Signet Jewelers Limited (“Signet”) (NYSE:SIG), the world's
largest retailer of diamond jewelry, today announced its results
for the 13 weeks ended November 2, 2019 (“third quarter Fiscal
2020”).
Summary:
Third Quarter Fiscal 2020
- Same store sales ("SSS") up 2.1%1
- GAAP diluted earnings per share ("EPS") of $(0.84)
- Non-GAAP diluted EPS of $(0.76)2
- Net cash provided by operating activities of $113.5 million
year to date
- Free cash flow of $18.2 million year to date2
Fiscal 2020 Guidance
- Fiscal 2020 same store sales down 1.7% to down 1.0% and total
sales of $6.01 billion - $6.05 billion
- Fiscal 2020 GAAP operating income of $147 - $167 million and
non-GAAP operating income of $270 - $280 million2
- Fiscal 2020 GAAP diluted EPS of $1.21 - $1.52 and non-GAAP
diluted EPS of $3.11 - $3.292
Fiscal Q3'20
Fiscal Q3'19
YTD Fiscal 2020
YTD Fiscal 2019
Revenue ($ in millions)
$
1,187.7
$
1,191.7
$
3,983.8
$
4,092.4
Same store sales % change1
2.1
%
1.6
%
(0.4
)%
1.0
%
GAAP
Operating income (loss)
$
(39.9
)
$
(48.8
)
$
(64.9
)
$
(681.1
)
Operating income (loss) as % of sales
(3.4
)%
(4.1
)%
(1.6
)%
(16.6
)%
GAAP Diluted EPS
$
(0.84
)
$
(0.74
)
$
(2.05
)
$
(10.31
)
Non-GAAP(2)
Non-GAAP operating income (loss)
$
(29.3
)
$
(38.9
)
$
48.0
$
33.8
Non-GAAP operating income (loss) as % of
sales
(2.5
)%
(3.3
)%
1.2
%
0.8
%
Non-GAAP Diluted EPS
$
(0.76
)
$
(1.06
)
$
(0.17
)
$
(0.35
)
(1)
Same store sales include physical store
sales and eCommerce sales.
(2)
See non-GAAP reconciliation page.
"We delivered positive same store sales and improved
profitability year over year and ahead of our guidance as we
continued to drive our Path to Brilliance transformation,” said
Virginia C. Drosos, Chief Executive Officer. “As we approach the
key selling weeks ahead, we are focused on successfully executing
our customer inspired holiday plans featuring new on-trend
merchandise, enhanced eCommerce capabilities, and more relevant and
targeted marketing campaigns. Our financial guidance embeds the
progress we have seen year to date balanced with our expectation
for a competitive retail holiday environment."
Change from previous
year
Third Quarter Fiscal 2020
Same store sales
Non-same store sales,
net
Total sales at constant
exchange rate
Exchange translation
impact
Total sales as
reported
Total sales (in
millions)
Kay
3.8
%
(0.3
)%
3.5
%
na
3.5
%
$
466.7
Zales
2.8
%
(3.9
)%
(1.1
)%
na
(1.1
)%
$
220.3
Jared
(2.9
)%
(1.3
)%
(4.2
)%
na
(4.2
)%
$
211.3
Piercing Pagoda
12.4
%
(1.2
)%
11.2
%
na
11.2
%
$
68.3
James Allen
15.8
%
—
%
15.8
%
na
15.8
%
$
60.8
Peoples
(4.2
)%
(1.2
)%
(5.4
)%
(1.4
)%
(6.8
)%
$
37.1
Regional banners
(16.4
)%
(45.3
)%
(61.7
)%
—
%
(61.7
)%
$
6.2
North America segment
2.9
%
(2.2
)%
0.7
%
(0.1
)%
0.6
%
$
1,070.7
International segment
(5.2
)%
(3.2
)%
(8.4
)%
(4.0
)%
(12.4
)%
$
106.4
Other(1)
na
73.8
%
73.8
%
—
%
73.8
%
$
10.6
Signet
2.1
%
(1.9
)%
0.2
%
(0.5
)%
(0.3
)%
$
1,187.7
(1)
Includes sales from Signet’s diamond
sourcing initiative.
