HAMILTON, Bermuda, Sept. 3, 2020 /PRNewswire/ -- Signet
Jewelers Limited ("Signet") (NYSE:SIG), the world's largest
retailer of diamond jewelry, today announced its results for the 13
weeks ended August 1, 2020 ("second quarter Fiscal 2021").
"Sales improved sequentially throughout the second quarter as we
reopened stores and remained agile and innovative in these
unprecedented times. During the quarter, we also scaled our new
virtual selling model, improved our merchandise assortment, and
enhanced our targeted digital marketing to a strong consumer
response," said Virginia C. Drosos,
Chief Executive Officer. "While same store sales were down 31.3% in
the quarter given store closures, same store sales turned positive
in late Q2 as we reached scale on store re-openings while driving
high double-digit growth in eCommerce. Momentum has continued into
Q3 with preliminary August same store sales of 10.9% and eCommerce
growth of 65.2%.
In response to COVID-19 impacts, we quickly pivoted to
accelerate our OmniChannel transformation while also focusing on
cash preservation. This allowed us to further invest in
'digital-first' initiatives, including new virtual selling
capabilities. In the second quarter, we served more than
300,000 customers through virtual consultations which achieved
higher than historical conversion rates. We also increased our
eCommerce distribution throughput five-fold and will continue to
invest in digital capabilities to accelerate growth and position
Signet to gain market share.
I am incredibly proud to be part of this company and want to
thank each and every team member for their extraordinary
contributions. We have been consistently guided by our purpose and
core values, prioritizing the health and safety of our employees
and customers and speaking out against racial injustice and
inequality. We continue to keep all of those who are suffering from
the COVID-19 pandemic in our thoughts and prayers and appreciate
the resilience and compassion of all front-line workers."
Second Quarter Fiscal 2021 Highlights
- Q2 same store sales ("SSS") down 31.3% (1),
reflecting eCommerce growth of 72.1% year over year. Brick and
Mortar sales improved sequentially as store openings accelerated
from approximately 20% open by end May, to 75% open by end June,
and 90% open by mid-July. Preliminary August SSS are 10.9% with
eCommerce growth of 65.2%.
- Net structural cost savings are on track to exceed $100 million in FY21. Now in the third year of
Path to Brilliance, the Company expects net savings of at least
$285 million versus its original
target of $225 million.
- GAAP earnings per share ("EPS") of $(1.73), reflects a pre-tax impairment charge of
$0.39.
- Non-GAAP diluted EPS of $(1.13).
|
|
Fiscal 21
Q2
|
|
Fiscal 20
Q2
|
|
YTD Fiscal
2021
|
|
YTD Fiscal
2020
|
Revenue ($ in
millions)
|
|
$
|
888.0
|
|
|
$
|
1,364.4
|
|
|
$
|
1,740.1
|
|
|
$
|
2,796.1
|
|
Same store sales %
change (1)
|
|
(31.3)
|
%
|
|
(1.5)
|
%
|
|
(35.2)
|
%
|
|
(1.4)
|
%
|
GAAP
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
$
|
(89.7)
|
|
|
$
|
(22.4)
|
|
|
$
|
(389.3)
|
|
|
$
|
(25.0)
|
|
Operating income
(loss) as % of sales
|
|
(10.1)
|
%
|
|
(1.6)
|
%
|
|
(22.4)
|
%
|
|
(0.9)
|
%
|
GAAP Diluted
EPS
|
|
$
|
(1.73)
|
|
|
$
|
(0.86)
|
|
|
$
|
(5.69)
|
|
|
$
|
(1.21)
|
|
Non-GAAP
(2)
|
|
|
|
|
|
|
|
|
Non-GAAP operating
income (loss)
|
|
$
|
(41.7)
|
|
|
$
|
53.1
|
|
|
$
|
(184.2)
|
|
|
$
|
77.3
|
|
Non-GAAP operating
income (loss) as % of sales
|
|
(4.7)
|
%
|
|
3.9
|
%
|
|
(10.6)
|
%
|
|
2.8
|
%
|
Non-GAAP Diluted
EPS
|
|
$
|
(1.13)
|
|
|
$
|
0.51
|
|
|
$
|
(2.72)
|
|
|
$
|
0.59
|
|
|
(1) Same store sales
include physical store sales and eCommerce sales.
(2) See non-GAAP
reconciliation page.
|
Business and Strategy Update
Consistent with the Company's digital first strategy, Signet
increased investment in Signet's OmniChannel platform, driving
growth and leveraging scale to position it for increased market
share and an even stronger leadership position in the category. The
Company has implemented a full-time virtual selling team, as well
as empowered more than 15,000 store associates to engage with
customers via virtual selling from their homes or in their
respective stores. Signet's investment in virtual selling is
producing higher levels of conversion on digital and retail foot
traffic. While the macro environment remains uncertain, the Company
believes that it is prepared, through both its virtual and physical
footprints, to serve customers wherever they want to shop and
however this upcoming holiday season unfolds.
