Signet Jewelers Limited (“Signet”) (NYSE:SIG), the world's
largest retailer of diamond jewelry, today announced its sales for
the 9 weeks ended January 4, 2020 (“Holiday Season”).
Holiday Season Sales
- Same store sales up 1.6% with North America same store sales up
2.0%
- eCommerce sales up 13.5% and brick and mortar same store sales
down 0.2%
Fiscal 2020 Guidance
- Raising same store sales to up 0.1% with sales of $6.1
billion
- Raising Fiscal 2020 GAAP operating income to $179 - $189
million and non-GAAP operating income to $302 - $307 million3
- Raising Fiscal 2020 GAAP diluted EPS to $1.70 - $1.86 and
non-GAAP diluted EPS to $3.61 - $3.693
Fourth Quarter Fiscal 2020 Guidance
- Raising same store sales to up 1.1% with sales of $2.12
billion
- Raising Q4 GAAP operating income to $244 - $254 million and
non-GAAP operating income to $254 - $259 million3
- Raising Q4 GAAP diluted EPS to $3.42- $3.56 and non-GAAP
diluted EPS to $3.44 - $3.523
Virginia C. Drosos, Chief Executive Officer, commented, “We
delivered holiday same store sales growth ahead of our guidance as
we continued to implement year two of our Path to Brilliance
transformation. Product newness, investments in our digital
capabilities, and more targeted marketing campaigns drove both
eCommerce and brick and mortar growth in North America. I would
like to sincerely thank our 30,000 team members, whose dedication
and customer focus enabled our strong execution this holiday season
and positive revision to our Fiscal 2020 guidance.”
Change from previous
year
Holiday Season
Fiscal 2020
Same store sales1
Non-same store sales,
net
Total sales at constant
exchange rate
Exchange translation
impact
Total sales as
reported
Total sales (in
millions)
Kay
0.2%
(2.0)%
(1.8)%
na
(1.8)%
$
713.6
Zales
5.4%
(1.8)%
3.6%
na
3.6%
$
411.9
Jared
(3.5)%
(2.4)%
(5.9)%
na
(5.9)%
$
304.9
Piercing Pagoda
6.9%
0.3%
7.2%
na
7.2%
$
88.3
James Allen
26.9%
—%
26.9%
na
26.9%
$
64.1
Peoples
4.5%
(2.0)%
2.5%
1.3%
3.8%
$
66.3
Regional banners
(10.4)%
(44.3)%
(54.7)%
—%
(54.7)%
$
10.2
North America segment
2.0%
(2.5)%
(0.5)%
—%
(0.5)%
$
1,659.3
International segment
(3.1)%
(3.5)%
(6.6)%
2.2%
(4.4)%
$
149.5
Other (2)
na
(25.2)%
(25.2)%
—%
(25.2)%
$
8.6
Signet
1.6%
(2.8)%
(1.2)%
0.2%
(1.0)%
$
1,817.4
(1)
Same store sales include physical store
sales and eCommerce sales.
(2)
Includes sales from Signet’s diamond
sourcing initiative.
(3)
See non-GAAP reconciliation page and see
financial guidance assumptions, including possible litigation
settlement assumptions.
Holiday Season Fiscal 2020 Sales Highlights:
Total same store sales performance grew 1.6% year over year.
eCommerce sales were $252.3 million, up 13.5% year over year. Brick
and mortar same store sales declined 0.2%.
Payment plan participation rate, including both credit and
leasing sales, decreased year over year.
By operating segment:
North America
- Same store sales increased 2.0%. Transactions grew in the
holiday season and average transaction value was flat.
- eCommerce sales grew 13.3% and brick and mortar sales grew 0.4%
on a same store sales basis.
- Bridal and Fashion category sales grew on a same store sales
basis reflecting strengthened product newness. The Other category,
predominately beads, and Watches declined.
International
- International same store sales decreased 3.1%. eCommerce sales
grew 15.8% and brick and mortar sales declined 6.0% on a same store
sales basis. Sales declined across categories and continued to
reflect a difficult operating environment in the UK.
Impact of Adoption of ASU No. 2016-13 Financial Instruments -
Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments
The Company will adopt ASU No. 2016-13 for periods beginning
February 2, 2020. The Company does not expect the adoption of this
standard to have a material impact to its financial position or
results of operations. The adoption of ASU No. 2016-13 has no
impact on revenue share income or fees paid under the company's
third party credit outsourcing agreements.
Financial Guidance:
Fiscal 2020
Current Guidance
Prior Guidance
Same store sales
up 0.1%
down 1.7% - down 1.0%
Total sales
$6.1 billion
$6.01 billion - $6.05 billion
GAAP operating income
$179 million - $189 million
$147 million - $167 million
Non-GAAP operating income
$302 million - $307 million
$270 million - $280 million
GAAP diluted EPS
$1.70 - $1.86
$1.21 - $1.52
Non-GAAP diluted EPS
$3.61 - $3.69
$3.11 - $3.29
Share count
51.8 million
51.8 million
GAAP tax rate
18.8% - 19.3%
17.0% - 18.3%
Non-GAAP tax rate
17.1% - 17.3%
15.9% - 16.3%
Capital expenditures
$135 million - $145 million
$135 million - $150 million
Net selling square footage
down approximately 2.7%
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 165 stores in Fiscal 2020
and open 38 stores. This results in a higher net store reduction of
127 stores versus prior guidance of 115 net store reduction. Net
selling square footage is now expected to decline approximately
2.7%.
