the acquisition of Zale in May 2014. This adjustment impacted the effective tax rate by 11.7% in the 13 weeks ended February 2, 2019 and 1.4% in Fiscal 2019. |
| (in millions) |
13 weeks ended |
14 weeks ended |
Fiscal 2019 | Fiscal 2018 | ||||||||||||
| GAAP Diluted EPS | $ | (2.25 | ) | $ | 5.24 | $ | (12.62 | ) | $ | 7.44 | ||||||
| Charges related to transformation plan1 | 0.37 | — | 1.77 | — | ||||||||||||
| Loss related to goodwill and intangible impairment1, 3 | 4.78 | — | 12.26 | — | ||||||||||||
| Loss related to sale of non-prime receivables1 | — | — | 2.11 | — | ||||||||||||
| Charge related to regulatory resolution2 | 0.20 | — | 0.20 | — | ||||||||||||
| GAAP quarterly impact of annual tax benefit1 | 0.86 | — | — | — | ||||||||||||
| Impact of revaluation of deferred taxes under Tax Cut and Jobs Act | — | (0.96 | ) | — | (0.93 | ) | ||||||||||
| Non-GAAP Diluted EPS | $ | 3.96 | $ | 4.28 | $ | 3.72 | $ | 6.51 | ||||||||
| 1 Reconciliation of GAAP and non-GAAP charges and losses includes related tax impact. |
| 2 Charge related to regulatory resolution is not deductible for tax purposes. |
|
3 Loss related to goodwill and intangible impairment includes the impact of diluted versus basic shares. Loss related to goodwill and intangible impairment also includes the impact of an immaterial out of period adjustment resulting from a reduction to a deferred tax liability associated with the acquisition of Zale in May 2014. |
|
Fiscal 2020 |
Fiscal 2020 |
||||||||||
|
2020 GAAP Diluted EPS |
$ |
1.86 |
$ |
2.66 |
|||||||
|
Charges related to transformation plan |
1.01 |
0.79 |
|||||||||
|
2020 Non-GAAP Diluted EPS* |
$ |
2.87 |
$ |
3.45 |
|||||||
|
Fiscal 2020 |
Fiscal 2020 |
||||||||||
| 2020 GAAP operating income | $ | 190.0 | $ | 245.0 | |||||||
| Charges related to transformation plan | 70.0 | 55.0 | |||||||||
| 2020 Non-GAAP operating income | $ | 260.0 | $ | 300.0 | |||||||
|
Q1 Fiscal 2020 |
Q1 Fiscal 2020 |
||||||||||
| Q1 2020 GAAP Diluted EPS | $ | (0.78 | ) | $ | (0.54 | ) | |||||
| Charges related to transformation plan | 0.50 | 0.37 | |||||||||
| Q1 2020 Non-GAAP Diluted EPS* | $ | (0.28 | ) | $ | (0.17 | ) | |||||
|
Q1 Fiscal 2020 |
Q1 Fiscal 2020 |
||||||||||
| Q1 2020 GAAP operating profit | $ | (25.0 | ) | $ | (12.0 | ) | |||||
| Charges related to transformation plan | 28.0 | 22.0 | |||||||||
| Q1 2020 Non-GAAP operating profit | $ | 3.0 | $ | 10.0 | |||||||
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 results embed a $167 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 purchased by investment funds managed by CarVal Investors and Castlelake.
