Strong same store sales drive solid
financial results
Signet Jewelers Limited (“Signet”) (NYSE and LSE: SIG), the
world's largest retailer of diamond jewelry, today announced its
results for the 13 weeks ended August 1, 2015 (“second quarter
Fiscal 2016”).
Mark Light, Chief Executive Officer of Signet Jewelers, said,
“Signet delivered a second quarter increase in same store sales of
4.2%, earnings per share of $0.78, and adjusted earnings per share
of $1.28, a 19.6% increase. These results exceeded our same store
sales and adjusted EPS guidance for the quarter. Results were
driven by strong and consistent sales growth across all of our
selling channels, as well as solid profitability and disciplined
cost management across our organization.
"The integration of Zale continues to go well, and we have begun
to see the benefit of net synergies positively impact our operating
results. I am increasingly confident that we are on track in FY16
to realize 20% of our three year net synergy target of $150 million
to $175 million. We remain committed to maintaining profitable
growth while balancing investment back into the business with
shareholder distribution.
“I want to congratulate and thank all Signet team members for
their contributions to our quarterly results.”
Second Quarter Fiscal 2016 Diluted Earnings per Share (“EPS”)
Analysis:
Consolidated results in prior year reflect the contribution of
26 fewer days year-over-year from the addition of Zale Corporation
acquired on May 29, 2014 ("the acquisition"). In addition,
consolidated results reflect purchase accounting and transaction
costs related to that acquisition.
Second quarter EPS was $0.78. EPS was unfavorably impacted by
transaction costs principally due to the $34.2 million legal
settlement of the Zale acquisition appraisal rights matters.
Second quarter Adjusted EPS was $1.28 driven by stronger than
expected business performance, a lower tax rate, and an operational
change associated with extended service plans, which resulted in a
change in revenue recognition. Adjusted EPS can be reconciled to
EPS as follows:
Adjusted EPS1 Purchase accounting adjustments
Transaction costs Earnings per share $1.28
$(0.04) $(0.46) $0.78
1. Throughout this release, Signet uses adjusted metrics which
adjust for purchase accounting and transaction costs in relation to
the Zale acquisition. See non-GAAP reconciliation tables. The
presentation of the Fiscal 2015 reconciliation has been changed to
conform with this year's adjusted presentation.
Financial Guidance:
13 weeks ended October 31, 2015 ("Third quarter Fiscal 2016") Same
store sales 3% to 4% EPS $0.23
to $0.25 Adjusted EPS $0.36 to $0.40 Fiscal 2016 Effective
tax rate 28% to 29% Capital expenditures $275 million to $325
million Net selling square footage growth 2% to 3%
Capital expenditures will be driven primarily by new Kay and
Jared stores, store remodels, and approximately $80 million to $90
million directed to the Zale division for information technology
infrastructure and stores.
Net selling square footage growth is expected to be driven by the
following projected store (and kiosk) changes:
Gross locations Net locations
Net square feet Sterling Jewelers division up 55 to
65 up 30 to 35 up 3% to 4% Zale division up 30 to 35 approximately
flat approximately flat UK Jewelry division up 5 to 10 slight
increase slight increase
Second quarter Fiscal 2016 Sales Highlights:
Total sales were $1,410.6 million, up $184.7 million or 15.1%,
compared to $1,225.9 million in the second quarter Fiscal 2015.
Same store sales increased 4.2% compared to an increase of 4.8% in
the 13 weeks ended August 2, 2014 ("second quarter Fiscal 2015")
driven by positive sales performance across all national store
brands. In the second quarter, an operational change related to the
Sterling division's extended service plans ("ESP") associated with
ring sizing was made to further align Zale and Sterling ESP
policies. This change triggered a change in the revenue and expense
recognition rates which favorably impacted Signet same store sales
by 60 basis points. eCommerce sales in the second quarter were
$65.9 million, up $15.4 million or 30.5% compared to $50.5 million
in the prior year second quarter.
