HAMILTON, Bermuda, Oct. 12, 2021 /PRNewswire/ -- Signet Jewelers
Limited ("Signet") (NYSE: SIG), the world's largest retailer of
diamond jewelry, today announced it has entered into an agreement
to acquire Diamonds Direct USA
Inc. ("Diamonds Direct"). Diamonds Direct is an off-mall,
destination jeweler in the U.S. with a highly productive, efficient
operating model with demonstrated growth and profitability which
will be immediately accretive to Signet post-closing. Diamonds
Direct's strong value proposition, extensive bridal offering and
customer-centric, high-touch shopping experience is a destination
for younger, luxury-oriented bridal shoppers. Signet plans to drive
operating synergies by leveraging scale in purchasing, targeted
marketing, Connected Commerce and jewelry services.
"The accretive addition of Diamonds Direct to our portfolio will
further drive shareholder value with its distinct bridal-focused
shopping experience and add a new entry point as we build lifetime
customer relationships and strive to reach our $9 billion revenue goal over time," said Signet
CEO, Virginia C. Drosos. "The
Signet team continues to deliver strong business performance as
part of our Inspiring Brilliance growth strategy. We are executing
on our strategic priorities and investing in our business, while
also returning cash to shareholders through our previously
announced reinstated dividend and share buy-back program."
"I am excited about Diamonds Direct joining the Signet family as
we share a passion for company culture that prioritizes our team
members, our customers and our community," said Itay Berger, President, Diamonds Direct. "We are
thrilled to continue to grow our business, leveraging Signet's
strengths and strategic capabilities to bring even more innovation
and value to our signature shopping experience."
Signet plans to acquire Diamonds Direct for $490 million in an all cash transaction which is
currently expected to close in the fourth quarter of Fiscal 2022,
subject to customary closing conditions and regulatory
approval. Following the acquisition, Diamonds Direct's
current leadership team will remain intact with Mr. Berger
reporting directly to Ms. Drosos. As a sign of commitment to
the long-term vision of Signet and Diamonds Direct, Mr. Berger and
other key Diamonds Direct executives have agreed, subject to the
completion of the transaction, to invest a portion of their
transaction proceeds in Signet shares. Signet plans to share
further details regarding Diamonds Direct following the completion
of the transaction.
Fiscal 2022 Guidance
"As results to-date have exceeded expectations, we're raising
our guidance on continued strong business momentum. Customers are
showing positive response to our new product launches, and the
reduction in government stimulus and customer shift to spending on
entertainment and travel are having less impact than we previously
anticipated," said Joan Hilson,
Chief Financial and Strategy Officer. "While there remain factors
beyond our control, our strengthened supply chain and vendor
partnerships gave us the ability to plan earlier receipt of holiday
product, and we currently do not expect any material supply chain
disruptions. Signet uses air freight for the transit of the
vast majority of our merchandise, thus avoiding current ocean
freight congestion."
|
Updated
Guidance
|
|
Guidance as of
9/2/21
|
|
Third
Quarter
|
|
Full
Year
|
|
Third
Quarter
|
|
Full
Year
|
Total revenue (in
billions)
|
$1.42 to
$1.45
|
|
$7.04 to
$7.19
|
|
$1.26 to
$1.31
|
|
$6.80 to
$6.95
|
Same store sales
(1)
|
10% to 12%
|
|
35% to 38%
|
|
(3%) to 1%
|
|
30% to 33%
|
Non-GAAP operating
income (in millions) (2)
|
$53 to $63
|
|
$680 to
$735
|
|
$10 to $25
|
|
$618 to
$673
|
|
(1) Same store sales include physical
stores and eCommerce sales
|
(2) See description of non-GAAP
measures below
|
Forecasted non-GAAP operating income provided above excludes
potential non-recurring charges. However, given the potential
impact of non-recurring charges to the GAAP operating income, we
cannot provide forecasted GAAP operating income or the probable
significance of such items without unreasonable efforts. As such,
we do not present a reconciliation of forecasted non-GAAP operating
income to corresponding GAAP operating income.
The Company's Third Quarter and Fiscal 2022 guidance is based on
the following assumptions:
- While not substantively experienced to-date, Signet continues
to expect some shift of consumer discretionary spending away from
the jewelry category toward experience-oriented categories in the
fourth quarter; however, such a shift is expected to have less of
an impact than originally anticipated. Implied guidance for
the fourth quarter is now a same store sales range of negative
low-single digits to positive low-single digits. The Company
continues to plan for increased marketing expense and promotional
flexibility; however, future results could differ materially from
current guidance.
- The Company expects gross cost savings in the range of
$85 million to $105 million for Fiscal 2022. Cost savings are
expected to benefit both SG&A and gross margin.
- Signet has planned Fiscal 2022 capital expenditures in the
range of $190 million to $200 million.