Signet's physical footprint remains a key component of its
competitive strategy. The Company currently has more than 90% of
its total fleet open with safety prioritized through Signet's new
Love Takes Care initiative that
includes safety protocols developed with leading healthcare
professionals. The Company believes the safe shopping environment
provided by the Company's brick and mortar stores is contributing
to sequential monthly sales improvements. Signet has closed 293 of
the previously announced 380 stores in this fiscal year's footprint
optimization effort.
The Company is maintaining cost containment efforts and net
structural cost savings are on track to exceed $100 million in FY21. Now in the third year of
Path to Brilliance, the Company expects net savings of at least
$285 million versus its original
target of $225 million. A reduction
in force this quarter contributed to these cost savings. These
difficult decisions were made thoughtfully to better align the
workforce to a more streamlined structure and digitally focused
cultures.
Second Quarter 2021 Financial Highlights
Signet's total sales were $888.0
million, down 34.9% year over year, in the 13 weeks ended
August 1, 2020 on a reported basis and down 34.8% on a
constant currency basis. Total same store sales declined 31.3% year
over year. eCommerce sales were $270.1
million, up 72.1%. Brick and mortar same store sales
declined 46.0%. For safety reasons, the Company's design and
service centers were closed until later in the
quarter. Because of this, revenue recognition related to
Signet's extended service plan programs was lower than last year
and negatively impacted same store sales by roughly 450 basis
points.
|
Change
from previous year
|
|
|
Second Quarter
Fiscal 2021
|
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)
|
North America
segment
|
(30.6)
|
%
|
|
(3.0)
|
%
|
|
(33.6)
|
%
|
|
(0.1)
|
%
|
|
(33.7)
|
%
|
|
$
|
823.0
|
|
International
segment
|
(38.8)
|
%
|
|
(7.3)
|
%
|
|
(46.1)
|
%
|
|
(0.3)
|
%
|
|
(46.4)
|
%
|
|
$
|
61.0
|
|
Other segment
(1)
|
nm
|
|
|
nm
|
|
|
nm
|
|
|
nm
|
|
|
nm
|
|
|
$
|
4.0
|
|
Signet
|
(31.3)
|
%
|
|
(3.5)
|
%
|
|
(34.8)
|
%
|
|
(0.1)
|
%
|
|
(34.9)
|
%
|
|
$
|
888.0
|
|
|
(1)
Includes sales from Signet's diamond sourcing
initiative.
|
By operating segment:
North America
- North America same store sales
declined 30.6%. Average transaction value ("ATV") increased 2.0%
and the number of transactions declined 28.1%.
- eCommerce sales grew 72.7%. Brick and mortar same store sales
declined 45.3%.
- North America payment plan
participation rate, including both credit and leasing sales, for Q2
was 40.2% versus 51.4% in the prior year second quarter. The year
over year decline continues to reflect a greater proportion of
eCommerce sales in the quarter.
International
- International same store sales decreased 38.8%. ATV increased
11.4% and the number of transactions declined 42.8%.
- eCommerce sales grew 65.6%, with brick and mortar same store
sales declining 54.6%.
GAAP gross margin was $224.3
million, or 25.3% of sales, down 830 bps versus the prior
year quarter. The majority of gross margin rate decline is due to a
deleveraging on fixed costs resulting from lower sales. The
remainder of the decline resulted from Signet's lower revenue
recognition relating to extended service plan programs. The rate
decline was partially offset through structural cost savings, lower
occupancy costs and lower inventory related costs.
SGA was $265.9 million, or 29.9%
of sales, was 30 bps favorable to last year's SGA of
$411.4 million. The improvement to
SGA was primarily driven by lower labor costs and lower advertising
expense.
GAAP operating loss was $(89.7)
million or (10.1)% of sales. The loss compares to
$(22.4) million, or (1.6)% of sales
in the prior year second quarter.
