Signet Jewelers Limited (“Signet”) (NYSE:SIG), the world's
largest retailer of diamond jewelry, today announced its results
for the 13 weeks ended October 28, 2017 (“third quarter Fiscal
2018”).
Summary:
- Same store sales ("SSS") down 5.0%,
including an estimated 120 basis point negative impact due to
weather-related incidents and systems and process disruptions
associated with outsourcing of the credit portfolio.
- Loss per share of $0.20, including
($0.25) per share in net transaction costs related to the first
phase of strategic credit outsourcing and the R2Net acquisition,
and ($0.10) due to weather-related incidents and credit outsourcing
disruptions.
- Substantial progress on strategic
initiatives, with double-digit eCommerce sales growth, improved
fashion category performance in updated collections at key price
points, enhanced digital marketing and streamlined promotions.
- Revised Fiscal 2018 guidance to reflect
the impact of credit outsourcing disruptions.
Virginia C. Drosos, Chief Executive Officer of Signet Jewelers,
said: "Signet had a challenging third quarter. In addition to an
anticipated sequential slowdown in our same store sales,
unfavorable weather-related incidents, along with unexpected
disruptions during the transition of our credit services, further
negatively impacted results. Encouragingly, within this backdrop,
we advanced our strategic priorities, which are beginning to
deliver results.
"We are seeing positive customer reaction to enhancements in our
OmniChannel experience, as well as streamlined marketing messages
and improved fashion assortment. We have also implemented several
synergies from the R2Net acquisition ahead of plan. Unfortunately,
these wins are being overshadowed by the systems disruptions and
significant process changes associated with the outsourcing of our
credit portfolio, with particular impact at Kay. While the
identified systems issues are behind us, we expect some credit
process disruption to continue and to negatively impact our fourth
quarter and full-year performance. As a result, we now expect our
fourth quarter same store sales to be down low- to mid-single
digits, leading to Fiscal 2018 same store sales down mid-single
digits and earnings ranging from $6.10 to $6.50 per share.
"We remain focused on executing our three strategic priorities:
Customer First, OmniChannel, and Culture of Agility and Efficiency.
While it’s still early, we are aggressively transforming our
business and believe we are on the right track to create a more
competitive and innovative Signet that is poised for sustainable,
profitable growth. I thank our Team Members for their dedication
and hard work."
Progress on Strategic Priorities
In the third quarter, Signet continued to advance its three
strategic priorities:
- Customer
First
- Streamlined promotional strategies and
effectively targeted customers in a continued promotional
environment.
- Expanded fashion category assortment
aligned with successful trends and at key price points, including
the launch of Interwoven brand.
- Increased marketing reach and
effectiveness with digital and social media impressions more than
doubling year-to-date to reach 1 billion impressions in Q3.
- Launched a data management platform to
better identify customer profiles and deliver personalized content
on Signet’s websites.
- OmniChannel
- Delivered total eCommerce growth of
56.4% driven by the newly-acquired R2Net, as well as strong digital
marketing tactics and recent enhancements to Sterling division
websites which drove double-digit percentage growth.
- Re-launched Zale eCommerce site with
new hybris platform.
- Began implementing R2Net’s diamond
imagery and content technology in Jared stores, 24/7 customer
service on Jared.com Design-A-Ring, and Ring Try-on App for
Kay.
- Culture of
Agility and Efficiency
- Disciplined cost reductions drove an
improvement in selling, general and administrative expenses ("SGA")
rate.
- Lowered inventory levels by 6.9% as a
result of strong working capital management.
- Reduced store tasks to release nearly
80,000 hours per month to be dedicated to customer service.
- Consolidation of distribution centers
near completion.
Financial Guidance Fiscal Year 2018:
On October 23, 2017, Signet completed the first phase of
strategic outsourcing of its credit portfolio to Alliance Data
Systems (“Alliance Data”) and Genesis Financial Solutions
(“Genesis”). As part of the first phase, Alliance Data acquired the
prime credit quality portion of Signet’s existing credit portfolio
and became the primary provider of credit to Signet’s customers,
while the credit servicing functions of the non-prime book has been
outsourced to Genesis.
