Accounts Receivable, Net

6 Months Ended

Jul. 30, 2011

Accounts Receivable, Net

Accounts Receivable, Net

6. Accounts receivable, net

Signet's accounts receivable primarily consist of US customer in-house finance programs ("finance receivables"), which are comprised of a large volume of transactions with no one customer representing a significant balance. Financing is only provided for transactions with Signet. The initial acceptance of customer finance arrangements is based on a variety of credit quality indicators, including consumer credit scores, consumer financial information and prior payment experience. Subsequent to the initial finance purchase, Signet monitors the credit quality of its customer finance receivable portfolio based on payment activity that drives the aging of receivables. These credit quality indicators are assessed on a real-time basis by Signet. On an ongoing basis, management monitors the credit exposure based on past due status and collection experience, as it has found a meaningful correlation between the past due status of customers and the risk of loss.

The finance receivables are of similar characteristics and are evaluated collectively for impairment rather than evaluating each finance receivable on an individual basis. The allowance is an estimate of the losses as of the balance sheet date, and is calculated using a proprietary model that analyzes factors such as delinquency rates and recovery rates. A 100% allowance is made for any amount that is 90 days aged on a recency basis, as well as an allowance for those under 90 days aged based on historical loss information and payment performance. The calculation is reviewed by management to assess whether, based on economic events, additional analyses are required to appropriately estimate losses inherent in the portfolio.

	July 30, 2011 $million		January 29, 2011 $million		July 31, 2010 $million
Accounts receivable by portfolio segment, net:
US customer in-house finance receivables		901.2		927.7		791.4
Other accounts receivable		5.6		8.2		5.8
Total accounts receivable, net		906.8		935.9		797.2

Other accounts receivable is comprised of gross accounts receivable relating to the insurance loss replacement business in the UK division of $6.2 million (January 29, 2011 and July 31, 2010: $8.7 million and $6.7 million, respectively), with a corresponding valuation allowance of $0.6 million (January 29, 2011 and July 31, 2010: $0.5 million and $0.9 million, respectively).

Allowance for Credit Losses on US Customer In-House Finance Receivables:

	July 30, 2011 $million			January 29, 2011 $million			July 31, 2010 $million
Beginning balance		(67.8	)		(72.2	)		(72.2	)
Charge-offs		40.3			119.0			54.1
Recoveries		9.9			17.4			8.5
Provision		(50.2	)		(132.0	)		(55.6	)
Ending balance		(67.8	)		(67.8	)		(65.2	)
Ending receivable balance evaluated for impairment		969.0			995.5			856.6
US customer in-house finance receivables, net		901.2			927.7			791.4

Credit Quality Indicator and Age Analysis of Past Due US Customer In-House Finance Receivables:

	July 30, 2011					January 29, 2011					July 31, 2010
	Gross $million		Valuation allowance $million			Gross $million		Valuation allowance $million			Gross $million		Valuation allowance $million
Performing:
Current		774.3		(23.2	)		804.4		(24.3	)		675.2		(19.9	)
Past due less than 90 days aged		154.7		(4.6	)		152.1		(4.5	)		140.3		(4.2	)
Non Performing:
Past due 90 days aged and more		40.0		(40.0	)		39.0		(39.0	)		41.1		(41.1	)
		969.0		(67.8	)		995.5		(67.8	)		856.6		(65.2	)

Amounts that are more than 90 days aged are placed on non-accrual status. For the 26 weeks ended July 30, 2011, Signet's bad debt expense for total accounts receivable is net of recoveries of $9.9 million (52 weeks ended January 29, 2011 and 26 weeks ended July 31, 2010: $17.4 million and $8.5 million, respectively).