- Sterling Jewelers division sales
increases were broad-based across store banners, product brands and
non-brands, as well as multi-channels. Bridal and diamond jewelry
was particularly strong. The average transaction price in Sterling
increased by 4.2% and the number of transactions decreased by 2.5%
due principally to merchandise mix.
- Zale division sales increases were
driven by higher sales among stores and kiosks. The prior year
quarter had 26 fewer days due to the acquisition. Sales related
drivers included sales associate training, branded bridal, branded
diamond fashion merchandise and new marketing creative.
- UK Jewelry division total sales
decreases were driven entirely by foreign currency exchange rates.
The increase in same store sales and total sales at constant
exchange rates was driven primarily by strong results in diamond
jewelry and watches. The average transaction price and number of
transactions for the division increased by 4.3% and 1.8%,
respectively, due principally to merchandise mix.
Sales change from previous year Second quarter
Fiscal 2016
Samestoresales¹
Non-samestoresales, net²
Total salesat constantexchangerate³
Exchangetranslationimpact³
Totalsales
Total sales(in millions)
Kay 4.1 % 2.5 % 6.6 % — %
6.6
% $ 530.0 Jared 2.7 % 5.1 % 7.8 % — % 7.8 % $ 285.4 Regional brands
(1.8 )% (9.5 )% (11.3 )% — %
(11.3 )% $ 43.1
Sterling Jewelers division
3.3 % 2.6 % 5.9
% — % 5.9 %
$ 858.5 Zales Jewelers4 6.2 % 59.3 % 65.5 % — % 65.5
% $ 262.0 Gordon’s Jewelers4 (7.6 )% 39.1 % 31.5 % — % 31.5 % $
16.7 Zale US Jewelry4 5.3 % 57.7 % 63.0 % — % 63.0 % $ 278.7
Peoples Jewellers4 6.7 % 49.1 % 55.8 % (21.5 )% 34.3 % $ 49.7
Mappins4 — % 33.3 % 33.3 % (19.0 )% 14.3 % $ 8.0 Zale Canada
Jewelry4 5.7 % 46.5 % 52.2 % (21.1 )% 31.1 % $ 57.7 Zale Jewelry4
5.4 % 55.6 % 61.0 % (4.5 )% 56.5 % $ 336.4 Piercing Pagoda4
8.4 % 54.4 % 62.8 % — % 62.8 % $
52.9
Zale division4
5.8 %
55.5 % 61.3 % (4.0
)% 57.3 % $ 389.3
H.Samuel 1.9 % (0.3 )% 1.6 % (8.3 )% (6.7 )% $ 76.3 Ernest Jones
8.3 % 2.8 % 11.1 % (9.0 )% 2.1 %
$ 82.8
UK Jewelers division 5.1
% 1.3 % 6.4 %
(8.7 )% (2.3 )%
$ 159.1 Other segment — %
(27.5 )% (27.5 )%
— % (27.5 )% $
3.7 Signet4
4.2 %
12.7 % 16.9 % (1.8
)% 15.1 % $
1,410.6 Adjusted Signet3,4
$ 1,417.8 Adjusted
Signet excluding Zale³
$ 1,021.3 1. Based on
stores opened for at least 12 months. 2. Includes all sales from
stores not open for 12 months. 3. Non-GAAP measure. 4. Same store
sales reflect three months of Fiscal 2016 compared to three months
of Fiscal 2015. Total sales in prior year reflect the contribution
of 26 fewer days year-over-year from the addition of Zale
Corporation, acquired on May 29, 2014.
Second quarter Fiscal 2016 Financial Highlights:
Gross margin was $490.8 million or 34.8% of sales compared to
$409.0 million or 33.4% of sales in the second quarter Fiscal 2015.
In the second quarter Fiscal 2016, adjusted gross margin was $500.1
million or 35.3% of adjusted sales compared to the prior year
adjusted gross margin rate of 34.3%. The increase in the adjusted
gross margin rate of 100 basis points over the prior year was
impacted by higher sales and favorable commodity costs. Excluding
Zale, the adjusted gross margin rate was 35.7%, up 90 basis
points.