Non-GAAP operating loss was $(41.7)
million, or (4.7)% of sales, compared to Non-GAAP operating
income of $53.1 million, or 3.9% of
sales in prior year second quarter. Non-GAAP operating loss
excluded $28.7 million in
restructuring charges related to the Path to Brilliance
transformation plan as well as $20.3
million related to the impairment of ROU assets and
property, plant and equipment.
|
|
Second quarter
Fiscal 2021
|
|
Second quarter
Fiscal 2020
|
GAAP Operating
income (loss) in millions
|
|
$
|
|
% of
sales
|
|
$
|
|
% of
sales
|
North America
segment
|
|
$
|
(57.0)
|
|
|
(6.9)
|
%
|
|
$
|
11.8
|
|
|
1.0
|
%
|
International
segment
|
|
(15.6)
|
|
|
(25.6)
|
%
|
|
(1.6)
|
|
|
(1.4)
|
%
|
Other
segment
|
|
(0.2)
|
|
|
nm
|
|
(9.1)
|
|
|
nm
|
Corporate and
unallocated expenses
|
|
(16.9)
|
|
|
nm
|
|
(23.5)
|
|
|
nm
|
Total GAAP operating
income (loss)
|
|
$
|
(89.7)
|
|
|
(10.1)
|
%
|
|
$
|
(22.4)
|
|
|
(1.6)
|
%
|
|
|
|
Second quarter
Fiscal 2021
|
|
Second quarter
Fiscal 2020
|
Non-GAAP Operating
income (loss) in millions
|
|
$
|
|
% of
sales
|
|
$
|
|
% of
sales
|
North America
segment
|
|
$
|
(12.0)
|
|
|
(1.5)
|
%
|
|
$
|
73.6
|
|
|
5.9
|
%
|
International
segment
|
|
(11.8)
|
|
|
(19.3)
|
%
|
|
(1.0)
|
|
|
(0.9)
|
%
|
Other
segment
|
|
(0.2)
|
|
|
nm
|
|
(6.4)
|
|
|
nm
|
Corporate and
unallocated expenses
|
|
(17.7)
|
|
|
nm
|
|
(13.1)
|
|
|
nm
|
Total Non-GAAP
operating income (loss)
|
|
$
|
(41.7)
|
|
|
(4.7)
|
%
|
|
$
|
53.1
|
|
|
3.9
|
%
|
The current quarter GAAP income tax benefit was $17.2 million compared to income tax expense of
$3.8 million in the prior year second
quarter. On a non-GAAP basis the income tax benefit was
$0.2 million.
GAAP EPS was $(1.73), including
$0.55 in restructuring charges
related to the Path to Brilliance transformation plan. Excluding
restructuring and asset impairment charges (and related tax
effects), EPS was $(1.13) 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
second quarter net loss.
Balance Sheet and Statement of Cash Flows Highlights
Signet continues to focus on cash in this economic climate, as
the Company believes it is the first defense against uncertainty
and protects its ability to fund growth initiatives. Continued cost
diligence and working capital efficiency led to a reduction in
inventory of $79 million to the prior
year second quarter and cash flow from operating activities
of $156.1 million.
Cash and cash equivalents were $1.20
billion, compared to $271.5
million at the prior year quarter end. Signet notes that
long term debt of $1.34 billion,
compared to $628.2 million at the
prior year quarter end.
Quarterly Dividend:
Signet's Board of Directors has elected to maintain the
temporary suspension of the dividend program on the common shares
and has elected to pay the November quarterly dividend on its
preference shares in kind.
Outlook:
While Signet is encouraged by customers' response to the
Company's digital first strategy and investments, looking to the
second half of this fiscal year, the Company is not providing
financial guidance. This is due to the continuing uncertainty
surrounding multiple factors including the magnitude and potential
resurgence of COVID-19 in key trade areas, extended duration of
heightened unemployment, supply chain disruptions and macro or
governmental influences on consumers' ability to spend,
particularly in discretionary categories like jewelry.
Further, there can be no assurance that August sales
trends will continue for the remainder of the third quarter and are
not indicative of future performance.