Signet is experiencing greater than anticipated disruptions
related to the complex credit transition process. Signet and its
credit partners are working with great urgency to resolve these
issues, and while the critical majority of the systems-related
issues have been identified and restored, the Company expects the
financial impact to carry forward into the fourth quarter given the
significant changes to the credit-related processes.
As a result, Signet now expects Fiscal 2018 SSS to be down a mid
single-digit percentage and EPS to be in the range of $6.10 and
$6.50.
The Company is in advanced discussions with interested funding
partners related to the second phase of its credit outsourcing,
which is expected to be completed in the first half of calendar
year 2018.
Prior Guidance Current Guidance SSS
Down low to mid single-digit % Down mid
single-digit % EPS¹ $7.16 - $7.56 $6.10 - $6.50 Effective
tax rate 24% 22% Weighted average common shares 69 million - 70
million 69 million - 70 million Capital expenditures in $ 260
million - 275 million 245 million - 260 million Net selling square
footage growth -1.0% to 0% -1.5% to -1.0% (1) Includes net impact
of outsourcing the credit portfolio and related transaction costs,
net impact of R2Net acquisition, separation costs, and share
repurchases associated with the credit transaction proceeds.
The following are additional considerations to assist financial
modeling:
- Capital expenditures will be driven
primarily by new Kay off-mall store openings, as well as store
remodels and information technology ("I/T") to support key business
strategies. For Fiscal 2018, Signet expects net store closures of
approximately 125 stores, consisting of roughly 90 to 100 store
openings and about 215 to 225 closures. Store closures are
primarily focused on mall-based regional brands not meeting
Signet's financial return targets. Store openings will be primarily
Kay off-mall locations.
- The capital expenditure mix in Fiscal
2018 will skew toward I/T investments to support Signet's
OmniChannel initiatives. As I/T investments depreciate faster than
store assets, this will have a small unfavorable impact as
depreciation accelerates near and medium term.
- Fiscal 2018 is a 53-week fiscal year
for Signet, ending February 3, 2018, driven by the retail industry
calendar. As previously communicated, the additional week, January
28, 2018 - February 3, 2018, will have no impact to SSS as it is
excluded from the calculation and no meaningful impact to operating
profit.
Third Quarter Fiscal 2018 Financial Highlights:
Signet's total sales were $1,156.9 million, down $29.3 million
or 2.5%, compared to a decrease also of 2.5% in the 13 weeks ended
October 29, 2016 ("third quarter Fiscal 2017"). SSS decreased
5.0%, which includes a positive 40 basis point contribution from
R2Net, compared to a decrease of 2.0% in the third quarter Fiscal
2017. Third quarter SSS were negatively impacted due to
weather-related incidents by an estimated 60 basis points and
disruptions related to the credit outsourcing transition by an
estimated 60 basis points.
Sales declines were primarily driven by soft bridal sales and a
lower number of customer transactions. These were offset in part by
the strength in eCommerce, with sales of $80.7 million, a 56.4%
increase, including the impact of R2Net. Excluding R2Net, eCommerce
sales grew 10.5%, driven by 34% growth at Sterling, partially
offset by a decline in Zale eCommerce sales which was impacted by
the conversion to the hybris platform during the quarter.
By operating segment:
- Sterling Jewelers' SSS decreased 6.2%,
including 60 basis points of favorable impact from R2Net sales.
Average transaction value ("ATV") increased 1.6% and the number of
transactions declined 7.6%. The SSS decline was driven by a
decrease in bridal sales, which were disproportionately affected by
systems and process disruptions associated with the outsourcing of
credit services. This was partially offset by higher sales of
select fashion jewelry collections at Kay and Jared.