Third quarter Fiscal
2020
Third quarter Fiscal
2019
GAAP Operating income (loss) in
millions
$
% of sales
$
% of sales
North America segment
$
(5.2
)
(0.5
)%
$
(19.5
)
(1.8
)%
International segment
(5.1
)
(4.8
)%
(4.4
)
(3.6
)%
Other
(29.6
)
nm
(24.9
)
nm
Total GAAP operating income (loss)
$
(39.9
)
(3.4
)%
$
(48.8
)
(4.1
)%
Third quarter Fiscal
2020
Third quarter Fiscal
2019
Non-GAAP Operating income (loss) in
millions
$
% of sales
$
% of sales
North America segment
$
(3.8
)
(0.4
)%
$
(19.5
)
(1.8
)%
International segment
(5.1
)
(4.8
)%
(4.4
)
(3.6
)%
Other
(20.4
)
nm
(15.0
)
nm
Total Non-GAAP operating income (loss)
$
(29.3
)
(2.5
)%
$
(38.9
)
(3.3
)%
Third Quarter 2020 Financial Highlights
Signet's total sales were $1.19 billion, down 0.3%, in the 13
weeks ended November 2, 2019 on a reported basis and up 0.2% on a
constant currency basis. Total same store sales grew 2.1%
year-over-year.
eCommerce sales were $139.3 million, up 11.4% year over year.
eCommerce sales accounted for 11.7% of sales, up from 10.5% of
total sales in the prior year quarter. Brick and mortar same store
sales grew 0.9%.
North America payment plan participation rate, including both
credit and leasing sales, was 52.4% versus 53.3% in the prior year
third quarter.
By operating segment:
North America
- North America same store sales grew 2.9%. Average transaction
value ("ATV") increased 0.5% and the number of transactions
increased 2.8%. Kay and Jared same store sales included a strategic
decision to offer higher levels of clearance to accelerate
inventory reduction ahead of receipt of new holiday
merchandise.
- eCommerce sales grew 13.0%, and brick and mortar same store
sales grew 1.6%. James Allen sales grew 15.8% and North America
eCommerce sales excluding James Allen grew 10.6%.
- Bridal and fashion category sales grew on a same store sales
basis. Bridal performance was led by growth in the Enchanted Disney
Fine Jewelry®, Vera Wang Love®, Neil Lane® and Leo® collections,
partially offset by declines in the Ever Us® and Tolkowsky
collections. Fashion growth was driven by on trend collections
including gold fashion jewelry, the Love+Be Loved collection™,
diamond fashion initiatives and Disney. The watches and other
categories declined on a same store sales basis with the other
category performance primarily driven by declines in Pandora®.
International
- International same store sales decreased 5.2%. ATV and the
number of transactions decreased 1.4% and 4.3%, respectively. Sales
declined across categories and continued to reflect a difficult
operating environment in the UK.
GAAP gross margin was $367.7 million, or 31.0% of sales, down 20
bps versus the prior year quarter. Gross margin rate reflected: 1)
transformation cost savings, 2) higher credit revenue share
payments; and 3) lower merchandise margin including an increase in
clearance sales to accelerate inventory reduction. In the current
year quarter, an additional charge of $1.4 million was taken
related to inventory that the company previously discontinued as
part of its transformation plan. Excluding this charge, non-GAAP
gross margin was $369.1 million, or 31.1%, flat versus the prior
year quarter.
SGA was $398.4 million, or 33.5% of sales, compared to $410.3
million, or 34.4% of sales in the prior year. Changes in SGA were
driven by: 1) lower store staff costs inclusive of closed stores,
2) net transformation cost savings; and 3) an increase in
advertising.
GAAP operating income (loss) was $(39.9) million or (3.4)% of
sales, compared to $(48.8) million, or (4.1)% of sales in the prior
year third quarter. The operating loss change reflected: 1) net
transformation cost savings, 2) lower net impact of credit
including higher revenue share payments, 3) higher levels of
clearance to accelerate inventory reduction ahead of receipt of new
holiday merchandise; and 4) an increase in advertising.
Non-GAAP operating income was $(29.3) million, or (2.5)% of
sales, compared to $(38.9) million, or (3.3)% of sales in prior
year third quarter. Non-GAAP operating income excluded $10.6
million in restructuring charges related to the Path to Brilliance
transformation plan.
Other non-operating income of $7.0 million includes a $6.7
million net gain related to the completion of the company's debt
refinancing. The net gain includes an $8.7 million net gain on the
early extinguishment of senior notes somewhat offset by a $2.0
million write-off of unamortized debt issuance costs related to
termination of the company's prior credit facility. For additional
details of the refinancing transaction please see Form 10-Q.