Conference Call:
A conference call is scheduled for September 3, 2020 at
8:30 a.m. ET and a simultaneous audio
webcast is available at www.signetjewelers.com. The call details
are:
Toll Free Dial-in: +1-888-317-6003
International Dial-in: +1-412-317-6061
Access code: 8856605
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 3,200 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 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 which could cause the actual results to not
be realized, including, but not limited to: the negative
impacts that the COVID-19 pandemic has had, and will continue to
have, on Signet's business, financial condition, profitability and
cash flows; the effect of steps we take in response to the
pandemic; the severity and duration of the pandemic, including
whether there is a "second wave" and whether it is necessary to
temporarily reclose our stores, distribution centers and corporate
facilities or for our suppliers and vendors to temporarily reclose
their facilities; the pace of recovery when the pandemic subsides
and the heightened impact it has on many of the risks described
herein, including without limitation risks relating to disruptions
in our supply chain, consumer behaviors such as spending and
willingness to congregate in shopping centers and the impact on
demand of our products, our level of indebtedness and covenant
compliance, availability of adequate capital, our ability to
execute our business plans, our lease obligations and relationships
with our landlords, and asset impairments; general economic or
market conditions; financial market risks; our ability to optimize
Signet's transformation initiative; a decline in consumer spending
or deterioration in consumer financial position; changes to
regulations relating to customer credit; disruption in the
availability of credit for customers and customer inability to meet
credit payment obligations; 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; deterioration in the performance of individual
businesses or of the Company's market value relative to its book
value, resulting in impairments of long-lived assets or intangible
assets or other adverse financial consequences; the volatility of
our stock price; the impact of financial covenants, credit ratings
or interest volatility on our ability to borrow; our ability to
maintain adequate levels of liquidity for our cash needs, including
debt obligations, payment of dividends, and capital expenditures as
well as the ability of our customers, suppliers and lenders to
access sources of liquidity to provide for their own cash needs;
changes in our credit rating; potential regulatory changes, global
economic conditions or other developments related to the
United Kingdom's exit from the
European Union; exchange rate fluctuations; the cost, availability
of and demand for diamonds, gold and other precious metals;
stakeholder reactions to disclosure regarding the source and use of
certain minerals; seasonality of Signet's business; the
merchandising, pricing and inventory policies followed by Signet
and failure to manage inventory levels; Signet's relationships with
suppliers and ability to obtain merchandise that customers wish to
purchase; the failure to adequately address the impact of existing
tariffs and/or the imposition of additional duties, tariffs, taxes
and other charges or other barriers to trade or impacts from trade
relations; the level of competition and promotional activity in the
jewelry sector; the development and maintenance of Signet's
OmniChannel retailing and ability to increase digital sales;
changes in consumer attitudes regarding jewelry and failure to
anticipate and keep pace with changing fashion trends; changes in
the supply and consumer acceptance of and demand for gem quality
lab created diamonds and adequate identification of the use of
substitute products in our jewelry; ability to execute successful
marketing programs and manage social media; the ability to optimize
Signet's real estate footprint; the ability to satisfy the
accounting requirements for "hedge accounting," or the default or
insolvency of a counterparty to a hedging contract; the performance
of and ability to recruit, train, motivate and retain qualified
sales associates; management of social, ethical and environmental
risks; the reputation of Signet and its banners; inadequacy in and
disruptions to internal controls and systems, including related to
the migration to a new financial reporting information technology
system; security breaches and other disruptions to Signet's
information technology infrastructure and databases; an adverse
development in legal or regulatory proceedings or tax matters,
including any new claims or litigation brought by employees,
suppliers, consumers or shareholders, regulatory initiatives or
investigations, and ongoing compliance with regulations and any
consent orders or other legal or regulatory decisions; failure to
comply with labor regulations; collective bargaining activity;
changes in taxation laws, 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; risks related to international laws
and Signet being a Bermuda
corporation; difficulty or delay in executing or integrating an
acquisition, business combination, major business or strategic
initiative; risks relating to the outcome of pending litigation,
including risks related to satisfaction of the conditions precedent
for our pending securities class action settlement; our ability to
protect our intellectual property or physical assets; changes in
assumptions used in making accounting estimates relating to items
such as extended service plans and pensions; the success of recent
changes in Signet's executive management team; or the impact of
weather-related incidents, natural disasters, strikes, protests,
riots or terrorism, acts of war or another public health
crisis or disease outbreak, epidemic or pandemic on Signet's
business.
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 2020
Annual Report on Form 10-K filed with the SEC on March 26,
2020 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.
Investors:
Vinnie
Sinisi
SVP Investor Relations
+1-330-665-6530
vincent.sinisi@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
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 US
("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 useful supplementary information to management and
investors in assessing the operating performance of our
business.
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 that is not in accordance with GAAP and is defined as the net
cash provided by operating activities, less purchases of property,
plant, and equipment. Free cash flow does not represent the
residual cash flow available for discretionary expenditure.
