Exceeds both top-line and bottom-line guidance
in Q3
Raises full year guidance inclusive of Blue
Nile
Inventory management balances newness with
lowest clearance in recent history
HAMILTON, Bermuda, Dec. 6, 2022
/PRNewswire/ -- Signet Jewelers Limited ("Signet") (NYSE:SIG),
the world's largest retailer of diamond jewelry, today announced
its results for the 13 weeks ended October 29, 2022 ("third
quarter Fiscal 2023").
"Our strong third quarter results exceeded guidance and evidence
why we believe Signet is uniquely positioned to deliver consistent
market share growth and value creation," said Virginia C. Drosos, Chief Executive Officer.
"Our financial strength and flexible operating model are enabling
continued strategic investments that are widening our competitive
advantages. We have acquired 22.5 million new customers over the
past five years, driving revenue and market share growth, and these
customers are younger, more affluent and highly diverse with
meaningful lifetime purchasing power. Our team's culture of
innovation, agility and rigorous execution continue to drive
advantage."
"We're raising our full-year guidance with confidence in the
sustainability of an annual double-digit non-GAAP operating margin,
which reflects current business trends and is now inclusive of Blue
Nile," said Joan Hilson, Chief
Financial and Strategy Officer. "We are entering this Holiday
season with the healthiest and most consumer-inspired inventory in
our history -- down 2% despite tiering up our Accessible Luxury
offering and with clearance at the lowest levels since our
transformation began, excluding acquisitions. Today, nearly all of
our inventory is immediately available to customers whenever,
wherever and however they choose to browse, shop and buy with us
which is driving inventory turns nearly double pre-transformation
levels."
Third Quarter Fiscal 2023 Highlights:
- Total sales were $1.6 billion, up
$44.9 million or 2.9% (up
4.2%(2) on a constant currency basis) to unusually
heightened sales in Q3 of FY22, resulting in part from government
benefit programs and the Company's strategic transformation
including marketing initiatives, and up 33.3% vs. Q3 of FY20.
- Same store sales ("SSS") down 7.6%(1) to Q3 of
FY22.
- GAAP operating income of $48.4
million, down from $106.9
million in Q3 of FY22 and up from a loss of $39.9 million in Q3 of FY20. Q3 FY23 includes
$9.5 million related to the fair
value adjustment of acquired inventory as well as acquisition and
integration-related charges.
- Non-GAAP operating income(2) of $57.9 million, down from a historic peak of
$105.2 million in Q3 of FY22 and up
from a loss of $29.3 million in Q3 of
FY20. The Company notes that in the two years prior to the
pandemic, the third quarter generated operating losses.
- GAAP diluted earnings per share ("EPS") of $0.60, down from diluted EPS of $1.45 in Q3 of FY22, including $0.14 in charges relating to the fair value
adjustment of acquired inventory as well as acquisition and
integration-related charges.
- Non-GAAP diluted EPS(2) of $0.74, down from $1.43 in Q3 of FY22.
- Cash and cash equivalents, at quarter end, of $327.3 million, down approximately $1.2 billion from Q3 of FY22 reflecting share
repurchases and inventory in-stock replenishment, as well as the
acquisition of Diamonds Direct and Blue Nile.
- Year to date cash used in operating activities of $155.5 million, down approximately $639 million from Q3 of FY22, and primarily
driven by inventory in-stock replenishment.
- Completed $20.2 million of share
repurchases during the third quarter.
(1)
|
Same store sales
include physical stores and eCommerce sales. Diamonds Direct and
Blue Nile are excluded.
|
(2)
|
See non-GAAP
reconciliation page.