The current quarter GAAP effective tax rate of 14.5% was
primarily driven by pre-tax earnings mix by jurisdiction. The
non-GAAP effective tax rate was 17.0% which was also primarily
driven by pre-tax earnings mix by jurisdiction.
GAAP EPS was $(0.84), including a $0.20 charge related to the
Path to Brilliance transformation plan and a $0.13 net gain on
early extinguishment of debt and $0.01 tax impact related to these
items. Excluding these items, EPS was $(0.76) on a non-GAAP
basis.
GAAP and non-GAAP EPS in the quarter are based on net income
(loss) available to common shareholders as the preferred shares are
anti-dilutive and excluded from the ending share count due to the
level of third quarter net income (loss).
Balance Sheet and Statement of Cash Flows
Net cash provided by operating activities was $113.5 million
year to date and free cash flow was $18.2 million year to date.
Free cash flow benefited from significantly lower use of cash for
inventory.
Cash and cash equivalents were $188.6 million, compared to
$130.7 million at the prior year quarter-end. Total debt, including
short-term and long-term debt and excluding operating lease
liabilities, was $793.8 million, compared to $983.0 million at the
prior year quarter-end.
Signet Path to Brilliance Expected Savings and Restructuring
Costs
In Fiscal 2020, the company expects net cost savings of $70
million - $80 million. The company expects 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 2020, the Company’s preliminary estimate for pre-tax
charges related to cost reduction activities ranges from $65
million - $75 million, of which $46 million - $58 million are
expected to be cash charges. The company's estimate for pre-tax
charges in Fiscal Years 2019 - 2021 is a range of $200 million -
$220 million, of which $105 million - $115 million are expected to
be cash charges.
In Fiscal 2020, the company expects to close approximately 150
stores, with 86 closures in the fiscal year to date and limited new
store openings for the full year. The company expects it will have
reduced its store base by approximately 12% over the three-year
period from Fiscal Years 2018 - 2020, materially reducing its
exposure to lower grade malls and simplifying the portfolio by
exiting most of its regional banners.
Financial Guidance:
Fiscal 2020
Same store sales
down 1.7% - down 1.0%
Total sales
$6.01 billion - $6.05 billion
GAAP operating income
$147 million - $167 million
Non-GAAP operating income
$270 million - $280 million
GAAP diluted EPS
$1.21 - $1.52
Non-GAAP diluted EPS
$3.11 - $3.29
Share count
51.8 million
GAAP tax rate
17.0% - 18.3%
Non-GAAP tax rate
15.9% - 16.3%
Capital expenditures
$135 million - $150 million
Net selling square footage
down 2.5% - down 3.0%
The above Fiscal 2020 guidance reflects the following
assumptions:
- GAAP and non-GAAP operating profit and EPS guidance is
inclusive of U.S. List 4 tariff impact enacted in September 2019
which are not expected to be material to Fiscal 2020 results.
- Same store sales guidance includes an unfavorable impact of 25
bps related to a timing shift of service plan revenue
recognized.
- Expected unfavorable $190 million impact on revenues due to
store closings.
- Company plans to close approximately 150 stores in Fiscal 2020
and open 35 stores inclusive of repositioning stores from mall to
off mall locations. Net selling square footage is expected to
decline approximately 2.5% - 3.0%.
- Credit outsourcing is expected to have a modestly positive
year-over-year impact on operating profit.
- Transformation program net savings goal of $70 million - $80
million.
- Pre-tax charges of $65 million - $75 million related to the
transformation plan.
- Interest expense of $38 million - $40 million.
- For purposes of calculating both GAAP and non-GAAP EPS, the
company expects to use the basic share count for the first three
quarters and the full year, and the diluted share count for the
fourth quarter.
- Non-GAAP EPS guidance of $3.11 - $3.29 excludes restructuring
charges associated with the transformation plan, goodwill
impairment charges and gain on early extinguishment of debt.