|
|
26 weeks
ended
|
(in millions)
|
|
August 1,
2020
|
|
August 3,
2019
|
Net cash provided by
operating activities
|
|
$
|
156.1
|
|
|
$
|
246.6
|
|
Purchase of property,
plant and equipment
|
|
(23.6)
|
|
|
(52.2)
|
|
Free cash
flow
|
|
$
|
132.5
|
|
|
$
|
194.4
|
|
|
|
|
|
|
|
|
13 weeks
ended
|
|
26 weeks
ended
|
(in millions)
|
|
August 1,
2020
|
|
August 3,
2019
|
|
August 1,
2020
|
|
August 3,
2019
|
Gross margin
|
|
$
|
224.3
|
|
|
$
|
458.7
|
|
|
$
|
428.5
|
|
|
$
|
958.1
|
|
Restructuring charges -
cost of sales
|
|
(0.2)
|
|
|
4.4
|
|
|
(0.6)
|
|
|
4.4
|
|
Non-GAAP Gross
Margin
|
|
$
|
224.1
|
|
|
$
|
463.1
|
|
|
$
|
427.9
|
|
|
$
|
962.5
|
|
|
|
|
|
|
|
|
13 weeks
ended
|
|
26 weeks
ended
|
(in millions)
|
|
August 1,
2020
|
|
August 3,
2019
|
|
August 1,
2020
|
|
August 3,
2019
|
Total GAAP operating
income (loss)
|
|
$
|
(89.7)
|
|
|
$
|
(22.4)
|
|
|
$
|
(389.3)
|
|
|
$
|
(25.0)
|
|
Charges related to
transformation plan
|
|
28.7
|
|
|
27.8
|
|
|
41.0
|
|
|
54.6
|
|
Asset
impairments
|
|
20.3
|
|
|
47.7
|
|
|
156.6
|
|
|
47.7
|
|
Shareholder
settlement
|
|
(1.0)
|
|
|
—
|
|
|
7.5
|
|
|
—
|
|
Total non-GAAP
operating income (loss)
|
|
$
|
(41.7)
|
|
|
$
|
53.1
|
|
|
$
|
(184.2)
|
|
|
$
|
77.3
|
|
|
|
|
|
|
|
|
13 weeks
ended
|
|
26 weeks
ended
|
(in millions)
|
|
August 1,
2020
|
|
August 3,
2019
|
|
August 1,
2020
|
|
August 3,
2019
|
North America segment
GAAP operating income
(loss)
|
|
$
|
(57.0)
|
|
|
$
|
11.8
|
|
|
$
|
(291.2)
|
|
|
$
|
40.1
|
|
Charges related to
transformation plan
|
|
27.5
|
|
|
14.1
|
|
|
36.0
|
|
|
33.4
|
|
Asset
impairments
|
|
17.5
|
|
|
47.7
|
|
|
135.4
|
|
|
47.7
|
|
North America segment
non-GAAP operating income
(loss)
|
|
$
|
(12.0)
|
|
|
$
|
73.6
|
|
|
$
|
(119.8)
|
|
|
$
|
121.2
|
|
|
|
|
|
|
|
|
13 weeks
ended
|
|
26 weeks
ended
|
(in millions)
|
|
August 1,
2020
|
|
August 3,
2019
|
|
August 1,
2020
|
|
August 3,
2019
|
International segment
GAAP operating income (loss)
|
|
$
|
(15.6)
|
|
|
$
|
(1.6)
|
|
|
$
|
(54.2)
|
|
|
$
|
(10.6)
|
|
Charges related to
transformation plan
|
|
1.0
|
|
|
0.6
|
|
|
4.6
|
|
|
1.6
|
|
Asset
impairments
|
|
2.8
|
|
|
—
|
|
|
21.2
|
|
|
—
|
|
International segment
non-GAAP operating income (loss)
|
|
$
|
(11.8)
|
|
|
$
|
(1.0)
|
|
|
$
|
(28.4)
|
|
|
$
|
(9.0)
|
|
|
|
|
|
|
|
|
13 weeks
ended
|
|
26 weeks
ended
|
(in millions)
|
|
August 1,
2020
|
|
August 3,
2019
|
|
August 1,
2020
|
|
August 3,
2019
|
Other segment GAAP
operating income (loss)
|
|
$
|
(0.2)
|
|
|
$
|
(9.1)
|
|
|
$
|
(0.5)
|
|
|
$
|
(12.9)
|
|
Charges related to
transformation plan
|
|
—
|
|
|
2.7
|
|
|
—
|
|
|
3.2
|
|
Other segment
non-GAAP operating income (loss)
|
|
$
|
(0.2)
|
|
|
$
|
(6.4)
|
|
|
$
|
(0.5)
|
|
|
$
|
(9.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks
ended
|
|
26 weeks
ended
|
(in millions)
|
|
August 1,
2020
|
|
August 3,
2019
|
|
August 1,
2020
|
|
August 3,
2019
|
Corporate and
unallocated expenses GAAP
operating income (loss)
|
|
$
|
(16.9)
|
|
|
$
|
(23.5)
|
|
|
$
|
(43.4)
|
|
|
$
|
(41.6)
|
|
Charges related to
transformation plan
|
|
0.2
|
|
|
10.4
|
|
|
0.4
|
|
|
16.4
|
|
Shareholder
settlement
|
|
(1.0)
