Accounts receivable, net

3 Months Ended

May 03, 2014

Accounts receivable, net

8. Accounts receivable, net

Signet’s accounts receivable primarily consist of US customer in-house financing receivables. The accounts receivable portfolio consists of a population that is of similar characteristics and is evaluated collectively for impairment. 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 more than 90 days aged on a recency basis and any amount associated with an account the owner of which has filed for bankruptcy, as well as an allowance for those amounts 90 days aged and under 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.

(in millions)	May 3, 2014		February 1, 2014		May 4, 2013
Accounts receivable by portfolio segment, net:
US customer in-house finance receivables	$	1,294.8	$	1,356.0	$	1,145.9
Other accounts receivable		13.4		18.0		11.6
Total accounts receivable, net	$	1,308.2	$	1,374.0	$	1,157.5

Signet grants credit to customers based on a variety of credit quality indicators, including consumer financial information and prior payment experience. 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.

Other accounts receivable is comprised primarily of gross accounts receivable relating to the insurance loss replacement business in the UK division of $12.2 million (February 1, 2014 and May 4, 2013: $12.8 million and $10.6 million, respectively) with a corresponding valuation allowance of $0.3 million (February 1, 2014 and May 4, 2013: $0.3 million and $0.4 million, respectively).

Allowance for credit losses on US customer in-house finance receivables:

(in millions)	13 weeks ended May 3, 2014			52 weeks ended February 1, 2014			13 weeks ended May 4, 2013
Beginning balance	$	(97.8	)	$	(87.7	)	$	(87.7	)
Charge-offs		32.3			128.2			29.4
Recoveries		8.5			26.0			7.4
Provision		(30.8	)		(164.3	)		(28.7	)
Ending balance	$	(87.8	)	$	(97.8	)	$	(79.6	)
Ending receivable balance evaluated for impairment		1,382.6			1,453.8			1,225.5
US customer in-house finance receivables, net	$	1,294.8		$	1,356.0		$	1,145.9

Net bad debt expense is defined as the provision expense less recoveries.

Credit quality indicator and age analysis of past due US customer in-house finance receivables:

	May 3, 2014					February 1, 2014					May 4, 2013
(in millions)	Gross		Valuation allowance			Gross		Valuation allowance			Gross		Valuation allowance
Performing:
Current, aged 0-30 days	$	1,130.8	$	(34.4	)	$	1,170.4	$	(36.3	)	$	999.1	$	(30.5	)
Past due, aged 31-90 days		205.6		(7.2	)		229.9		(8.0	)		183.9		(6.6	)
Non Performing:
Past due, aged more than 90 days		46.2		(46.2	)		53.5		(53.5	)		42.5		(42.5	)
	$	1,382.6	$	(87.8	)	$	1,453.8	$	(97.8	)	$	1,225.5	$	(79.6	)

	May 3, 2014						February 1, 2014						May 4, 2013
(as a percentage of the ending receivable balance)	Gross			Valuation allowance			Gross			Valuation allowance			Gross			Valuation allowance
Performing		96.7	%		3.1	%		96.3	%		3.2	%		96.5	%		3.2	%
Non Performing		3.3	%		100.0	%		3.7	%		100.0	%		3.5	%		100.0	%
		100.0	%		6.4	%		100.0	%		6.7	%		100.0	%		6.5	%