- Zale Jewelry's SSS decreased 3.4%. ATV
increased 2.5%, and the number of transactions decreased 6.9%. The
SSS declines were generally across categories, while bridal and new
fashion collections ended the quarter on a strong trajectory.
eCommerce sales were negatively impacted by the planned conversion
of Zale eCommerce platforms to hybris technology, which is
beginning to drive improvements in website functionality and
performance.
- Piercing Pagoda's SSS increased 2.1%.
ATV increased 9.1%, while the number of transactions decreased
6.6%. This SSS increase was driven primarily by higher sales of
fashion gold jewelry.
- UK Jewelry's SSS decreased 5.1%. ATV
increased 8.3% and the number of transactions decreased 12.9%. The
SSS decline was driven principally by non-branded jewelry offset in
part by higher sales in select watch brands.
Sales change from previous year Third quarter
Fiscal 2018
Samestoresales1
Non-samestoresales, net2
Total salesat constantexchange rate
Exchangetranslationimpact
Totalsales
Total sales(in mill. $)
Kay (7.2 )% 2.8 %
(4.4 )% —
%
(4.4 )% 436.3 Jared (5.1 )% 1.3 % (3.8 )% — % (3.8 )% 218.0 R2Net3
17.9 %
23.7 Regional brands (16.3 )% (13.3 )%
(29.6 )% — % (29.6 )% 20.7
Sterling
Jewelers division (6.2 )%
4.3 % (1.9 )%
— % (1.9 )% 698.7
Zales Jewelers (3.3 )% (1.0 )% (4.3 )% — % (4.3 )% 215.7 Gordon’s
Jewelers (15.8 )% (18.9 )% (34.7 )% — % (34.7 )% 6.4 Zale US
Jewelry (3.7 )% (1.8 )% (5.5 )% — % (5.5 )% 222.1 Peoples Jewellers
(0.5 )% (1.1 )% (1.6 )% 4.3 % 2.7 % 42.3 Mappins (15.9 )% (24.7 )%
(40.6 )% 2.9 % (37.7 )% 3.8 Zale Canada Jewelry (1.9 )% (4.8 )%
(6.7 )% 4.2 % (2.5 )% 46.1 Zale Jewelry (3.4 )% (2.3 )% (5.7 )% 0.7
% (5.0 )% 268.2 Piercing Pagoda 2.1 %
1.6 % 3.7 % — % 3.7 % 55.4
Zale
division (2.5 )%
(1.7 )% (4.2 )%
0.6 % (3.6 )%
323.6 H.Samuel (4.6 )% 0.8 % (3.8 )% 1.9 % (1.9 )% 61.6
Ernest Jones (5.6 )% 2.7 % (2.9
)% 1.9 % (1.0 )% 66.8
UK Jewelry
division (5.1 )%
1.8 % (3.3 )% 1.8
% (1.5 )% 128.4 Other
segment
6.2 Signet
(5.0 )% 2.2 %
(2.8 )% 0.3 %
(2.5 )% 1,156.9 Notes: 1=For stores
open for at least 12 months. 2=For stores not open in the last 12
months. 3=Includes 47 days of R2Net sales as if R2Net had been part
of Signet in the same period prior year.
Gross margin was $321.1 million or 27.8% of sales, down 170
basis points compared to prior year, including de-leverage of 30
bps of R2Net which carries a lower gross margin rate. The remaining
decline in rate was driven by lower sales on fixed costs (e.g.
store occupancy) and a lower gross merchandise margin rate,
impacted by the inclusion of R2Net. Excluding the mix effect of
R2Net, gross merchandise margin increased driven by streamlined
marketing initiatives and effective customer targeting, despite
more promotional activity. By division:
- Sterling Jewelers gross margin
decreased $20.2 million. The gross margin rate decreased 230 basis
points, of which 60 basis points is attributed to inclusion of
R2Net. The remainder of the rate decline is primarily due to
de-leverage of fixed costs, and higher disposition of inventory in
part due to distribution center consolidation, offset in part by
store banner merchandise margin improvement and less bad debt
expense.