|
(in millions, except
per share amounts)
|
|
Fiscal 23
Q3
|
|
Fiscal 22
Q3
|
|
Fiscal 20
Q3
|
|
YTD Fiscal
2023
|
|
YTD Fiscal
2022
|
Sales
|
|
$ 1,582.7
|
|
$ 1,537.8
|
|
$ 1,187.7
|
|
$ 5,175.9
|
|
$ 5,014.7
|
SSS % change
(1)
|
|
(7.6) %
|
|
18.9 %
|
|
2.1 %
|
|
(4.4) %
|
|
66.3 %
|
GAAP
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
$ 48.4
|
|
$
106.9
|
|
$ (39.9)
|
|
$
235.4
|
|
$
501.0
|
Operating income (loss)
as % of sales
|
|
3.1 %
|
|
7.0 %
|
|
(3.4) %
|
|
4.5 %
|
|
10.0 %
|
GAAP Diluted EPS (loss
per share)
|
|
$ 0.60
|
|
$ 1.45
|
|
$ (0.84)
|
|
$ 1.49
|
|
$
7.27
|
Non-GAAP
(2)
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating
income (loss)
|
|
$ 57.9
|
|
$
105.2
|
|
$ (29.3)
|
|
$
445.7
|
|
$
497.1
|
Non-GAAP operating
income (loss) as % of
sales
|
|
3.7 %
|
|
6.8 %
|
|
(2.5) %
|
|
8.6 %
|
|
9.9 %
|
Non-GAAP Diluted EPS
(loss per share)
|
|
$ 0.74
|
|
$ 1.43
|
|
$ (0.76)
|
|
$ 6.36
|
|
$
7.22
|
|
|
(1)
|
Same store sales
include physical stores and eCommerce sales. Diamonds Direct and
Blue Nile are excluded.
|
(2)
|
See non-GAAP
reconciliation page.
|
Third Quarter Fiscal 2023 Results:
|
Change
from previous year
|
|
|
Third Quarter Fiscal
2023
|
Same
store
sales
|
|
Non-same
store sales,
net(2)
|
|
Total sales
at constant
exchange rate
|
|
Exchange
translation
impact
|
|
Total
sales
as reported
|
|
Total
sales
(in millions)
|
North America
segment
|
(7.6) %
|
|
12.7 %
|
|
5.1 %
|
|
— %
|
|
5.1 %
|
|
$
1,464.8
|
International
segment
|
(6.7) %
|
|
(0.5) %
|
|
(7.2) %
|
|
(14.0) %
|
|
(21.2) %
|
|
$ 95.3
|
Other segment
(1)
|
nm
|
|
nm
|
|
nm
|
|
nm
|
|
nm
|
|
$ 22.6
|
Signet
|
(7.6) %
|
|
11.8 %
|
|
4.2 %
|
|
(1.3) %
|
|
2.9 %
|
|
$
1,582.7
|
|
|
(1)
|
Includes sales from
Signet's diamond sourcing initiative.
|
(2)
|
Includes sales from
acquired businesses which were not included in the results for the
full comparable periods presented.
|
nm Not
meaningful.
|
By reportable segment:
North America
- Total sales of $1.5 billion, up
5.1% to Q3 of FY22 and up 36.8% to Q3 of FY20.
- SSS declined 7.6% to Q3 of FY22 reflecting higher average
transaction value ("ATV") but a lower number of transactions.
International
- Total sales of $95.3 million,
down 21.2% to Q3 of FY22 and down 10.4% to Q3 of FY20.
- SSS declined 6.7% versus Q3 of FY22 reflecting higher ATV but a
lower number of transactions.
GAAP gross margin was $552.6
million, or 34.9% of sales, down 250 basis points to the
third quarter last year. This reflects occupancy cost deleverage on
lower sales and the expected impact of Diamonds Direct and
Blue Nile, both of which carry a lower relative margin due to their
higher bridal mix. Notably, merchandise margin in organic banners
improved versus last year.
GAAP SG&A was $501.7 million,
or 31.7% of sales, an increase of 110 basis points to the third
quarter last year. Deleverage was primarily driven by digital and
IT investments, partially offset by labor cost leverage.
GAAP operating income was $48.4
million or 3.1% of sales, compared to $106.9 million, or 7.0% of sales in the prior
year third quarter.