| (in millions) | Fiscal 2018 | Fiscal 2019 | |||||
| Operating profit impact | $18 | $(149) | |||||
| Operating profit impact year-over-year change | $(21) | $(167) | |||||
|
Proceeds from sale of prime and non-prime receivables |
$952 | $445.5 | |||||
|
Note: Proceeds are shown pre-transaction costs. |
|||||||
| (in millions) | Fiscal Q1'19 | Fiscal Q2'19 | Fiscal Q3'19 | Fiscal Q4'19 | |||||||||
| Operating profit impact year-over-year change | $(69) | $(39) | $(46) | $(13) | |||||||||
|
Condensed Consolidated Income Statements (Unaudited) |
|||||||||||||||||||||
| (in millions, except per share amounts) |
13 weeks ended |
14 weeks ended |
Fiscal 2019 | Fiscal 2018 | |||||||||||||||||
| Sales | $ | 2,154.7 | $ | 2,293.1 | $ | 6,247.1 | $ | 6,253.0 | |||||||||||||
| Cost of sales | (1,277.9 | ) | (1,373.3 | ) | (4,024.1 | ) | (4,063.0 | ) | |||||||||||||
| Restructuring charges - cost of sales | 1.0 | — | (62.2 | ) | — | ||||||||||||||||
| Gross margin | 877.8 | 919.8 | 2,160.8 | 2,190.0 | |||||||||||||||||
| Selling, general and administrative expenses | (647.2 | ) | (634.5 | ) | (1,985.1 | ) | (1,872.2 | ) | |||||||||||||
| Credit transaction, net | — | (1.3 | ) | (167.4 | ) | 1.3 | |||||||||||||||
| Restructuring charges | (28.1 | ) | — | (63.7 | ) | — | |||||||||||||||
| Goodwill and intangible impairments | (286.7 | ) | — | (735.4 | ) | — | |||||||||||||||
| Other operating income, net | 0.7 | 39.5 | 26.2 | 260.8 | |||||||||||||||||
| Operating income (loss) | (83.5 | ) | 323.5 | (764.6 | ) | 579.9 | |||||||||||||||
| Interest expense, net | (10.8 | ) | (10.0 | ) | (39.7 | ) | (52.7 | ) | |||||||||||||
| Other non-operating income | 0.3 | — | 1.7 | 0.0 | |||||||||||||||||
| Income (loss) before income taxes | (94.0 | ) | 313.5 | (802.6 | ) | 527.2 | |||||||||||||||
| Income taxes | (13.9 | ) | 37.8 | 145.2 | (7.9 | ) | |||||||||||||||
| Net income (loss) | $ | (107.9 | ) | $ | 351.3 | $ | (657.4 | ) | $ | 519.3 | |||||||||||
| Dividends on redeemable convertible preferred shares | (8.3 | ) | (8.3 | ) | (32.9 | ) | (32.9 | ) | |||||||||||||
| Net income (loss) attributable to common shareholders | $ | (116.2 | ) | $ | 343.0 | $ | (690.3 | ) | $ | 486.4 | |||||||||||
| Earnings (loss) per common share: | |||||||||||||||||||||
| Basic | $ | (2.25 | ) | $ | 5.70 | $ | (12.62 | ) | $ | 7.72 | |||||||||||
| Diluted | $ | (2.25 | ) | $ | 5.24 | $ | (12.62 | ) | $ | 7.44 | |||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||
| Basic | 51.6 | 60.2 | 54.7 | 63.0 | |||||||||||||||||
| Diluted | 51.6 | 67.0 | 54.7 | 69.8 | |||||||||||||||||
| Dividends declared per common share | $ | 0.37 | $ | 0.31 | $ | 1.48 | $ | 1.24 | |||||||||||||
|
Condensed Consolidated Balance Sheets (Unaudited) |
|||||||||||
| (in millions, except par value per share amount) | February 2, 2019 | February 3, 2018 | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 195.4 | $ | 225.1 | |||||||
| Accounts receivable, held for sale | 4.2 | — | |||||||||
| Accounts receivable, net | 19.5 | 692.5 | |||||||||
| Other receivables | 72.5 | 87.2 | |||||||||
| Other current assets | 171.5 | 158.2 | |||||||||
| Income taxes | 5.8 | 2.6 | |||||||||
| Inventories | 2,386.9 | 2,280.5 | |||||||||