- Gross margin dollars in the Sterling
Jewelers division increased $25.1 million compared to the prior
year second quarter. The gross margin rate, up 90 basis points,
increased principally due to an improvement in the merchandise
margin from favorable commodity costs partially offset by net bad
debt due to higher credit sales.
- Gross margin dollars in the Zale
division increased $52.3 million compared to the prior year second
quarter, reflecting higher sales and an adjusted gross margin rate
increase of 170 basis points. The gross margin rate expansion was
driven principally by improved merchandise margin attributed to a
number of factors, including merchandise synergy initiatives and
favorable commodity costs, and leverage on store occupancy.
- Gross margin dollars in the UK Jewelry
division increased $0.5 million compared to the prior year second
quarter, and the gross margin rate increased 100 basis points. The
gross margin rate expansion was driven principally by lower store
occupancy expenses.
SGA was $452.8 million or 32.1% of sales compared to $379.2
million or 31.0% of sales in second quarter Fiscal 2015. The $73.6
million increase was primarily due to the addition of 26 days of
Zale operations in this year's quarter, as well as
transaction-related expenses of $43.6 million, including the
appraisal rights legal settlement of $34.2 million, and favorable
adjustments related to purchase accounting of $4.2 million. In the
prior year, favorable adjustments related to purchase accounting
were $3.0 million and transaction-related expenses were $30.8
million.
- Second quarter Fiscal 2016 adjusted SGA
was $413.4 million or 29.2% of sales compared to 28.4% in the prior
year. The 80 basis point increase was due to incremental
investments in Zale principally around advertising, information
technology support, and employee benefits.
- The second quarter Fiscal 2016 adjusted
Signet SGA rate excluding Zale would have been 27.5%, a 10 basis
point decrease versus the prior year second quarter primarily due
to leverage on store payroll costs partially offset by higher
central costs associated with legal fees related to the appraisal
rights litigation.
Other operating income was $62.8 million compared to $53.7
million in the prior year second quarter, up $9.1 million or 16.9%.
This increase was due to the Sterling division’s higher interest
income earned from higher outstanding receivable balances.
Operating income was $100.8 million, or 7.2% of sales compared
to $83.5 million or 6.8% of sales last year. Included in operating
income were purchase accounting and transaction related adjustments
which reduced operating income by $48.7 million in the second
quarter compared to adjustments of $42.3 in the prior year second
quarter. Adjusted operating income was $149.5 million, or 10.5% of
sales compared to adjusted operating income of $125.8 million or
10.2% of sales last year. Signet's 30 basis point increase in
adjusted operating margin was due principally to higher sales and
gross margin.
- Operating income in the Sterling
Jewelers division was $157.8 million or 18.4% of sales compared to
$129.9 million or 16.0% in the prior year second quarter.
- Operating loss in the Zale division,
inclusive of purchase accounting adjustments, was $2.1 million or
0.5% of sales compared to an operating loss of $9.8 million or 4.0%
in the prior year second quarter. The prior year second quarter
includes 26 fewer days of Zale operations.
- Operating income in the UK division was
$3.2 million or 2.0% of sales compared to $1.1 million or 0.7% of
sales in the prior year second quarter.
- Operating loss of the Other operating
segment, which includes unallocated corporate administrative costs
and the costs of Signet's diamond sourcing initiative, was $58.1
million compared to a loss of $37.7 million in the prior year
second quarter. The increase was driven by the legal settlement.
The prior year included transaction-related costs of $30.8
million.
Income tax expense was $27.5 million, an effective tax rate
(“ETR”) of 30.7%, compared to $11.8 million, an ETR of 16.9%, in
the prior year second quarter. The second quarter's higher ETR was
driven in large part by the $34.2 million appraisal rights legal
settlement which is not deductible for tax purposes. Signet
continues to anticipate a Fiscal 2016 ETR of 28% to 29% on both an
adjusted and GAAP basis.
Adjusted EPS was $1.28, up 19.6% compared to $1.07 in the prior
year second quarter. Adjusted EPS included a favorable impact of
$0.05 due to the change in revenue recognition from extended
service plans.