Q4 Fiscal 2020
Same store sales
down 4.0% - down 2.0%
Total sales
$2.03 billion - $2.07 billion
GAAP operating income
$212 million - $232 million
Non-GAAP operating income
$222 million - $232 million
GAAP diluted EPS
$2.99 - $3.26
Non-GAAP diluted EPS
$3.01 - $3.16
Share count
59.3 million
GAAP tax rate
11.6% - 12.9%
Non-GAAP tax rate
15.0% - 15.6%
The above Q4 Fiscal 2020 guidance reflects the following
assumptions:
- GAAP and non-GAAP operating profit and EPS guidance is
inclusive of U.S. List 4 tariff impact enacted in September 2019
which are not expected to be material to fourth quarter Fiscal 2020
results.
- Expected unfavorable $55 million impact on revenues due to
store closings.
- Pre-tax charges of $0 million - $10 million related to the
transformation plan.
- Interest expense of $10 million - $12 million.
- GAAP and non-GAAP EPS guidance is calculated using net income
before preferred dividend and applying fully diluted share
count.
- Non-GAAP EPS guidance of $3.01 - $3.16 excludes restructuring
charges associated with the transformation plan.
Conference Call:
A conference call is scheduled today at 7:30 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: 7889135
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.
Holiday Sales Press Release Timing:
Signet Jewelers intends to announce its holiday sales results
via a press release before market open on Thursday, January 16,
2020.
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,
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, 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 which could cause the actual results to not
be realized, including, but not limited to: market conditions, or
other factors that relate to us, including 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; our ability to achieve the
benefits related to the outsourcing of the credit portfolio sale
due to technology disruptions, future financial results and
operating results and/or disruptions arising from changes to or
termination of the non-prime outsourcing agreement requiring
transition to alternative arrangements through other providers or
alternative payment options; 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 failure to adequately address the
List 4 tariff impact and or imposition of additional duties,
tariffs, taxes and other charges or other barriers to trade or
impacts from trade relations; 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”
and "Forward-Looking Statements" sections 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 and the "Safe Harbor Statements" in
current reports on Form 8-K 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
U.S. (“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 greater clarity to management and investors.
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 which 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
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.
39 weeks ended
(in millions)
November 2, 2019
November 3, 2018
Net cash provided by operating
activities
$
113.5
$
313.5
Purchase of property, plant and
equipment
(95.3
)
(93.4
)
Free cash flow
$
18.2
$
220.1
39 weeks ended
(in millions)
November 2, 2019
November 3, 2018
Free cash flow
$
18.2
$
220.1
Proceeds from sale of in-house finance
receivables
—
(445.5
)
Adjusted free cash flow
$
18.2
$
(225.4
)
13 weeks ended
39 weeks ended
(in millions)
November 2, 2019
November 3, 2018
November 2, 2019
November 3, 2018
Gross margin
$
367.7
$
371.2
$
1,325.8
$
1,283.0
Restructuring charges - cost of sales
1.4
—
5.8
63.2
Non-GAAP Gross Margin
$
369.1
$
371.2
$
1,331.6
$
1,346.2
13 weeks ended
39 weeks ended
(in millions)
November 2, 2019
November 3, 2018
November 2, 2019
November 3, 2018