- Zale gross margin decreased $5.6
million. The gross margin rate decreased 60 basis points due
primarily to de-leverage of fixed costs, higher disposition of
inventory in part due to distribution center consolidation and
promotions, partially offset by an improvement in merchandise
margin.
- UK Jewelry gross margin decreased $3.2
million. The gross margin rate decreased 210 basis points driven
principally by greater promotional activity and de-leverage of
fixed costs.
SGA declined 2.7% to $375.9 million or 32.5% of sales, including
$8.1 million of transaction costs related to R2Net, compared to
$386.5 million or 32.6% of sales in the prior year. SGA rate
improved 10 basis points, or, 80 basis points excluding R2Net
transaction costs. R2Net transaction costs were offset by
disciplined cost reductions in store and corporate payroll, other
payroll related benefits, including a $4 million pension
curtailment, and a continued shift of marketing spend to
higher-return investments in digital.
In the third quarter, Signet recognized a $12.2 million net
credit transaction expense related to the sale of the prime
accounts receivables. This included $22.4 million of legal,
advisory, implementation, and retention expenses, partially offset
by a $10.2 million beneficial interest gain related to expected
profit sharing.
Other operating income was $72.5 million compared to $68.6
million in the prior year third quarter, up $3.9 million or 5.7%.
This increase was due to the Sterling division’s higher interest
income earned from higher outstanding receivable balances.
Signet's operating income was $5.5 million or 0.5% of sales,
including $20.3 million of net transaction cost related to the
outsourcing of credit portfolio and the acquisition of R2Net,
compared to $32.1 million or 2.7% of sales in prior year third
quarter. Operating margin decline of 220 basis points was primarily
driven by 170 basis points related to transaction costs.
Third quarter Fiscal 2018 Third quarter
Fiscal 2017 Income/(loss) in millions $ % of sales $
% of sales Sterling Jewelers division (includes R2Net) $ 73.7 10.5
% $ 78.6 11.0 % Zale division (19.9 ) (6.1 )% (24.7 ) (7.4 )% UK
Jewelry division (1.7 ) (1.3 )% — — % Other
(46.6 ) nm (21.8 ) nm Total 5.5
0.5 % 32.1 2.7 % Note: Sterling Jewelers includes the
beneficial interest gain of $10.2 million and Other includes $22.4
million of credit related transaction costs. The acquisition
costs-only of R2Net are in Other. nm: Not meaningful.
Income tax benefit was $7.2 million compared to a $2.4 million
expense in the prior year third quarter. The income tax benefit for
the quarter represents the adjustment required to provide for taxes
at the expected annual effective tax rate.
Third quarter loss per share was $0.20 versus earnings per share
of $0.20 in the third quarter of 2017. This included the following
unfavorable factors (per share):
- Net credit transaction costs
($0.14)
- R2Net acquisition costs ($0.11)
- Disruptions related to weather and
credit outsourcing ($0.10)
Balance Sheet and Statement of Cash Flows:
Cash and cash equivalents were $113.4 million compared to $82.7
million at the prior year quarter-end. The sale of the prime
portion of accounts receivable and favorable changes to inventory
were partially offset by share repurchases, the acquisition of
R2Net, and lower net income.
At the end of the third quarter, net accounts receivable were
$640.1 million compared to $1,581.1 million at the prior year
quarter-end. The decrease in receivables is primarily driven by the
sale of the prime portfolio in the third quarter of $960
million. Third quarter Sterling Jewelers credit participation
rate was 59.6% compared to 66.8% in the third quarter of last year.
The decline in penetration rate was driven by a combination of a
continued trend in lower credit applications and therefore
resulting in a lower number of approved credit applicants as well
as disruption related to the credit transition. Finance charge
income in the third quarter was $70.3 million and net bad debt
expense was $51.5 million -- a net favorable difference of $18.8
million. This compares to a difference of $9.8 million in the prior
year. This favorable year-on-year relationship was driven primarily
by lower bad debt expense due to the decrease in portfolio
assets.