Non-GAAP operating income was $57.9
million, or 3.7% of sales, compared to $105.2 million, or 6.8% of sales in prior year
third quarter. Non-GAAP operating income excluded $9.5 million in charges relating to the fair
value adjustment of acquired inventory as well as acquisition and
integration charges related to Blue Nile.
|
|
Third quarter Fiscal
2023
|
|
Third quarter Fiscal
2022
|
GAAP Operating
income in millions
|
|
$
|
|
% of
sales
|
|
$
|
|
% of
sales
|
North America
segment
|
|
$
65.4
|
|
4.5 %
|
|
$
123.8
|
|
8.9 %
|
International
segment
|
|
(6.5)
|
|
(6.8) %
|
|
0.2
|
|
0.2 %
|
Other
segment
|
|
(0.3)
|
|
nm
|
|
(0.4)
|
|
nm
|
Corporate and
unallocated expenses
|
|
(10.2)
|
|
nm
|
|
(16.7)
|
|
nm
|
Total GAAP operating
income
|
|
$
48.4
|
|
3.1 %
|
|
$
106.9
|
|
7.0 %
|
|
|
Third quarter Fiscal
2023
|
|
Third quarter Fiscal
2022
|
Non-GAAP Operating
income in millions (1)
|
|
$
|
|
% of
sales
|
|
$
|
|
% of
sales
|
North America
segment
|
|
$
74.9
|
|
5.1 %
|
|
$
123.8
|
|
8.9 %
|
International
segment
|
|
(6.5)
|
|
(6.8) %
|
|
0.2
|
|
0.2 %
|
Other
segment
|
|
(0.3)
|
|
nm
|
|
(0.4)
|
|
nm
|
Corporate and
unallocated expenses
|
|
(10.2)
|
|
nm
|
|
(18.4)
|
|
nm
|
Total Non-GAAP
operating income
|
|
$
57.9
|
|
3.7 %
|
|
$
105.2
|
|
6.8 %
|
|
|
(1)
|
See non-GAAP
reconciliation page.
|
nm Not
meaningful
|
The current quarter GAAP income tax expense was $4.6 million compared to income tax expense of
$9.1 million in the prior year
third quarter. On a non-GAAP basis, income tax expense was
$7.1 million compared to income tax
expense of $8.7 million in the prior
year third quarter.
GAAP diluted EPS was $0.60,
including $0.14 in charges relating
to the fair value adjustment of acquired inventory as well as
acquisition and integration-related charges. Excluding these
charges (and related tax effects), diluted EPS was $0.74 on a non-GAAP basis.
GAAP EPS and non-GAAP EPS for the third quarter of Fiscal 2023
exclude the impact of the preferred shares in the dilutive share
count, as their inclusion would be antidilutive based on the level
of net income this quarter.
Balance Sheet and Statement of Cash Flows Highlights:
Year to date cash used for operating activities was $155.5 million for Q3 Fiscal 2023 compared
to cash provided by operating activities of $483.9 million last year. Cash and cash
equivalents were $327.3 million as of
quarter end, compared to $1.5 billion
last year. The year over year change to cash and cash equivalents
was primarily driven by share repurchases and inventory in-stock
replenishment, and the acquisitions of Diamonds Direct and Blue
Nile.
Ending inventory was $2.4 billion,
up approximately $281 million to the
third quarter last year as a result of the Company's acquisitions
of Diamonds Direct and Blue Nile, which was partially offset by
lower inventory levels in the rest of the Company.
Return of Capital:
Signet's Board of Directors has declared a quarterly cash
dividend on common shares of $0.20
per share for the fourth quarter of Fiscal 2023, payable
February 24, 2023 to shareholders of
record on January 27, 2023, with an
ex-dividend date of January 26,
2023.
Fiscal 2023 year to date, through December 2, Signet has repurchased approximately
5.6 million shares at an average cost per share of $70.28, or $393.0
million, including $20.2
million during the third quarter and $50 million from the completion of the
accelerated share repurchase program from Fiscal 2022.
Approximately $570.3 million remains
under the Company's multi-year authorization.