Total GAAP operating income (loss)
$
(39.9
)
$
(48.8
)
$
(64.9
)
$
(681.1
)
Charges related to transformation plan
10.6
9.5
65.2
98.8
Loss related to goodwill and intangible
impairment
—
—
47.7
448.7
Loss related to sale of non-prime
receivables
—
0.4
—
167.4
Total non-GAAP operating income (loss)
$
(29.3
)
$
(38.9
)
$
48.0
$
33.8
13 weeks ended
39 weeks ended
(in millions)
November 2, 2019
November 3, 2018
November 2, 2019
November 3, 2018
North America segment GAAP operating
income (loss)
$
(5.2
)
$
(19.5
)
$
67.1
$
(561.0
)
Charges related to transformation plan
1.4
—
2.6
53.7
Loss related to goodwill and intangible
impairment
—
—
47.7
448.7
Loss related to sale of non-prime
receivables
—
—
—
160.4
North America segment non-GAAP operating
income (loss)
$
(3.8
)
$
(19.5
)
$
117.4
$
101.8
13 weeks ended
39 weeks ended
(in millions)
November 2, 2019
November 3, 2018
November 2, 2019
November 3, 2018
International segment GAAP operating
income (loss)
$
(5.1
)
$
(4.4
)
$
(14.1
)
$
(18.1
)
Charges related to transformation plan
—
—
—
3.8
International segment non-GAAP operating
income (loss)
$
(5.1
)
$
(4.4
)
$
(14.1
)
$
(14.3
)
13 weeks ended
39 weeks ended
(in millions)
November 2, 2019
November 3, 2018
November 2, 2019
November 3, 2018
Other segment GAAP operating income
(loss)
$
(29.6
)
$
(24.9
)
$
(117.9
)
$
(102.0
)
Charges related to transformation plan
9.2
9.5
62.6
41.3
Loss related to sale of non-prime
receivables
—
0.4
—
7.0
Other segment non-GAAP operating income
(loss)
$
(20.4
)
$
(15.0
)
$
(55.3
)
$
(53.7
)
13 weeks ended
November 2, 2019
November 3, 2018
GAAP effective tax rate
14.5
%
49.4
%
Charges related to transformation plan
(4.5
)%
(4.0
)%
Gain on early extinguishment of debt
7.0
%
—
%
Loss related to sale of non-prime
receivables
—
%
(0.2
)%
GAAP quarterly impact of annual tax
benefit
—
%
(39.5
)%
Non-GAAP effective tax rate
17.0
%
5.7
%
13 weeks ended
November 2, 2019
November 3, 2018
GAAP Diluted EPS
$
(0.84
)
$
(0.74
)
Charges related to transformation plan
0.20
0.18
Gain on early extinguishment of debt
(0.13
)
—
Loss related to sale of non-prime
receivables
—
0.01
GAAP quarterly impact of annual tax
benefit
—
(0.47
)
Tax impact of items above
0.01
(0.04
)
Non-GAAP Diluted EPS
$
(0.76
)
$
(1.06
)
Fiscal 2020 Guidance Low End
Fiscal 2020 Guidance High End
2020 GAAP operating income
$
147.0
$
167.0
Charges related to transformation plan
75.0
65.0
Loss related to goodwill and intangible
impairment
48.0
48.0
2020 Non-GAAP operating income
$
270.0
$
280.0
Fiscal 2020 Guidance Low End
Fiscal 2020 Guidance High End
2020 GAAP Diluted EPS
$
1.21
$
1.52
Gain on early extinguishment of debt
(0.13
)
(0.13
)
Charges related to transformation plan
1.45
1.26
Loss related to goodwill and intangible
impairment
0.92
0.92
Tax impact of items above
(0.34
)
(0.28
)
2020 Non-GAAP Diluted EPS
$
3.11
$
3.29
Fiscal 2020 Guidance Low End
Fiscal 2020 Guidance High End
2020 GAAP effective tax rate
17.0
%
18.3
%
Gain on early extinguishment of debt
(0.2
)%
(0.2
)%
Charges related to transformation plan
3.8
%
2.7
%
Loss related to goodwill and intangible
impairment
(4.7
)%
(4.5
)%
2020 Non-GAAP effective tax rate
15.9
%
16.3
%
Fiscal Q4'20 Guidance Low End
Fiscal Q4'20 Guidance High
End
Q4 2020 GAAP operating profit
$
212.0
$
232.0
Charges related to transformation plan
10.0
—
Q4 2020 Non-GAAP operating profit
$
222.0
$
232.0
Fiscal Q4'20 Guidance Low End
Fiscal Q4'20 Guidance High
End
Q4 2020 GAAP Diluted EPS
$
2.99
$
3.26
Charges related to transformation plan
0.17
—
Tax impact of item above
(0.04
)
—
GAAP impact of annual tax expense
(0.11
)
(0.10
)
Q4 2020 Non-GAAP Diluted EPS
$
3.01
$
3.16
Fiscal Q4'20 Guidance Low End
Fiscal Q4'20 Guidance High
End
Q4 2020 GAAP effective tax rate