Net inventories were $2,466.1 million, down 6.9% compared to
$2,649.4 million at the prior year quarter-end. This was driven
primarily by a focus on working capital across the business.
Long term debt was $696.8 million compared to $1,324.2 million
in the prior year period. The $627.4 million decline was driven
principally by repayment of the $600.0 million asset backed
securitization associated with the sale of Signet's prime accounts
receivable portfolio.
Signet’s capital allocation is essentially unchanged in light of
the resolution of the Company’s credit strategic review. Signet
remains committed to maintaining an investment grade profile with a
strong balance sheet and financial flexibility to fund its business
and growth strategy. The proceeds from the transaction were used to
redeem the securitization facility and repay the short-term loan
associated with the R2Net acquisition. Signet does not expect
material additional share repurchases in Fiscal 2018. The Company
is targeting to maintain an adjusted leverage ratio between 3.0x to
3.5x.
On October 28, 2017 Signet had 3,639 stores totaling 5.1 million
square feet of selling space. Since year-end, store count decreased
by 43 and square feet of selling space increased 0.2%. The majority
of new store openings were in off-mall locations which tend to be
bigger than mall locations where most closures occurred with a
focus on regional store banners.
Store count
Jan 28, 2017 Openings
Closures Oct 28, 2017 Kay 1,192 53 (8 ) 1,237
Jared 275 2 (1 ) 276 Regional brands 121
— (21 ) 100
Sterling Jewelers division
1,588 55
(30 ) 1,613 Zales 751 11 (39 ) 723
Peoples 143 2 (12 ) 133 Gordons 42 — (10 ) 32 Mappins 34 — (12 ) 22
Total Zale Jewelry 970 13 (73 ) 910 Piercing Pagoda
616 9 (17 ) 608
Zale division
1,586 22
(90 ) 1,518 H.Samuel 304 2 (2 ) 304
Ernest Jones 204 1 (1 )
204
UK Jewelry division 508
3 (3 ) 508
Signet 3,682 80
(123 ) 3,639
Conference Call:
A conference call is scheduled today at 8:30 a.m. ET and a
simultaneous audio webcast and slide presentation are available at
www.signetjewelers.com. The slides are available to be downloaded
from the website. The call details are:
Dial-in: 1-647-689-4229
Access code: 5595748
A replay and transcript of the call will be posted on Signet's
website as soon as they are available and will be accessible for
one year.
About Signet and Safe Harbor Statement:
Signet Jewelers Limited is the world's largest retailer of
diamond jewelry. Signet operates approximately 3,600 stores
primarily under the name brands of Kay Jewelers, Zales, Jared The
Galleria Of Jewelry, H.Samuel, Ernest Jones, Peoples, 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, including but not limited to, the benefits
and outsourcing of the credit portfolio sale including I/T
disruptions, future financial results and operating results, the
timing and expected completion of the second phase of the credit
outsourcing, the impact of weather-related incidents on Signet’s
business, the benefits and integration of R2Net, general economic
conditions, regulatory changes following the United Kingdom’s
announcement to exit from the European Union, a decline in consumer
spending, the merchandising, pricing and inventory policies
followed by Signet, the reputation of Signet and its brands, the
level of competition in the jewelry sector, the cost and
availability of diamonds, gold and other precious metals,
regulations relating to customer credit, seasonality of Signet’s
business, financial market risks, deterioration in customers’
financial condition, exchange rate fluctuations, changes in
Signet’s credit rating, changes in consumer attitudes regarding
jewelry, management of social, ethical and environmental risks, the
development and maintenance of Signet’s omni-channel retailing,
security breaches and other disruptions to Signet’s information
technology infrastructure and databases, inadequacy in and
disruptions to internal controls and systems, changes in
assumptions used in making accounting estimates relating to items
such as extended service plans and pensions, 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, and our ability to
successfully integrate Zale Corporation’s operations and to realize
synergies from the transaction.