Our Purpose and Sustainable Growth:
As a company with a Purpose-inspired business strategy, Signet
is committed to ongoing leadership in Corporate Citizenship &
Sustainability and views Environmental, Social and Governance
("ESG") initiatives as an important growth driver. For the third
year in a row, Signet is a Great Place to Work-Certified™ company
based on survey responses for our team members. In addition, Great
Place to Work® and Fortune magazine has named Signet to the
2022 Best Workplaces in Retail™ list. Signet's approach to supply
chain risk management is a core component of our ESG program. As a
tenured leader in the jewelry industry, Signet continues to hold
our global suppliers to high ethical standards and prioritizes
respect for human rights. The "Signet Promise" is Signet's public
commitment to continuously improve the integrity of our global
diamond supply chain though our four-layered system of checks and
balances to support consumer confidence.
Fiscal 2023 Guidance:
Signet is providing below its fourth quarter and full year
Fiscal 2023 sales and operating income guidance which is provided
on a non-GAAP basis.
|
Fourth
Quarter
|
|
Fiscal
2023
|
Total sales (in
billions)
|
$2.59 to
$2.66
|
|
$7.77 to
$7.84
|
Operating income
(1) (in millions)
|
$363 to $404
|
|
$809 to $850
|
Diluted EPS
(1)
|
|
|
$11.40 to
$12.00
|
|
|
(1)
|
See description of
non-GAAP measures below.
|
Forecasted non-GAAP operating income provided above excludes
potential non-recurring charges, such as integration-related costs
associated with the acquisition of Blue Nile and the potential
impacts of purchase accounting. However, given the potential
impacts of these items 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 fourth quarter and full year Fiscal 2023 Outlook
is based on the following assumptions:
- The Company's outlook includes a level of consumer pressure,
including inflation and the impact of stimulus, similar to what is
currently being experienced. The Company's outlook does not include
a material worsening of macroeconomic factors which could impact
consumer spending patterns and have associated impacts on business
performance.
- The Company's outlook for the fourth quarter and the full year
of Fiscal 2023 includes the impact of the Blue Nile acquisition and
continuing unfavorable revenue impact from foreign currency.
- Signet continues to anticipate some shift of consumer
discretionary spending away from the jewelry category reflecting
pent-up demand for experience-oriented categories.
- Signet's efforts to mitigate supply chain disruption have been
effective thus far. Guidance assumes no significant disruptions in
availability of inventory.
- The Company's outlook factors in some flexibility in the level
of promotion during the 4th Quarter of Fiscal 2023.
- Annual effective tax rate of approximately 17% assumes no
additional discrete items and no changes in current tax laws during
the remainder of Fiscal 2023.
- The above guidance excludes non-recurring charges for Fiscal
2023 related to the resolution of a previously disclosed legal
matter of $190 million, approximately
$17 million relating to the fair
value adjustment of acquired inventory that will be recognized
within cost of sales in Fiscal 2023, and the non-cash,
non-operating charges for the buy-out of substantially all of the
UK pension obligations of approximately $135
million.
- Earnings per share includes share repurchases through
December 2, 2022, as well as the
dilutive effect of the 8.1 million preferred shares.
- Capital investments up to $215
million, reflecting continued investments in Connected
Commerce capabilities, banner differentiation and technology
harmonization. The expected capital investments have been reduced
as a result of supply chain delays related to differentiated banner
investment in stores.
Conference Call:
A conference call is scheduled for December 6, 2022 at
8:30 a.m. ET and a simultaneous audio
webcast is available at www.signetjewelers.com. The call details
are:
Toll Free US Dial-in: 1-844-200-6205
Toll Free Canada Dial-in: 1-833-950-0062
International Dial-In: +1 929-526-1599
Access Code: 844358
Conference call participants may also pre-register at:
https://www.netroadshow.com/events/login?show=0776790d&confId=42638
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. 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 four
consecutive years. Signet operates approximately 2,800 stores
primarily under the name brands of Kay Jewelers, Zales, Jared,
Banter by Piercing Pagoda, Diamonds Direct, JamesAllen.com, Blue
Nile, Peoples, H. Samuel, Ernest
Jones 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.banter.com,
www.diamondsdirect.com, www.jamesallen.com,
www.peoplesjewellers.com, www.hsamuel.co.uk, www.ernestjones.co.uk,
www.rocksbox.com and www.bluenile.com.