- Credit outsourcing is expected to have a positive
year-over-year impact on operating profit.
- Transformation program net savings goal increased to $80
million - $90 million versus prior guidance of $70 million - $80
million.
- Pre-tax charges of $70 million - $75 million related to the
transformation plan.
- Interest expense of $37 million - $38 million versus prior
guidance of $38 million - $40 million.
- Non-GAAP EPS guidance of $3.61 - $3.69 excludes restructuring
charges associated with the transformation plan, goodwill
impairment charges and gain on early extinguishment of debt.
Q4 Fiscal 2020
Current Guidance
Prior Guidance
Same store sales
up 1.1%
down 4.0% - down 2.0%
Total sales
$2.12 billion
$2.03 billion - $2.07 billion
GAAP operating income
$244 million - $254 million
$212 million - $232 million
Non-GAAP operating income
$254 million - $259 million
$222 million - $232 million
GAAP diluted EPS
$3.42 - $3.56
$2.99 - $3.26
Non-GAAP diluted EPS
$3.44 - $3.52
$3.01 - $3.16
Share count
59.3 million
59.3 million
GAAP tax rate
13.5% - 14.1%
11.6% - 12.9%
Non-GAAP tax rate
16.4% - 16.7%
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 $5 million - $10 million related to the
transformation plan.
- Interest expense of $9 million - $10 million versus prior
guidance 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 $3.44 - $3.52 excludes restructuring
charges associated with the transformation plan.
Possible litigation settlement assumptions:
- Guidance for Fiscal 2020 and Q4 Fiscal 2020 does not reflect
the possible settlement of a previously disclosed litigation which,
if it becomes probable, would not have a material adverse effect on
our financial position. As part of settlement discussions, a
mediator’s proposal which would include a company contribution was
conditionally accepted by both parties, subject to a number of
important contingencies, including approvals. There is no assurance
that the proposed settlement will be consummated. If the possible
settlement becomes probable, GAAP guidance would be impacted. There
would be no impact on non-GAAP guidance.
Quarterly Dividend:
Signet's Board of Directors declared a quarterly cash dividend
of $0.37 per share for the fourth quarter of Fiscal 2020, payable
on February 28, 2020 to shareholders of record on January 31, 2020,
with an ex-dividend date of January 30, 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: risks relating to the
outcome of pending litigation; 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.
(in millions)
Q4 Fiscal 2020 Guidance Low
End
Q4 Fiscal 2020 Guidance High
End
Q4 2020 GAAP operating income
$
244.0
$
254.0
Charges related to transformation plan
10.0
5.0
Q4 2020 Non-GAAP operating income
$
254.0
$
259.0
Q4 Fiscal 2020 Guidance Low
End
Q4 Fiscal 2020 Guidance High
End
Q4 2020 GAAP Diluted EPS
$
3.42
$
3.56
Charges related to transformation plan
0.16
0.08
Tax impact of items above
(0.04
)
(0.02
)
GAAP impact of annual tax expense
(0.10
)
(0.10
)
Q4 2020 Non-GAAP Diluted EPS
$
3.44
$
3.52
Q4 Fiscal 2020 Guidance Low
End
Q4 Fiscal 2020 Guidance High
End
Q4 2020 GAAP effective tax rate
13.5
%
14.1
%
Charges related to transformation plan
0.5
0.2
GAAP impact of annual tax expense
2.4
2.4
Q4 2020 Non-GAAP effective tax rate
16.4
%
16.7
%
(in millions)
Fiscal 2020 Guidance Low End
Fiscal 2020 Guidance High End
2020 GAAP operating income
$
179.0
$
189.0
Charges related to transformation plan
75.0
70.0
Loss related to goodwill and intangible
impairment
48.0
48.0
2020 Non-GAAP operating income
$
302.0
$
307.0
Fiscal 2020 Guidance Low End
Fiscal 2020 Guidance High End
2020 GAAP Diluted EPS
$
1.70
$
1.86
Gain on early extinguishment of debt
(0.13
)
(0.13
)
Charges related to transformation plan
1.45
1.35
Loss related to goodwill and intangible
impairment
0.92
0.92
Tax impact of items above
(0.33
)
(0.31
)
2020 Non-GAAP Diluted EPS
$
3.61
$
3.69
Fiscal 2020 Guidance Low End
Fiscal 2020 Guidance High End
2020 GAAP effective tax rate
18.8
%
19.3
%
Gain on early extinguishment of debt
(0.2
)
(0.2
)
Charges related to transformation plan
2.8
2.4
Loss related to goodwill and intangible
impairment
(4.3
)
(4.2
)
2020 Non-GAAP effective tax rate
17.1
%
17.3
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200116005191/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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