For a discussion of these and other risks and uncertainties
which could cause actual results to differ materially from those
expressed in any forward-looking statement, see the "Risk Factors"
section of Signet's Fiscal 2017 Annual Report on Form 10-K filed
with the SEC on March 16, 2017 and quarterly reports on Form
10-Q 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.
Condensed Consolidated Income
Statements (Unaudited) 13 weeks ended
39 weeks ended (in millions, except per share amounts)
October 28, 2017 October 29,
2016 October 28, 2017 October 29,
2016 Sales 1,156.9 1,186.2 3,959.9 4,138.5 Cost
of sales (835.8 ) (836.2 )
(2,689.7 ) (2,723.2 )
Gross margin 321.1
350.0 1,270.2 1,415.3 Selling, general and
administrative expenses (375.9 ) (386.5 ) (1,237.7 ) (1,264.9 )
Credit transaction, net (12.2 ) — 2.6 — Other operating income, net
72.5 68.6 221.3
213.6
Operating income 5.5
32.1 256.4 364.0 Interest expense, net
(16.6 ) (12.7 ) (42.7 ) (36.4 )
(Loss) income before income taxes (11.1 )
19.4 213.7 327.6 Income taxes
7.2 (2.4 ) (45.7 ) (81.9 )
Net (loss) income (3.9 ) 17.0
168.0 245.7 Dividends on redeemable convertible
preferred shares (8.2 ) (2.2 )
(24.6 ) (2.2 )
Net (loss) income attributable to common
shareholders (12.1 ) 14.8 143.4
243.5 (Loss) earnings per common share: Basic $ (0.20 ) $
0.20 $ 2.24 $ 3.19 Diluted $ (0.20 ) $ 0.20 $ 2.24 $ 3.18 Weighted
average common shares outstanding: Basic 60.1 73.5 64.0 76.4
Diluted 60.1 73.6 64.1 76.5 Dividends declared per common share $
0.31 $ 0.26 $ 0.93 $ 0.78
Condensed Consolidated Balance Sheets (Unaudited)
(in millions, except par value per share amount)
October
28, 2017 January 28, 2017 October 29, 2016
Assets Current assets: Cash and cash equivalents 113.4 98.7
82.7 Accounts receivable, net 640.1 1,858.0 1,581.1 Other
receivables 80.3 95.9 74.2 Other current assets 145.0 136.3 146.8
Income taxes 17.3 4.4 20.8 Inventories 2,466.1 2,449.3 2,649.4
Total current assets 3,462.2 4,642.6
4,555.0 Non-current assets: Property, plant and equipment,
net of accumulated depreciation of $1,162.7, $1,049.4 and $1,015.4,
respectively 855.1 822.9 791.1 Goodwill 867.1 517.6 517.0
Intangible assets, net 410.4 417.0 419.8 Other assets 169.1 165.1
157.5 Deferred tax assets 1.3 0.7 — Retirement benefit asset 35.5
31.9 47.1
Total assets 5,800.7 6,597.8
6,487.5 Liabilities and Shareholders’ equity Current
liabilities: Loans and overdrafts 291.8 91.1 288.8 Accounts payable
324.9 255.7 382.2 Accrued expenses and other current liabilities
430.5 478.2 402.9 Deferred revenue 270.3 276.9 256.7 Income taxes —
101.8 4.4
Total current liabilities 1,317.5
1,203.7 1,335.0 Non-current liabilities: Long-term
debt 696.8 1,317.9 1,324.2 Other liabilities 244.4 213.7 219.9
Deferred revenue 646.1 659.0 632.1 Deferred tax liabilities 143.8
101.4 133.4
Total liabilities 3,048.6 3,495.7
3,644.6 Commitments and contingencies Series A
redeemable convertible preferred shares of $.01 par value:
authorized 500 shares, 0.625 shares outstanding (January 28, 2017
and October 29, 2016: 0.625 shares outstanding) 613.1
611.9 611.7 Shareholders’ equity: Common shares of
$0.18 par value: authorized 500 shares, 60.4 shares outstanding
(January 28, 2017: 68.3 outstanding; October 29, 2016: 69.6