This release contains statements which are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are 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, results of operations, financial condition,
liquidity, prospects, growth, strategies and the industry in which
we operate. 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: difficulty or delay in
executing or integrating an acquisition, including Diamonds Direct
and Blue Nile, or executing other major business or strategic
initiatives, the negative impacts that the COVID-19 pandemic has
had, and could have in the future, on our 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 COVID-19 has on many of the risks described herein,
including without limitation risks relating to disruptions in our
supply chain, our ability to attract and retain labor, decelerating
levels of consumer confidence and consumer behaviors such as
willingness to patronize shopping centers and shifts in spending
away from the jewelry category toward more experiential purchases
such as travel, the impacts of the expiration of government
stimulus on overall consumer spending, 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, including impacts of inflation, the
cessation of government stimulus programs, or other pricing
environment factors on our commodity costs (including diamonds) or
other operating costs; a prolonged slowdown in the growth of the
jewelry market or a recession in the overall economy; financial
market risks; a decline in consumer discretionary spending or
deterioration in consumer financial position, including due to the
impacts of inflation and rising prices on necessities such as gas
and groceries; our ability to optimize our transformation
strategies; 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 outsourcing
agreements; deterioration in the performance of individual
businesses or of our 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
(including execution of accelerated share repurchases and the
payment of related to excise taxes) 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; future
legislative and regulatory requirements in the US and globally
relating to climate change, including any new climate related
disclosure or compliance requirements, such as those recently
proposed by the SEC; the risk of a potential US rail union strike;
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,
including any impact on the global market supply of diamonds due to
the ongoing Russia-Ukraine conflict or related sanctions;
stakeholder reactions to disclosure regarding the source and use of
certain minerals; scrutiny or detention of goods produced in
certain territories resulting from trade restrictions; seasonality
of our business; the merchandising, pricing and inventory policies
followed by us and our ability to manage inventory levels; our
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 our 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 our 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 our real estate footprint; the performance of and
ability to recruit, train, motivate and retain qualified team
members - particularly in regions experiencing low unemployment
rates; 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 our
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 our 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; 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, organized crime or
theft, strikes, protests, riots or terrorism, acts of war
(including the ongoing Russia-Ukraine conflict), or another public health
crisis or disease outbreak, epidemic or pandemic on our
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 2022
Annual Report on Form 10-K filed with the SEC on March 17,
2022 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 & ESG Officer
+1-330-668-5932
colleen.rooney@signetjewelers.com
GAAP to Non-GAAP Reconciliations
The following information provides reconciliations of the most
directly 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 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 condensed 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.
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 (used in) provided by operating activities, less purchases of
property, plant, and equipment. Management considers adjusted free
cash flow, defined as free cash flow excluding proceeds from the
sale of the non-prime in-house finance receivables, as helpful in
understanding how the business is generating cash from its
operating and investing activities that can be used to meet the
financing needs of the business. Free cash flow and adjusted free
cash flow are indicators used by management frequently in
evaluating its overall liquidity and determining appropriate
capital allocation strategies. Free cash flow and adjusted free
cash flow do not represent the residual cash flow available for
discretionary purposes. The Company also provides the
year-over-year change in total sales excluding the impact of
foreign currency fluctuations to provide transparency to
performance and enhance investors' understanding of underlying
business trends. The effect from foreign currency, calculated on a
constant currency basis, is determined by applying current year
average exchange rates to prior year sales in local currency.