Balance Sheet and Other Highlights at August 1,
2015:
Cash and cash equivalents were $159.8 million compared to $215.0
million as of August 2, 2014. The lower cash position was due
to unfavorable changes to working capital, higher capital spending,
higher dividends and share repurchases.
For the quarter, Signet repurchased $60.0 million of shares, or
0.5 million shares at an average cost of $128.03 per share. Year to
date Signet repurchased $81.9 million of shares, or 0.6 million
shares at an average cost of $130.27 per share. As of
August 1, 2015, there was $183.7 million remaining under
Signet’s 2013 share repurchase authorization program.
Net accounts receivable were $1,493.2 million, up 13.5% compared
to $1,316.0 million as of August 2, 2014. In the Sterling
Jewelers division the credit participation rate was 61.6% in the 26
weeks ended August 1, 2015 compared to 60.0% in the 26 weeks
ended August 2, 2014.
Net inventories were $2,414.2 million, up 2.9% compared to
$2,345.3 million as of the prior year period due primarily to more
stores and rough diamond inventory.
Long term debt was $1,348.7 million compared to $1,379.1 million
in the prior year period.
On August 1, 2015, Signet had 3,593 stores, consisting of
the following:
Store count Jan 31, 2015
Openings Closures Aug
1, 2015 Kay 1,094 28
(4) 1,118 Jared 253 9 (1) 261 Regional brands
157 — (6) 151
Sterling Jewelers division 1,504
37 (11)
1,530 Zales 716 2 (6) 712 Gordons 69 — (3) 66 Peoples 144 1
— 145 Mappins 43 — — 43 Total Zale Jewelry 972 3 (9) 966 Piercing
Pagoda 605 — (6)
599
Zale division 1,577
3 (15)
1,565 H.Samuel 302 — (1) 301 Ernest Jones 196
2 (1) 197
UK Jewelry
division 498 2
(2) 498 Signet
3,579 42
(28) 3,593
Dividends:
Reflecting the Board's confidence in the strength of the
business as well as Signet's ability to invest in growth
initiatives and the Board's commitment to building long-term
shareholder value, a quarterly cash dividend of $0.22 per
Signet Common Share has been declared for the third quarter of
Fiscal 2016 payable on November 27, 2015 to shareholders
of record on October 30, 2015, with an ex-dividend date
of October 29, 2015.
Conference Call:
A conference call is scheduled today at 8:30 a.m. ET and a
simultaneous audio webcast and slide presentation are available at
www.signetjewelers.com. The slides are available to be downloaded
from the website ahead of the conference call. The call details
are:
Dial-in: 1-877-201-0168 or 1-647-788-4901 Access code:
87573872
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 3,600 stores
primarily under the name brands of Kay Jewelers, Zales, Jared The
Galleria Of Jewelry, H.Samuel, Ernest Jones, Peoples and Piercing
Pagoda. 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 and www.pagoda.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, 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 general
economic conditions, risks relating to Signet being a Bermuda
corporation, the merchandising, pricing and inventory policies
followed by Signet, the reputation of Signet and its brands, the
level of competition in the jewelry sector, the cost and
availability of diamonds, gold and other precious metals,
regulations relating to customer credit, seasonality of Signet's
business, financial market risks, deterioration in customers’
financial condition, exchange rate fluctuations, changes in
Signet's credit rating, changes in consumer attitudes regarding
jewelry, management of social, ethical and environmental risks,
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 extended service plans and pensions, the impact of the
acquisition of Zale Corporation on relationships, including with
employees, suppliers, customers and competitors, and our ability to
successfully integrate Zale's operations and to realize synergies
from the transaction.
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 2015 Annual Report on Form 10-K filed
with the SEC on March 26, 2015 and the "Risk Factors" section of
Signet's Quarterly Report on Form 10-Q filed with
the SEC on June 3, 2015. Signet undertakes no
obligation to update or revise any forward-looking statements to
reflect subsequent events or circumstances, except as required by
law.