|
|
|
—
|
|
|
7.5
|
|
|
—
|
|
Corporate and
unallocated expenses non-GAAP
operating income (loss)
|
|
$
|
(17.7)
|
|
|
$
|
(13.1)
|
|
|
$
|
(35.5)
|
|
|
$
|
(25.2)
|
|
|
|
|
|
|
13 weeks
ended
|
|
August 1,
2020
|
|
August 3,
2019
|
GAAP effective tax
rate
|
17.4
|
%
|
|
(11.8)
|
%
|
Charges related to
transformation plan
|
(10.9)
|
%
|
|
(7.1)
|
%
|
Asset
impairments
|
(5.3)
|
%
|
|
39.0
|
%
|
Shareholder
settlement
|
(0.8)
|
%
|
|
—
|
%
|
Non-GAAP effective
tax rate
|
0.4
|
%
|
|
20.1
|
%
|
|
|
|
|
|
|
|
13 weeks
ended
|
|
26 weeks
ended
|
|
|
August 1,
2020
|
|
August 3,
2019
|
|
August 1,
2020
|
|
August 3,
2019
|
GAAP Diluted
EPS
|
|
$
|
(1.73)
|
|
|
$
|
(0.86)
|
|
|
$
|
(5.69)
|
|
|
$
|
(1.21)
|
|
Charges related to
transformation plan
|
|
0.55
|
|
|
0.54
|
|
|
0.79
|
|
|
1.06
|
|
Asset
impairments
|
|
0.39
|
|
|
0.92
|
|
|
3.02
|
|
|
0.92
|
|
Shareholder
settlement
|
|
(0.02)
|
|
|
—
|
|
|
0.14
|
|
|
—
|
|
Tax impact of items
above
|
|
(0.32)
|
|
|
(0.09)
|
|
|
(0.98)
|
|
|
(0.18)
|
|
Non-GAAP Diluted
EPS
|
|
$
|
(1.13)
|
|
|
$
|
0.51
|
|
|
$
|
(2.72)
|
|
|
$
|
0.59
|
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
|
|
|
13 weeks
ended
|
|
26 weeks
ended
|
(in millions, except
per share amounts)
|
|
August 1,
2020
|
|
August 3,
2019
|
|
August 1,
2020
|
|
August 3,
2019
|
Sales
|
|
$
|
888.0
|
|
|
$
|
1,364.4
|
|
|
$
|
1,740.1
|
|
|
$
|
2,796.1
|
|
Cost of
sales
|
|
(663.9)
|
|
|
(901.3)
|
|
|
(1,312.2)
|
|
|
(1,833.6)
|
|
Restructuring charges
- cost of sales
|
|
0.2
|
|
|
(4.4)
|
|
|
0.6
|
|
|
(4.4)
|
|
Gross
margin
|
|
224.3
|
|
|
458.7
|
|
|
428.5
|
|
|
958.1
|
|
Selling, general and
administrative expenses
|
|
(265.9)
|
|
|
(411.4)
|
|
|
(624.3)
|
|
|
(886.6)
|
|
Restructuring
charges
|
|
(28.9)
|
|
|
(23.4)
|
|
|
(41.6)
|
|
|
(50.2)
|
|
Asset
impairments
|
|
(20.3)
|
|
|
(47.7)
|
|
|
(156.6)
|
|
|
(47.7)
|
|
Other operating
income, net
|
|
1.1
|
|
|
1.4
|
|
|
4.7
|
|
|
1.4
|
|
Operating income
(loss)
|
|
(89.7)
|
|
|
(22.4)
|
|
|
(389.3)
|
|
|
(25.0)
|
|
Interest expense,
net
|
|
(9.4)
|
|
|
(10.1)
|
|
|
(16.5)
|
|
|
(19.3)
|
|
Other non-operating
income, net
|
|
0.2
|
|
|
0.2
|
|
|
0.3
|
|
|
0.5
|
|
Income (loss) before
income taxes
|
|
(98.9)
|
|
|
(32.3)
|
|
|
(405.5)
|
|
|
(43.8)
|
|
Income tax
benefit
|
|
17.2
|
|
|
(3.8)
|
|
|
126.7
|
|
|
(2.3)
|
|
Net income
(loss)
|
|
$
|
(81.7)
|
|
|
$
|
(36.1)
|
|
|
$
|
(278.8)
|
|
|
$
|
(46.1)
|
|
Dividends on
redeemable convertible preferred shares
|
|
(8.3)
|
|
|
(8.2)
|
|
|
(16.5)
|
|
|
(16.4)
|
|
Net income (loss)
attributable to common shareholders
|
|
$
|
(90.0)
|
|
|
$
|
(44.3)
|
|
|
$
|
(295.3)
|
|
|
$
|
(62.5)
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(1.73)
|
|
|
$
|
(0.86)
|
|
|
$
|
(5.69)
|
|
|
$
|
(1.21)
|
|
Diluted
|
|
$
|
(1.73)
|
|
|
$
|
(0.86)
|
|
|
$
|
(5.69)
|
|
|
$
|
(1.21)
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
52.0
|
|
|
51.7
|
|
|
51.9
|
|
|
51.6
|
|
Diluted
|
|
52.0
|
|
|
51.7
|
|
|
51.9
|
|
|
51.6
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
|
$
|
—
|
|
|
$
|
0.37
|
|
|
$
|
—
|
|
|
$
|
0.74
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
|
(in millions, except