11.6
%
12.9
%
Charges related to transformation plan
0.6
%
—
GAAP impact of annual tax expense
2.8
%
2.7
%
Q4 2020 Non-GAAP effective tax rate
15.0
%
15.6
%
Condensed Consolidated Statements of Operations
(Unaudited)
13 weeks ended
39 weeks ended
(in millions, except per share
amounts)
November 2, 2019
November 3, 2018
November 2, 2019
November 3, 2018
Sales
$
1,187.7
$
1,191.7
$
3,983.8
$
4,092.4
Cost of sales
(818.6
)
(820.5
)
(2,652.2
)
(2,746.2
)
Restructuring charges - cost of sales
(1.4
)
—
(5.8
)
(63.2
)
Gross margin
367.7
371.2
1,325.8
1,283.0
Selling, general and administrative
expenses
(398.4
)
(410.3
)
(1,285.0
)
(1,337.9
)
Credit transaction, net
—
(0.4
)
—
(167.4
)
Restructuring charges
(9.2
)
(9.5
)
(59.4
)
(35.6
)
Goodwill and intangible impairments
—
—
(47.7
)
(448.7
)
Other operating income, net
—
0.2
1.4
25.5
Operating income (loss)
(39.9
)
(48.8
)
(64.9
)
(681.1
)
Interest expense, net
(8.6
)
(10.6
)
(27.9
)
(28.9
)
Other non-operating income
7.0
0.3
7.5
1.4
Income (loss) before income taxes
(41.5
)
(59.1
)
(85.3
)
(708.6
)
Income tax benefit
6.0
29.2
3.7
159.1
Net income (loss)
$
(35.5
)
$
(29.9
)
$
(81.6
)
$
(549.5
)
Dividends on redeemable convertible
preferred shares
(8.2
)
(8.2
)
(24.6
)
(24.6
)
Net income (loss) attributable to common
shareholders
$
(43.7
)
$
(38.1
)
$
(106.2
)
$
(574.1
)
Earnings (loss) per common share:
Basic
$
(0.84
)
$
(0.74
)
$
(2.05
)
$
(10.31
)
Diluted
$
(0.84
)
$
(0.74
)
$
(2.05
)
$
(10.31
)
Weighted average common shares
outstanding:
Basic
51.8
51.5
51.7
55.7
Diluted
51.8
51.5
51.7
55.7
Dividends declared per common share
$
0.37
$
0.37
$
1.11
$
1.11
Condensed Consolidated Balance Sheets (Unaudited)
(in millions, except par value per share
amount)
November 2, 2019
February 2, 2019
November 3, 2018
Assets
Current assets:
Cash and cash equivalents
$
188.6
$
195.4
$
130.7
Accounts receivable
20.8
23.7
14.1
Other current assets
207.2
244.0
218.2
Income taxes
2.7
5.8
—
Inventories
2,519.4
2,386.9
2,647.1
Total current assets
2,938.7
2,855.8
3,010.1
Non-current assets:
Property, plant and equipment, net of
accumulated depreciation of $1,337.1, $1,282.8 and $1,283.4,
respectively
751.2
800.5
810.4
Operating lease right-of-use assets
1,684.0
—
—
Goodwill
248.8
296.6
509.0
Intangible assets, net
264.2
265.0
340.2
Other assets
196.4
181.2
201.6
Deferred tax assets
18.3
21.0
36.2
Total assets
$
6,101.6
$
4,420.1
$
4,907.5
Liabilities, Redeemable convertible
preferred shares, and Shareholders’ equity
Current liabilities:
Loans and overdrafts
$
5.0
$
78.8
$
322.6
Accounts payable
333.9
153.7
339.6
Accrued expenses and other current
liabilities
434.6
502.8
431.3
Deferred revenue
267.3
270.0
253.1
Operating lease liabilities
324.9
—
—
Income taxes
17.4
27.7
19.1
Total current liabilities
1,383.1
1,033.0
1,365.7
Non-current liabilities:
Long-term debt
788.8
649.6
660.4
Operating lease liabilities
1,448.9
—
—
Other liabilities
120.4
224.1
233.2
Deferred revenue
693.2
696.5
671.7
Deferred tax liabilities
—
—
12.7
Total liabilities
4,434.4
2,603.2
2,943.7
Commitments and contingencies
Series A redeemable convertible preferred
shares of $.01 par value: authorized 500 shares, 0.625 shares
outstanding (February 2, 2019 and November 3, 2018: 0.625 shares
outstanding)
616.5
615.3
614.8
Shareholders’ equity:
Common shares of $0.18 par value:
authorized 500 shares, 52.3 shares outstanding (February 2, 2019
and November 3, 2018: 51.9 outstanding)
12.6
12.6
15.7
Additional paid-in capital
242.3
236.5
294.2
Other reserves
0.4
0.4
0.4
Treasury shares at cost: 17.7 shares
(February 2, 2019: 18.1 shares; November 3, 2018: 35.3 shares)
(984.8
)
(1,027.3
)
(2,418.0
)
Retained earnings
2,079.7
2,282.2
3,763.5
Accumulated other comprehensive loss
(299.5
)