Signet uses adjusted metrics, which adjust for purchase
accounting and transaction costs related to the acquisition and the
contribution of the Zale division to give investors information as
to Signet’s results without regard to the expenses associated with
the acquisition. Signet is furnishing the following schedules in
order to provide further visibility into the components of Adjusted
Signet results until the third quarter of Fiscal 2016.
Non-GAAP Reconciliation for the second quarter
ended August 1, 2015 (in mil. of $ except per share data)
Adjusted Signet
PurchaseAccounting1
TransactionCosts2
Signet Sales 1,417.8 (7.2 ) — 1,410.6 Cost of sales
(917.7 ) (2.1 ) — (919.8 ) Gross margin
500.1 (9.3 ) — 490.8 Selling, general and administrative expenses
(413.4 ) 4.2 (43.6 ) (452.8 ) Other operating income, net 62.8
— — 62.8 Operating
income (loss) 149.5 (5.1 ) (43.6 ) 100.8 Interest expense, net
(11.1 ) — — (11.1 ) Income
before income taxes 138.4 (5.1 ) (43.6 ) 89.7 Income taxes (35.8 )
1.8 6.5 (27.5 ) Net income
(loss) 102.6 (3.3 ) (37.1 ) 62.2
Earnings per share – diluted 1.28 (0.04
) (0.46 ) 0.78
Signet's Second Quarter Guidance 1.11 to 1.16
(0.05
)
(0.07) to (0.06) 0.99 to 1.05
Additional schedule for the second quarter ended August 1, 2015
($ in mil. except per share data)
Adjusted Signetexcluding Zale3
Zale operations Adjusted Signet Sales
1,021.3 100.0 % 396.5 100.0 % 1,417.8 100.0 % Cost of sales (657.0
) (64.3 )% (260.7 ) (65.8 )% (917.7 ) (64.7 )% Gross margin 364.3
35.7 % 135.8 34.2 % 500.1 35.3 % Selling, general and
administrative expenses (280.8 ) (27.5 )% (132.6 ) (33.4 )% (413.4
) (29.2 )% Other operating income, net 63.0 6.2 % (0.2 )
(0.1 )% 62.8 4.4 % Operating income 146.5 14.4 % 3.0 0.7 %
149.5 10.5 % Interest expense, net (11.0 ) (1.1 )% (0.1 ) — % (11.1
) (0.8 )% Income before income taxes 135.5 13.3 % 2.9 0.7 % 138.4
9.7 % Income taxes (34.8 ) (3.4 )% (1.0 ) (0.2 )% (35.8 ) (2.5 )%
Net income (loss) 100.7 9.9 % 1.9 0.5 % 102.6
7.2 % Earnings per share – diluted $ 1.26 $ 0.02 $ 1.28 1
Includes deferred revenue adjustments related to acquisition
accounting which resulted in a reset of deferred revenue associated
with extended service plans previously sold by Zale Corporation.
Similar to the Sterling Jewelers division, historically, Zale
Corporation deferred the revenue generated by the sale of lifetime
warranties and recognized revenue in relation to the pattern of
costs expected to be incurred, which included a profit margin on
activities related to the initial selling effort. In acquisition
accounting, deferred revenue is only recognized when a legal
performance obligation is assumed by the acquirer. The fair value
of deferred revenue is determined based on the future obligations
associated with the outstanding plans at the time of the
Acquisition. The acquisition accounting adjustment results in a
reduction to the deferred revenue balance from $183.8 million to
$93.3 million as of May 29, 2014 as the fair value was determined
through the estimation of costs remaining to be incurred, plus a
reasonable profit margin on the estimated costs. Revenues generated
from the sale of extended services plans subsequent to the
Acquisition are recognized in revenue in a manner consistent with
Signet’s methodology. Additionally, accounting adjustments include
the recognition of a portion of the inventory fair value step-up of
$32.2 million and amortization of acquired intangibles. 2
Transaction costs include legal settlement costs related to the
Zale appraisal rights litigation of $34.2 million as well as
integration expenses associated with consulting services. These
costs are included within Signet’s Other segment. 3 Includes
capital structure and financing costs.