par value per share amount)
|
|
August 1,
2020
|
|
February 1,
2020
|
|
August 3,
2019
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,204.0
|
|
|
$
|
374.5
|
|
|
$
|
271.5
|
|
Accounts receivable,
net
|
|
31.5
|
|
|
38.8
|
|
|
21.8
|
|
Other current
assets
|
|
182.9
|
|
|
403.5
|
|
|
190.6
|
|
Income
taxes
|
|
251.3
|
|
|
6.3
|
|
|
2.6
|
|
Inventories,
net
|
|
2,193.1
|
|
|
2,331.7
|
|
|
2,272.1
|
|
Total current
assets
|
|
3,862.8
|
|
|
3,154.8
|
|
|
2,758.6
|
|
Non-current
assets:
|
|
|
|
|
|
|
Property, plant and
equipment, net of accumulated depreciation of
$1,119.3, $1,064.7 and $1,338.3, respectively
|
|
645.8
|
|
|
741.9
|
|
|
750.2
|
|
Operating lease
right-of-use assets
|
|
1,459.9
|
|
|
1,683.3
|
|
|
1,729.3
|
|
Goodwill
|
|
238.0
|
|
|
248.8
|
|
|
248.8
|
|
Intangible assets,
net
|
|
179.0
|
|
|
263.8
|
|
|
264.3
|
|
Other
assets
|
|
179.0
|
|
|
201.8
|
|
|
194.7
|
|
Deferred tax
assets
|
|
13.6
|
|
|
4.7
|
|
|
19.7
|
|
Total
assets
|
|
$
|
6,578.1
|
|
|
$
|
6,299.1
|
|
|
$
|
5,965.6
|
|
Liabilities,
Redeemable convertible preferred shares, and
Shareholders' equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Loans and
overdrafts
|
|
$
|
4.6
|
|
|
$
|
95.6
|
|
|
$
|
54.2
|
|
Accounts
payable
|
|
302.2
|
|
|
227.9
|
|
|
224.1
|
|
Accrued expenses and
other current liabilities
|
|
442.0
|
|
|
697.0
|
|
|
418.0
|
|
Deferred
revenue
|
|
330.9
|
|
|
266.2
|
|
|
265.4
|
|
Operating lease
liabilities
|
|
391.0
|
|
|
338.2
|
|
|
324.8
|
|
Income
taxes
|
|
28.7
|
|
|
27.7
|
|
|
25.1
|
|
Total current
liabilities
|
|
1,499.4
|
|
|
1,652.6
|
|
|
1,311.6
|
|
Non-current
liabilities:
|
|
|
|
|
|
|
Long-term
debt
|
|
1,336.1
|
|
|
515.9
|
|
|
628.2
|
|
Operating lease
liabilities
|
|
1,263.3
|
|
|
1,437.7
|
|
|
1,499.0
|
|
Other
liabilities
|
|
108.9
|
|
|
116.6
|
|
|
122.7
|
|
Deferred
revenue
|
|
699.3
|
|
|
731.5
|
|
|
699.8
|
|
Deferred tax
liabilities
|
|
129.1
|
|
|
5.2
|
|
|
—
|
|
Total
liabilities
|
|
5,036.1
|
|
|
4,459.5
|
|
|
4,261.3
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
Series A redeemable
convertible preferred shares of $.01 par value:
authorized 500 shares, 0.625 shares outstanding (February 1,
2020 and
August 3, 2019: 0.625 shares outstanding)
|
|
625.6
|
|
|
617.0
|
|
|
616.1
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
Common shares of $.18
par value: authorized 500 shares, 52.3 shares
outstanding (February 1, 2020 and August 3, 2019: 52.3
outstanding)
|
|
12.6
|
|
|
12.6
|
|
|
12.6
|
|
Additional paid-in
capital
|
|
250.8
|
|
|
245.4
|
|
|
236.3
|
|
Other
reserves
|
|
0.4
|
|
|
0.4
|
|
|
0.4
|
|
Treasury shares at
cost: 17.7 shares (February 1, 2020 and August 3,
2019: 17.7 shares)
|
|
(981.1)
|
|
|
(984.9)
|
|
|
(993.0)
|
|
Retained
earnings
|
|
1,943.7
|
|
|
2,242.9
|
|
|
2,154.2
|
|
Accumulated other
comprehensive loss
|
|
(310.0)
|
|
|
(293.8)
|
|
|
(322.3)
|
|
Total shareholders'
equity
|
|
916.4
|
|
|
1,222.6
|
|
|
1,088.2
|
|
Total liabilities,
redeemable convertible preferred shares and
shareholders' equity
|
|
$
|
6,578.1
|
|
|
$
|
6,299.1
|
|
|
$
|
5,965.6
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
|
|
|
26 weeks
ended