(302.8
)
(306.8
)
Total shareholders’ equity
1,050.7
1,201.6
1,349.0
Total liabilities, redeemable convertible
preferred shares and shareholders’ equity
$
6,101.6
$
4,420.1
$
4,907.5
Condensed Consolidated Statements of Cash Flows
(Unaudited)
39 weeks ended
(in millions)
November 2, 2019
November 3, 2018
Cash flows from operating
activities
Net income (loss)
$
(81.6
)
$
(549.5
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Amortization of operating lease assets
262.9
—
Depreciation and amortization
129.5
138.4
Amortization of unfavorable leases and
contracts
(4.1
)
(5.9
)
Share-based compensation
13.0
15.5
Deferred taxation
(0.4
)
(113.2
)
Credit transaction, net
—
160.4
Goodwill and intangible impairments
47.7
448.7
Restructuring charges
17.9
80.2
Other non-cash movements
(9.4
)
(3.3
)
Changes in operating assets and
liabilities:
Decrease in accounts receivable
2.7
55.1
Proceeds from sale of in-house finance
receivables
—
445.5
Decrease in other assets and other
receivables
4.0
31.9
Increase in inventories
(133.0
)
(456.6
)
Increase in accounts payable
183.7
106.5
Decrease in accrued expenses and other
liabilities
(30.5
)
(7.3
)
Change in operating lease liabilities
(270.9
)
—
Decrease in deferred revenue
(6.3
)
(31.8
)
(Decrease) increase in income taxes
payable
(7.6
)
2.0
Pension plan contributions
(4.1
)
(3.1
)
Net cash provided by operating
activities
113.5
313.5
Investing activities
Purchase of property, plant and
equipment
(95.3
)
(93.4
)
Proceeds from sale of assets
—
5.5
Purchase of available-for-sale
securities
(11.7
)
(0.6
)
Proceeds from sale of available-for-sale
securities
7.1
9.0
Net cash used in investing activities
(99.9
)
(79.5
)
Financing activities
Dividends paid on common shares
(58.0
)
(59.8
)
Dividends paid on redeemable convertible
preferred shares
(23.4
)
(23.4
)
Repurchase of common shares
—
(485.0
)
Proceeds from term loans
100.0
—
Repayments of term loans
(294.9
)
(22.3
)
Settlement of senior notes, including
third party fees
(240.9
)
—
Proceeds from revolving credit
facilities
562.0
698.0
Repayments of revolving credit
facilities
(19.0
)
(416.0
)
Payment of debt issuance costs
(7.3
)
—
Repayments of bank overdrafts
(35.0
)
(10.1
)
Other financing activities
1.0
(2.1
)
Net cash used in financing activities
(15.5
)
(320.7
)
Cash and cash equivalents at beginning of
period
195.4
225.1
Decrease in cash and cash equivalents
(1.9
)
(86.7
)
Effect of exchange rate changes on cash
and cash equivalents
(4.9
)
(7.7
)
Cash and cash equivalents at end of
period
$
188.6
$
130.7
Real Estate Portfolio:
Signet has a diversified real estate portfolio. On November 2,
2019, Signet had 3,274 stores totaling 4.7 million square feet of
selling space. In the third quarter, store count decreased by 10
and square feet of selling space decreased 0.0%. Compared to year
end Fiscal 2019, store count decreased by 60 and square feet of
selling space decreased 1.3%.
Store count by banner
February 2, 2019
Openings
Closures
November 2, 2019
Kay
1,214
16
(36
)
1,194
Zales
658
5
(9
)
654
Peoples
123
—
(5
)
118
Jared
256
1
(7
)
250
Piercing Pagoda
574
4
(8
)
570
Regional banners
32
—
(5
)
27
North America segment
2,857
26
(70
)
2,813
H.Samuel
288
—
(11
)
277
Ernest Jones
189
—
(5
)
184
International segment
477
—
(16
)
461
Signet
3,334
26
(86
)
3,274
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191205005199/en/
Investors: Randi Abada SVP Corporate Finance Strategy
& Investor Relations +1 330 668 3489
randi.abada@signetjewelers.com Media: Colleen Rooney Chief
Communications Officer +1 330 668 5932
colleen.rooney@signetjewelers.com David Bouffard VP Corporate
Affairs +1 330 668 5369 david.bouffard@signetjewelers.com
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