outstanding) 15.7 15.7 15.7 Additional paid-in capital 285.6 280.7
128.5 Other reserves 0.4 0.4 0.4 Treasury shares at cost: 26.8
shares (January 28, 2017: 18.9 shares; October 29, 2016: 17.6
shares) (1,945.2 ) (1,494.8 ) (1,338.9 ) Retained earnings 4,074.9
3,995.9 3,727.8 Accumulated other comprehensive loss (292.4 )
(307.7 ) (302.3 )
Total shareholders’ equity 2,139.0
2,490.2 2,231.2 Total liabilities, redeemable
convertible preferred shares and shareholders’ equity
5,800.7 6,597.8 6,487.5
Condensed Consolidated Statements of Cash Flows
(Unaudited) 39 weeks ended (in millions)
October 28, 2017 October 29,
2016 Cash flows from operating activities Net
income 168.0 245.7 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization
147.1 138.8 Amortization of unfavorable leases and contracts (10.8
) (14.9 ) Pension benefit (3.6 ) (1.3 ) Share-based compensation
11.0 14.0 Deferred taxation 41.7 60.9 Excess tax benefit from
exercise of share awards — (1.3 ) Credit transaction, net (30.9 ) —
Amortization of debt discount and issuance costs 3.2 2.2 Other
non-cash movements 1.5 1.9 Changes in operating assets and
liabilities: Decrease in accounts receivable 286.1 174.0 Proceeds
from sale of in-house finance receivables 960.2 — Decrease in other
receivables and other assets 19.6 9.0 Increase in other current
assets (2.5 ) (15.4 ) Decrease (increase) in inventories 4.6 (217.0
) Increase in accounts payable 39.7 114.1 Decrease in accrued
expenses and other liabilities (5.4 ) (82.2 ) Decrease in deferred
revenue (29.5 ) (2.5 ) Decrease in income taxes payable (115.3 )
(62.6 ) Pension plan contributions (2.4 )
(2.5 )
Net cash provided by operating activities
1,482.3 360.9
Investing activities Purchase of property, plant and
equipment (166.1 ) (195.6 ) Purchase of available-for-sale
securities (1.7 ) (10.4 ) Proceeds from sale of available-for-sale
securities 0.9 10.0 Acquisition of R2Net Inc., net of cash acquired
(332.4 ) —
Net cash used in
investing activities (499.3
) (196.0 ) Financing activities
Dividends paid on common shares (57.7 ) (57.5 ) Dividends paid on
redeemable convertible preferred shares (26.9 ) — Proceeds from
issuance of redeemable convertible preferred shares, net of
issuance costs — 611.6 Proceeds from term and bridge loans 350.0 —
Repayments of term and bridge loans (365.7 ) (12.0 ) Proceeds from
securitization facility 1,745.9 1,837.1 Repayments of
securitization facility (2,345.9 ) (1,837.1 ) Proceeds from
revolving credit facility 605.0 598.0 Repayments of revolving
credit facility (405.0 ) (339.0 ) Repurchase of common shares
(460.0 ) (1,000.0 ) Repayments of bank overdrafts (5.9 ) (13.3 )
Other financing activities (4.5 ) (6.0
)
Net cash used in financing activities
(970.7 ) (218.2 ) Cash and cash
equivalents at beginning of period 98.7 137.7 Increase (decrease)
in cash and cash equivalents 12.3 (53.3 ) Effect of exchange rate
changes on cash and cash equivalents 2.4 (1.7 ) Cash and cash
equivalents at end of period 113.4
82.7
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171121005273/en/
Investors:Signet JewelersJames Grant, +1 (330) 668-5412VP
Investor RelationsorMedia:Signet JewelersDavid Bouffard, +1 (330)
668-5369VP Corporate Affairs
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