Accounts receivable, net

9 Months Ended

Oct. 31, 2015

Signet’s accounts receivable primarily consist of Sterling Jewelers’ customer in-house financing receivables. The accounts receivable portfolio consists of a population that has similar characteristics and is evaluated collectively for impairment. The allowance is an estimate of the expected 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)	October 31, 2015		January 31, 2015		November 1, 2014
Accounts receivable by portfolio segment, net:
Sterling Jewelers customer in-house finance receivables	$	1,437.2	$	1,552.9	$	1,280.3
Other accounts receivable	14.3		14.7		11.8
Total accounts receivable, net	$	1,451.5	$	1,567.6	$	1,292.1

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 Jewelry division of $9.9 million (January 31, 2015 and November 1, 2014: $13.7 million and $9.5 million, respectively), with a corresponding valuation allowance of $0.6 million (January 31, 2015 and November 1, 2014: $0.5 million and $0.3 million, respectively). The credit function for the Zale division is primarily outsourced and, as such, no material accounts receivable exist as of October 31, 2015, January 31, 2015 or November 1, 2014.

The allowance for credit losses on Sterling Jewelers' customer in-house finance receivables is shown below:



	39 weeks ended
(in millions)	October 31, 2015			November 1, 2014
Beginning balance:	$	(113.1	)	$	(97.8	)
Charge-offs	121.5			101.0
Recoveries	27.0			22.1
Provision	(157.6		)	(127.9		)
Ending balance	$	(122.2	)	$	(102.6	)
Ending receivable balance evaluated for impairment	1,559.4			1,382.9
Sterling Jewelers customer in-house finance receivables, net	$	1,437.2		$	1,280.3

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

The following tables summarize the credit quality indicator and age analysis of past due Sterling Jewelers' customer in-house finance receivables:



	October 31, 2015					January 31, 2015					November 1, 2014
(in millions)	Gross		Valuation allowance			Gross		Valuation allowance			Gross		Valuation allowance
Performing:
Current, aged 0 – 30 days	$	1,212.2	$	(36.8	)	$	1,332.2	$	(41.1	)	$	1,087.9	$	(33.2	)
Past due, aged 31 – 90 days	271.2		(9.4		)	271.1		(9.3		)	233.8		(8.2		)
Non Performing:
Past due, aged more than 90 days	76.0		(76.0		)	62.7		(62.7		)	61.2		(61.2		)
	$	1,559.4	$	(122.2	)	$	1,666.0	$	(113.1	)	$	1,382.9	$	(102.6	)



	October 31, 2015				January 31, 2015				November 1, 2014
(as a % of the ending receivable balance)	Gross		Valuation allowance		Gross		Valuation allowance		Gross		Valuation allowance
Performing	95.1	%	3.1	%	96.2	%	3.1	%	95.6	%	3.1	%
Non Performing	4.9	%	100.0	%	3.8	%	100.0	%	4.4	%	100.0	%
	100.0	%	7.8	%	100.0	%	6.8	%	100.0	%	7.4	%

Securitized credit card receivables

The Sterling Jewelers division securitizes its credit card receivables through its Sterling Jewelers Receivables Master Note Trust established on May 15, 2014. See Note 17 for additional information regarding this asset-backed securitization facility.