Signet uses adjusted metrics in order to provide further
visibility into the components of its results. Second quarter
Fiscal 2015 adjusted results are presented and reconciled below.
This presentation is furnished to align the methodology of last
year's results to the non-GAAP presentation of this year.
Non-GAAP Reconciliation for the second quarter ended
August 2, 2014 (in mil. of $ except per share data)
Adjusted Signet
PurchaseAccounting1
TransactionCosts2
Signet Sales 1,235.2 (9.3 ) — 1,225.9
Cost of sales (811.7 ) (5.2 ) — (816.9
) Gross margin 423.5 (14.5 ) — 409.0 Selling, general and
administrative expenses (351.4 ) 3.0 (30.8 ) (379.2 ) Other
operating income, net 53.7 — —
53.7 Operating income (loss) 125.8 (11.5 ) (30.8 )
83.5 Interest expense, net (12.5 ) (1.2 ) —
(13.7 ) Income before income taxes 113.3 (12.7 ) (30.8 )
69.8 Income taxes (27.7 ) 4.8 11.1
(11.8 ) Net income (loss) 85.6 (7.9 )
(19.7 ) 58.0 Earnings per share – diluted
1.07 (0.10 ) (0.25 ) 0.72
Additional schedule for the second quarter ended
August 2, 2014 ($ in mil. except per share data)
Adjusted Signetexcluding Zale3
Zale operations Adjusted Signet Sales
978.4 100.0 % 256.8 100.0 % 1,235.2 100.0 % Cost of sales (638.4 )
(65.2 )% (173.3 ) (67.5 )% (811.7 ) (65.7 )% Gross margin 340.0
34.8 % 83.5 32.5 % 423.5 34.3 % Selling, general and administrative
expenses (269.6 ) (27.6 )% (81.8 ) (31.8 )% (351.4 ) (28.4 )% Other
operating income, net 53.7 5.5 % — — % 53.7
4.3 % Operating income 124.1 12.7 % 1.7 0.7 % 125.8 10.2 % Interest
expense, net (12.3 ) (1.3 )% (0.2 ) (0.1 )% (12.5 ) (1.0 )% Income
before income taxes 111.8 11.4 % 1.5 0.6 % 113.3 9.2 % Income taxes
(27.1 ) (2.7 )% (0.6 ) (0.2 )% (27.7 ) (2.3 )% Net income (loss)
84.7 8.7 % 0.9 0.4 % 85.6 6.9 % Earnings per
share – diluted $ 1.06 $ 0.01 $ 1.07 1
Includes deferred revenue adjustments
related to acquisition accounting which resulted in a reset of
deferred revenue associated with extended service plans previously
sold by Zale. Similar to Signet's Sterling Jewelers division,
historically, Zale deferred the revenue generated by the sale of
lifetime warranties and recognized revenue in relation to the
pattern of costs expected to be incurred, which included a profit
margin on activities related to the initial selling effort. In
acquisition accounting, deferred revenue is only recognized when a
legal performance obligation is assumed by the acquirer. The fair
value of deferred revenue is determined based on the future
obligations associated with the outstanding plans at the time of
the Acquisition. The acquisition accounting adjustment results in a
reduction to the deferred revenue balance from $183.8 million to
$93.0 million as of May 29, 2014 as the fair value was determined
through the estimation of costs remaining to be incurred, plus a
reasonable profit margin on the estimated costs. Revenues generated
from the sale of extended services plans subsequent to the
Acquisition are recognized in revenue in a manner consistent with
Signet's methodology. Additionally, accounting adjustments include
the recognition of a portion of the inventory fair value step-up of
$31.3 million and amortization expense of intangibles.
2 Transaction costs include transaction-related and
integration expenses associated with advisor fees for legal, tax,
accounting and consulting expenses. These costs are included within
Signet’s Other segment. 3 Includes capital structure and
financing costs.