- The Company expects to close over 100 stores in Fiscal 2022 and
open up to 100, primarily in highly efficient Banter by Piercing
Pagoda formats.
- Signet's efforts to mitigate supply chain disruption amongst
the pandemic impacts have been effective thus far. Guidance assumes
no material supply chain disruptions for the remainder of the
year.
- Signet continues to put the health and safety of its employees
and customers first and will close stores in the event that either
is at risk; however, guidance does not contemplate large scale
store closures resulting from COVID-19 variants.
- Continued uncertainty regarding macroeconomic factors exists,
including but not limited to the magnitude and duration of COVID-19
resurgence through the Delta variant in key trade areas, extended
duration of heightened unemployment, supply chain disruptions,
pricing environment changes (including, but not limited to,
materials, labor, fulfillment and advertising costs) and government
support policies which can impact consumers' ability to spend,
particularly in discretionary categories like jewelry. Further,
there can be no assurance that current results and trends will
continue for the remainder of the fiscal year and such results and
trends are not indicative of future performance. Please see
disclosures within the Safe Harbor Statement for other risk
factors.
- As previously announced, the Company recently entered into an
agreement to wind up its U.K. pension scheme. As such, the
Company expects to recognize non-cash, non-operating pre-tax
settlement charges totaling approximately $125 million to $150
million by the time the transaction is completed, subject to
finalization of any applicable adjustments, true up costs, and the
impact of foreign currency. However, the amount of such settlement
charges that will be recognized in Fiscal 2022 and thereby impact
Fiscal 2022 GAAP earnings cannot be forecasted.
- Guidance does not consider any post-closing costs and operating
results from the pending acquisition of Diamonds Direct.
Non-GAAP Measures
In addition to financial measures calculated and presented in
accordance with accounting principles generally accepted in the US
("GAAP"), 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 and the Company's guidance
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 the
Company's consolidated 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.
About Diamonds Direct
Diamonds Direct is a direct-to-consumer destination retailer
headquartered in Charlotte, North
Carolina. Each location offers loose and mounted diamonds,
including rare and unique stones, as well as a multitude of
engagement ring mountings and wedding bands by America's top
designers. Diamonds Direct's bridal jewelry selection is
complimented by diamond and gemstone fashion jewelry, pearls and
much more. The retailer backs their products with industry leading
guarantees and warranties, including their unprecedented 110
percent lifetime upgrade. Diamonds Direct is a
socially-responsible company that thinks globally and acts locally.
The company ensures all diamonds are ethically sourced via the
Kimberley Process and is responsible for hundreds of thousands of
dollars raised for local philanthropies and cultural organizations
that are critical to the communities Diamonds Direct calls home.
For more information visit www.DiamondsDirect.com.
About Signet and Safe Harbor Statement
Signet Jewelers Limited is the world's largest retailer of
diamond jewelry. As a purpose-driven and
sustainability-focused company, Signet is a participant in the
United Nations Global Compact and adheres to its principles-based
approach to responsible business. Signet is a Great Place to Work
–Certified™ company and has been named to the Bloomberg
Gender-Equality Index for three consecutive years. Signet operates
approximately 2,800 stores primarily under the name brands of Kay
Jewelers, Zales, Jared, H. Samuel, Ernest
Jones, Peoples, Piercing Pagoda, and JamesAllen.com and
the jewelry subscription service, Rocksbox. 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,
www.rocksbox.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," "preliminary," "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 could have in the future,
on Signet's business, financial condition, profitability and cash
flows; the effect of steps we take in response to the pandemic; the
severity, duration and potential resurgence of the pandemic
(including through variants), including 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 willingness to
congregate in shopping centers and shifts in spending away from the
jewelry category 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
strategies; 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, including due to technology
disruptions, future financial results and operating results and/or
disruptions arising from changes to or termination of the relevant
non-prime outsourcing agreement requiring transition to alternative
arrangements through other providers or alternative payment options
and our ability to successfully establish future arrangements for
the forward-flow receivables; 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, planned
share repurchases 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 including
the ability to continue to utilize extended payment terms and the
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; our ability to optimize Signet's multi-year strategy to
gain market share, expand and improve existing services, innovate
and achieve sustainable, long-term growth; the maintenance and
continued innovation of Signet's OmniChannel retailing and ability
to increase digital sales, as well as management of its digital
marketing costs; 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 team members; 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 new information technology
systems which impact financial reporting; 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 corporate taxation
rates, 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 or deductions associated with payments to foreign
related parties that are subject to a low effective tax rate; 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; 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; 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 2021
Annual Report on Form 10-K filed with the SEC on March 19, 2021 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 & Treasury
+1-330-665-6530
vincent.sinisi@signetjewelers.com
Media:
Colleen Rooney
Chief Communications & ESG 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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SOURCE Signet Jewelers Ltd.