| Total current assets | 2,855.8 | 3,446.1 | |||||||||
| Non-current assets: | |||||||||||
| Property, plant and equipment, net | 800.5 | 877.9 | |||||||||
| Goodwill | 296.6 | 821.7 | |||||||||
| Intangible assets, net | 265.0 | 481.5 | |||||||||
| Other assets | 150.6 | 171.2 | |||||||||
| Deferred tax assets | 21.0 | 1.4 | |||||||||
| Retirement benefit asset | 30.6 | 39.8 | |||||||||
| Total assets | $ | 4,420.1 | $ | 5,839.6 | |||||||
| Liabilities and Shareholders’ equity | |||||||||||
| Current liabilities: | |||||||||||
| Loans and overdrafts | $ | 78.8 | $ | 44.0 | |||||||
| Accounts payable | 153.7 | 237.0 | |||||||||
| Accrued expenses and other current liabilities | 502.8 | 448.0 | |||||||||
| Deferred revenue | 270.0 | 288.6 | |||||||||
| Income taxes | 27.7 | 19.6 | |||||||||
| Total current liabilities | 1,033.0 | 1,037.2 | |||||||||
| Non-current liabilities: | |||||||||||
| Long-term debt | 649.6 | 688.2 | |||||||||
| Other liabilities | 224.1 | 239.6 | |||||||||
| Deferred revenue | 696.5 | 668.9 | |||||||||
| Deferred tax liabilities | — | 92.3 | |||||||||
| Total liabilities | 2,603.2 | 2,726.2 | |||||||||
| Commitments and contingencies | |||||||||||
|
Series A redeemable convertible preferred shares of $0.01 par value:
500 shares authorized, 0.625 shares outstanding |
615.3 | 613.6 | |||||||||
| Shareholders’ equity: | |||||||||||
|
Common shares of $0.18 par value: authorized 500 shares, 51.9 shares
outstanding (2018: 60.5 outstanding) |
12.6 | 15.7 | |||||||||
| Additional paid-in capital | 236.5 | 290.2 | |||||||||
| Other reserves | 0.4 | 0.4 | |||||||||
| Treasury shares at cost: 18.1 shares (2018: 26.7 shares) | (1,027.3 | ) | (1,942.1 | ) | |||||||
| Retained earnings | 2,282.2 | 4,396.2 | |||||||||
| Accumulated other comprehensive loss | (302.8 | ) | (260.6 | ) | |||||||
| Total shareholders’ equity | 1,201.6 | 2,499.8 | |||||||||
| Total liabilities, redeemable convertible preferred shares and shareholders’ equity | $ | 4,420.1 | $ | 5,839.6 | |||||||
|
Condensed Consolidated Statements of Cash Flows (Unaudited) |
|||||||||||
| (in millions) | Fiscal 2019 | Fiscal 2018 | |||||||||
| Cash flows from operating activities: | |||||||||||
| Net income (loss) | $ | (657.4 | ) | $ | 519.3 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 183.6 | 203.4 | |||||||||
| Amortization of unfavorable leases and contracts | (7.9 | ) | (13.0 | ) | |||||||
| Pension benefit | (0.8 | ) | (3.5 | ) | |||||||
| Share-based compensation | 16.5 | 16.1 | |||||||||
| Deferred taxation | (105.6 | ) | (33.4 | ) | |||||||
| Credit transaction, net | 160.4 | (30.9 | ) | ||||||||
| Goodwill and intangible impairments | 735.4 | — | |||||||||
| Restructuring charges | 84.9 | — | |||||||||
| Amortization of debt discount and issuance costs | 2.0 | 3.7 | |||||||||
| Other non-cash movements | (4.6 | ) | 2.4 | ||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Decrease in accounts receivable | 18.1 | 242.1 | |||||||||
| Decrease in accounts receivable held for sale | 27.6 | — | |||||||||
| Proceeds from sale of in-house finance receivables | 445.5 | 952.5 | |||||||||
| Decrease (increase) in other assets and other receivables | 0.7 | (6.0 | ) | ||||||||