Condensed Consolidated Income
Statements (Unaudited) 13 weeks
ended 26 weeks ended (in millions, except per share
amounts)
August 1, 2015 August 2,
2014 August 1, 2015 August 2, 2014
Sales 1,410.6 1,225.9 2,941.2 2,282.0 Cost of sales
(919.8 ) (816.9 ) (1,884.5 )
(1,465.8 )
Gross margin 490.8 409.0
1,056.7 816.2 Selling, general and administrative
expenses (452.8 ) (379.2 ) (906.0 ) (689.7 ) Other operating
income, net 62.8 53.7
126.3 107.7
Operating income
100.8 83.5 277.0 234.2 Interest
expense, net (11.1 ) (13.7 )
(22.1 ) (15.5 )
Income before income taxes
89.7 69.8 254.9 218.7 Income taxes
(27.5 ) (11.8 ) (73.9 )
(64.1 )
Net income 62.2 58.0 181.0
154.6 Earnings per share: basic $ 0.78 $ 0.73 $ 2.27 $ 1.93
diluted $ 0.78 $ 0.72 $ 2.26 $ 1.93 Weighted average common shares
outstanding: basic 79.7 79.9 79.8 79.9 diluted 79.9 80.2 80.0 80.2
Dividends declared per share $ 0.22 $ 0.18 $ 0.44 $ 0.36
Condensed Consolidated Balance Sheets (Unaudited)
(in millions, except par value per share
amount)
August 1, 2015 January 31, 2015
August 2, 2014 Assets Current assets: Cash and cash
equivalents 159.8 193.6 215.0 Accounts receivable, net 1,493.2
1,567.6 1,316.0 Other receivables 55.2 63.6 54.1 Other current
assets 126.8 137.2 120.5 Deferred tax assets 4.3 4.5 2.3 Income
taxes 3.0 1.8 15.5 Inventories 2,414.2 2,439.0 2,345.3
Total
current assets 4,256.5 4,407.3 4,068.7
Non-current assets: Property, plant and equipment, net of
accumulated depreciation of $915.1, $852.1 and $831.7, respectively
685.1 665.9 627.8 Goodwill 517.6 519.2 551.9 Intangible assets, net
437.8 447.1 467.6 Other assets 145.4 140.0 133.0 Deferred tax
assets 129.0 111.1 84.4 Retirement benefit asset 40.4 37.0 61.3
Total assets 6,211.8 6,327.6 5,994.7
Liabilities and Shareholders’ equity Current liabilities:
Loans and overdrafts 82.0 97.5 31.2 Accounts payable 194.0 277.7
235.0 Accrued expenses and other current liabilities 453.1 482.4
422.1 Deferred revenue 230.2 248.0 211.1 Deferred tax liabilities
172.4 145.8 218.9 Income taxes 5.8 86.9 55.4
Total current
liabilities 1,137.5 1,338.3 1,173.7
Non-current liabilities: Long-term debt 1,348.7 1,363.8 1,379.1
Other liabilities 226.2 230.2 235.4 Deferred revenue 607.0 563.9
520.4 Deferred tax liabilities 20.2 21.0 2.2
Total
liabilities 3,339.6 3,517.2 3,310.8
Commitments and contingencies Shareholders’ equity: Common
shares of $0.18 par value: authorized 500 shares, 79.7 shares
outstanding (January 31, 2015: 80.3 outstanding; August 2, 2014:
80.2 outstanding) 15.7 15.7 15.7 Additional paid-in capital 269.7
265.2 262.5 Other reserves 0.4 0.4 0.4 Treasury shares at cost: 7.5
shares (January 31, 2015: 6.9 shares; August 2, 2014: 7.0 shares)
(452.7 ) (370.0 ) (367.0 ) Retained earnings 3,282.8 3,135.7
2,935.3
Accumulated other comprehensive loss (243.7
) (236.6 ) (163.0 ) Total
shareholders’ equity 2,872.2 2,810.4
2,683.9 Total liabilities and shareholders’ equity
6,211.8 6,327.6 5,994.7
Condensed Consolidated Statements of Cash Flows
(Unaudited) 13 weeks ended 26 weeks
ended (in millions)
August 1, 2015
August 2, 2014 August 1, 2015 August
2, 2014 Cash flows from operating activities: Net