|
|
39 weeks
ended
|
(in millions)
|
|
October 29,
2022
|
|
October 30,
2021
|
Net cash (used in)
provided by operating activities
|
|
$
(155.5)
|
|
$
483.9
|
Purchase of property,
plant and equipment
|
|
(94.3)
|
|
(50.5)
|
Free cash
flow
|
|
(249.8)
|
|
433.4
|
Proceeds from sale of
in-house finance receivables
|
|
—
|
|
(81.3)
|
Adjusted free cash
flow
|
|
$
(249.8)
|
|
$
352.1
|
|
|
13 weeks
ended
|
39 weeks
ended
|
(in millions)
|
|
October 29,
2022
|
|
October 30,
2021
|
|
October 29,
2022
|
|
October 30,
2021
|
Gross margin
|
|
$
552.6
|
|
$
575.6
|
|
$
1,941.0
|
|
$
1,971.6
|
Inventory step-up -
cost of sales
|
|
5.0
|
|
—
|
|
15.2
|
|
—
|
Non-GAAP Gross
Margin
|
|
$
557.6
|
|
$
575.6
|
|
$
1,956.2
|
|
$
1,971.6
|
|
|
13 weeks
ended
|
39 weeks
ended
|
(in millions)
|
|
October 29,
2022
|
|
October 30,
2021
|
|
October 29,
2022
|
|
October 30,
2021
|
Selling, general and
administrative expenses
|
|
$
(501.7)
|
|
$
(470.5)
|
|
$
(1,512.1)
|
|
$
(1,485.1)
|
Acquisition and
integration-related costs
|
|
4.5
|
|
—
|
|
5.1
|
|
1.1
|
Non-GAAP selling,
general and administrative expenses
|
|
$
(497.2)
|
|
$
(470.5)
|
|
$
(1,507.0)
|
|
$
(1,484.0)
|
|
|
13 weeks
ended
|
|
39 weeks
ended
|
(in millions)
|
|
October 29,
2022
|
|
October 30,
2021
|
|
November 2,
2019
|
|
October 29,
2022
|
|
October 30,
2021
|
Total GAAP operating
income (loss)
|
|
$
48.4
|
|
$
106.9
|
|
$
(39.9)
|
|
$
235.4
|
|
$
501.0
|
Charges (credits)
related to
transformation plan
|
|
—
|
|
(1.7)
|
|
10.6
|
|
—
|
|
(3.3)
|
Asset impairments, net
(1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.3)
|
Acquisition and
integration-related
costs (2)
|
|
9.5
|
|
—
|
|
—
|
|
20.3
|
|
1.1
|
Gain on sale of
in-house finance
receivables
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1.4)
|
Litigation
charges
|
|
—
|
|
—
|
|
—
|
|
190.0
|
|
—
|
Total non-GAAP
operating income
(loss)
|
|
$
57.9
|
|
$
105.2
|
|
$
(29.3)
|
|
$
445.7
|
|
$
497.1
|
|
(1) Includes
asset impairments, net recorded due to the various impacts of
COVID-19 to the Company's business and related gains on
terminations or modifications of leases, resulting from previously
recorded impairments of the right of use assets in Fiscal
2021.
|
|
(2) Acquisition and
integration-related costs include the impact of the fair value
step-up for inventory from Diamonds Direct and Blue Nile; as well
as direct transaction-related and integration costs, primarily
professional fees and severance, incurred for the acquisition of
Blue Nile in Fiscal 2023; Fiscal 2022 included direct
transaction-related costs for the acquisition of
Rocksbox.
|
|
|
13 weeks
ended
|
|
39 weeks
ended
|
(in millions)
|
|
October 29,
2022
|
|
October 30,
2021
|
|
October 29,
2022
|
|
October 30,
2021
|
North America segment
GAAP operating income
|
|
$
65.4
|
|
$
123.8
|
|
$
300.3
|
|
$
573.1
|
Credits related to
transformation plan
|
|
—
|
|
—
|
|
—
|
|
(1.0)
|
Asset impairments, net
(1)
|
|
—
|
|
—
|
|
—
|
|
(0.3)
|
Gain on sale of
in-house finance receivables
|
|
—
|
|
—
|
|
—
|
|
(1.4)
|
Litigation
charges
|
|
—
|
|
—
|
|
190.0
|
|
—
|
Acquisition and
integration-related costs (2)
|
|
9.5
|
|
—
|
|
20.3
|
|
1.1
|
North America segment
non-GAAP operating income
|
|
$
74.9
|
|
$
123.8
|
|
$
510.6
|
|
$
571.5
|
|
(1) Includes
asset impairments, net recorded due to the various impacts of
COVID-19 to the Company's business and related gains on
terminations or modifications of leases, resulting from previously
recorded impairments of the right of use assets in Fiscal
2021.