| Decrease (increase) in inventories | (194.3 | ) | 210.9 | ||||||||
| Decrease in accounts payable | (78.5 | ) | (51.4 | ) | |||||||
| Increase in accrued expenses and other liabilities | 55.9 | 3.9 | |||||||||
| Increase in deferred revenue | 9.7 | 10.0 | |||||||||
| Increase (decrease) in income taxes payable | 10.9 | (82.4 | ) | ||||||||
| Pension plan contributions | (4.4 | ) | (3.2 | ) | |||||||
| Net cash provided by operating activities | 697.7 | 1,940.5 | |||||||||
| Investing activities | |||||||||||
| Purchase of property, plant and equipment | (133.5 | ) | (237.4 | ) | |||||||
| Proceeds from sale of assets | 5.5 | — | |||||||||
| Purchase of available-for-sale securities | (0.6 | ) | (2.4 | ) | |||||||
| Proceeds from sale of available-for-sale securities | 9.6 | 2.2 | |||||||||
| Acquisition of R2Net Inc., net of cash acquired | — | (331.8 | ) | ||||||||
| Net cash used in investing activities | (119.0 | ) | (569.4 | ) | |||||||
| Financing activities | |||||||||||
| Dividends paid on common shares | (79.0 | ) | (76.5 | ) | |||||||
| Dividends paid on redeemable convertible preferred shares | (31.2 | ) | (34.7 | ) | |||||||
| Repurchase of common shares | (485.0 | ) | (460.0 | ) | |||||||
| Proceeds from term and bridge loans | — | 350.0 | |||||||||
| Repayments of term and bridge loans | (31.3 | ) | (372.3 | ) | |||||||
| Proceeds from securitization facility | — | 1,745.9 | |||||||||
| Repayments of securitization facility | — | (2,345.9 | ) | ||||||||
| Proceeds from revolving credit facility | 787.0 | 814.0 | |||||||||
| Repayments of revolving credit facility | (787.0 | ) | (870.0 | ) | |||||||
| Repayments of bank overdrafts | 25.9 | (0.1 | ) | ||||||||
| Other financing activities | (2.1 | ) | (4.0 | ) | |||||||
| Net cash used in financing activities | (602.7 | ) | (1,253.6 | ) | |||||||
| Cash and cash equivalents at beginning of period | 225.1 | 98.7 | |||||||||
| Increase (decrease) in cash and cash equivalents | (24.0 | ) | 117.5 | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | (5.7 | ) | 8.9 | ||||||||
| Cash and cash equivalents at end of period | $ | 195.4 | $ | 225.1 | |||||||
Real Estate Portfolio:
Signet has a diversified real estate portfolio. On February 2, 2019, Signet operated 3,334 stores totaling 4.7 million square feet of selling space. Compared to prior year, store count decreased by 222 and square feet of selling space decreased 5.7%.
| Store count by banner | February 3, 2018 | Openings | Closures | February 2, 2019 | ||||||||||
| Kay | 1,247 | 31 | (64 | ) | 1,214 | |||||||||
| Zales | 704 | 2 | (48 | ) | 658 | |||||||||
| Peoples | 129 | 2 | (8 | ) | 123 | |||||||||
| Jared | 274 | 1 | (19 | ) | 256 | |||||||||
| Piercing Pagoda | 598 | — | (24 | ) | 574 | |||||||||
| Regional banners(1) | 100 | 1 | (69 | ) | 32 | |||||||||
| North America segment | 3,052 | 37 | (232 | ) | 2,857 | |||||||||
| H.Samuel | 301 | — | (13 | ) | 288 | |||||||||
| Ernest Jones | 203 | 3 | (17 | ) | 189 | |||||||||
| International segment | 504 | 3 | (30 | ) | 477 | |||||||||
| Signet | 3,556 | 40 | (262 | ) | 3,334 | |||||||||
|
(1) Includes one James Allen location. |
||||||||||||||
CONTACT:
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