|
(in
millions)
|
|
August 1,
2020
|
|
August 3,
2019
|
Cash flows from
operating activities
|
|
|
|
|
Net income
(loss)
|
|
$
|
(278.8)
|
|
|
$
|
(46.1)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
84.8
|
|
|
85.8
|
|
Amortization of
unfavorable leases and contracts
|
|
(2.7)
|
|
|
(2.7)
|
|
Share-based
compensation
|
|
6.3
|
|
|
8.3
|
|
Deferred
taxation
|
|
115.0
|
|
|
(0.4)
|
|
Asset
impairments
|
|
156.6
|
|
|
47.7
|
|
Restructuring
charges
|
|
11.5
|
|
|
14.0
|
|
Other non-cash
movements
|
|
0.7
|
|
|
(0.4)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Decrease in accounts
receivable
|
|
7.0
|
|
|
1.5
|
|
Decrease in other
assets and other receivables
|
|
244.0
|
|
|
19.3
|
|
Decrease in
inventories
|
|
135.3
|
|
|
96.8
|
|
Increase in accounts
payable
|
|
65.5
|
|
|
74.7
|
|
Decrease in accrued
expenses and other liabilities
|
|
(241.1)
|
|
|
(44.6)
|
|
Change in operating
lease assets and liabilities
|
|
64.2
|
|
|
(1.9)
|
|
Increase (decrease) in
deferred revenue
|
|
32.9
|
|
|
(1.1)
|
|
Changes in income tax
receivable and payable
|
|
(243.0)
|
|
|
(1.1)
|
|
Pension plan
contributions
|
|
(2.1)
|
|
|
(3.2)
|
|
Net cash provided by
operating activities
|
|
156.1
|
|
|
246.6
|
|
Investing
activities
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(23.6)
|
|
|
(52.2)
|
|
Purchase of
available-for-sale securities
|
|
—
|
|
|
(11.7)
|
|
Proceeds from sale of
available-for-sale securities
|
|
3.1
|
|
|
0.5
|
|
Net cash used in
investing activities
|
|
(20.5)
|
|
|
(63.4)
|
|
Financing
activities
|
|
|
|
|
Dividends paid on
common shares
|
|
(19.3)
|
|
|
(38.5)
|
|
Dividends paid on
redeemable convertible preferred shares
|
|
(7.8)
|
|
|
(15.6)
|
|
Repayments of term
loans
|
|
—
|
|
|
(17.9)
|
|
Proceeds from
revolving credit facilities
|
|
900.0
|
|
|
—
|
|
Repayments of
revolving credit facilities
|
|
(80.0)
|
|
|
—
|
|
Decrease of bank
overdrafts
|
|
(86.8)
|
|
|
(29.1)
|
|
Other financing
activities
|
|
(9.8)
|
|
|
(0.6)
|
|
Net cash provided by
(used in) financing activities
|
|
696.3
|
|
|
(101.7)
|
|
Cash and cash
equivalents at beginning of period
|
|
374.5
|
|
|
195.4
|
|
Increase in cash and
cash equivalents
|
|
831.9
|
|
|
81.5
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(2.4)
|
|
|
(5.4)
|
|
Cash and cash
equivalents at end of period
|
|
$
|
1,204.0
|
|
|
$
|
271.5
|
|
Real Estate Portfolio:
Signet has a diversified real estate portfolio. On
August 1, 2020, Signet had 2,915 stores totaling 4.3 million
square feet of selling space. In the second quarter, store count
decreased by 257 and square feet of selling space decreased 5.7%.
Compared to year-end Fiscal 2020, store count decreased by 293 and
square feet of selling space decreased 6.7%.
Store count by
segment
|
February 1,
2020
|
|
Openings
|
|
Closures
|
|
August 1,
2020
|
North America
segment
|
2,757
|
|
—
|
|
(196)
|
|
2,561
|
International
segment
|
451
|
|
—
|
|
(97)
|
|
354
|
Signet
|
3,208
|
|
—
|
|
(293)
|
|
2,915
|
View original
content:http://www.prnewswire.com/news-releases/signet-jewelers-reports-q2-results-and-accelerated-sales-momentum-301123544.html
SOURCE Signet Jewelers Ltd.