income 62.2 58.0 181.0 154.6 Adjustments to reconcile net income to
net cash provided by operating activities: Depreciation and
amortization 42.7 36.5 84.5 64.5 Amortization of unfavorable leases
and contracts (8.8 ) (5.9 ) (17.6 ) (5.9 ) Pension benefit — (0.6 )
— (1.2 ) Share-based compensation 3.8 4.0 7.1 7.2 Deferred taxation
7.0 (13.6 ) 13.9 (4.2 ) Excess tax benefit from exercise of share
awards — — (5.1 ) (7.7 ) Amortization of debt discount and issuance
costs 0.7 4.5 1.6 5.5 Other non-cash movements (0.2 ) 0.7 2.0 0.1
Changes in operating assets and liabilities: Decrease (increase) in
accounts receivable 7.0 (7.9 ) 74.7 58.3 Increase in other
receivables and other assets (6.3 ) (2.3 ) (0.5 ) (4.0 ) Decrease
(increase) in other current assets 6.5 (23.5 ) 4.8 (22.8 ) Decrease
in inventories 72.1 37.0 28.4 17.1 Decrease in accounts payable
(61.8 ) (24.7 ) (80.8 ) (28.9 ) Increase (decrease) in accrued
expenses and other liabilities 42.5 23.7 (28.6 ) (19.0 ) (Decrease)
increase in deferred revenue (3.7 ) 6.1 24.0 21.0 (Decrease)
increase in income taxes payable (19.4 ) 19.5 (77.3 ) (48.5 )
Pension plan contributions (0.7 ) (1.1 ) (1.5
) (2.2 )
Net cash provided by operating activities
143.6 110.4
210.6 183.9 Investing activities
Purchase of property, plant and equipment (56.0 ) (61.9 ) (98.9 )
(90.0 ) Purchase of available-for-sale securities (0.5 ) (1.2 )
(1.9 ) (1.2 ) Proceeds from sale of available-for-sale securities
0.1 1.0 3.6 1.0 Acquisition of Zale Corporation, net of cash
acquired — (1,429.2 ) —
(1,429.2 )
Net cash used in investing activities
(56.4 ) (1,491.3 )
(97.2 ) (1,519.4 ) Financing
activities Dividends paid (17.7 ) (14.4 ) (32.1 ) (26.4 ) Proceeds
from issuance of common shares 0.1 1.0 0.2 2.0 Excess tax benefit
from exercise of share awards — — 5.1 7.7 Proceeds from senior
notes — 398.4 — 398.4 Proceeds from term loan — 400.0 — 400.0
Repayments of term loan (5.0 ) — (10.0 ) — Proceeds from
securitization facility 558.1 930.6 1,196.3 930.6 Repayments of
securitization facility (558.1 ) (330.6 ) (1,196.3 ) (330.6 )
Payment of debt issuance costs — (15.4 ) — (18.4 ) Repurchase of
common shares (62.8 ) (11.0 ) (81.9 ) (22.4 ) Net settlement of
equity based awards 0.4 0.2 (8.3 ) (15.1 ) Principal payments under
capital lease obligations (0.3 ) (0.2 ) (0.6 ) (0.2 ) Repayment of
short-term borrowings 35.0 (11.7 )
(20.0 ) (22.2 )
Net cash (used in) provided by financing
activities (50.3 ) 1,346.9
(147.6 ) 1,303.4
Cash and cash equivalents at beginning of period 122.6 249.1 193.6
247.6 Increase (decrease) in cash and cash equivalents 36.9 (34.0 )
(34.2 ) (32.1 ) Effect of exchange rate changes on cash and cash
equivalents 0.3 (0.1 ) 0.4 (0.5 ) Cash and cash equivalents at end
of period 159.8 215.0 159.8
215.0
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version on businesswire.com: http://www.businesswire.com/news/home/20150827005186/en/
Investors:Signet JewelersJames Grant, +1 (330) 668-5412VP
Investor RelationsorMedia:Signet JewelersDavid Bouffard, +1 (330)
668-5369VP Corporate Affairs
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