|
|
(2) Acquisition and
integration-related costs include the impact of the fair value
step-up for inventory from Diamonds Direct and Blue Nile; as well
as direct transaction-related and integration costs, primarily
professional fees and severance, incurred for the acquisition of
Blue Nile in Fiscal 2023; Fiscal 2022 included direct
transaction-related costs for the acquisition of
Rocksbox.
|
|
|
13 weeks
ended
|
39 weeks
ended
|
(in millions)
|
|
October 29,
2022
|
|
October 30,
2021
|
|
October 29,
2022
|
|
October 30,
2021
|
Corporate and
unallocated expenses GAAP operating
loss
|
|
$
(10.2)
|
|
$
(16.7)
|
|
$
(54.5)
|
|
$
(66.7)
|
Credits related to
transformation plan
|
|
—
|
|
(1.7)
|
|
—
|
|
(2.3)
|
Corporate and
unallocated expenses non-GAAP
operating loss
|
|
$
(10.2)
|
|
$
(18.4)
|
|
$
(54.5)
|
|
$
(69.0)
|
|
13 weeks
ended
|
|
39 weeks
ended
|
(in
millions)
|
October 29,
2022
|
|
October 30,
2021
|
|
October 29,
2022
|
|
October 30,
2021
|
GAAP income tax expense
(benefit)
|
$
4.6
|
|
$
9.1
|
|
$
(15.0)
|
|
$
32.1
|
Credits related to
transformation plan
|
—
|
|
(0.4)
|
|
—
|
|
(0.9)
|
Pension settlement
loss
|
—
|
|
—
|
|
25.2
|
|
—
|
Acquisition and
integration-related costs (1)
|
2.5
|
|
—
|
|
5.1
|
|
0.1
|
Gain on sale of
in-house finance receivables
|
—
|
|
—
|
|
—
|
|
(0.4)
|
Litigation
charges
|
—
|
|
—
|
|
47.7
|
|
—
|
Non-GAAP income tax
expense (benefit)
|
$
7.1
|
|
$
8.7
|
|
$
63.0
|
|
$
30.9
|
|
(1) Acquisition and
integration-related costs include the impact of the fair value
step-up for inventory from Diamonds Direct and Blue Nile; as well
as direct transaction-related and integration costs, primarily
professional fees and severance, incurred for the acquisition of
Blue Nile in Fiscal 2023; Fiscal 2022 included direct
transaction-related costs for the acquisition of
Rocksbox.
|
|
13 weeks
ended
|
|
October 29,
2022
|
|
October 30,
2021
|
GAAP effective tax
rate
|
10.9 %
|
|
8.9 %
|
Credits related to
transformation plan
|
— %
|
|
(0.2) %
|
Acquisition and
integration-related costs (1)
|
2.9 %
|
|
— %
|
Non-GAAP effective tax
rate
|
13.8 %
|
|
8.7 %
|
|
(1) Acquisition and
integration-related costs include the impact of the fair value
step-up for inventory from Diamonds Direct and Blue Nile; as well
as direct transaction-related and integration costs, primarily
professional fees and severance, incurred for the acquisition of
Blue Nile in Fiscal 2023; Fiscal 2022 included direct
transaction-related costs for the acquisition of
Rocksbox.
|
|
|
13 weeks
ended
|
|
39 weeks
ended
|
|
|
October 29,
2022
|
|
October 30,
2021
|
|
November 2,
2019
|
|
October 29,
2022
|
|
October 30,
2021
|
GAAP Diluted
EPS
|
|
$
0.60
|
|
$
1.45
|
|
$
(0.84)
|
|
$
1.49
|
|
$
7.27
|
Charges (credits)
related to
transformation plan
|
|
—
|
|
(0.03)
|
|
0.20
|
|
—
|
|
(0.05)
|
Pension settlement
loss
|
|
—
|
|
—
|
|
—
|
|
2.70
|
|
—
|
Litigation
charges
|
|
—
|
|
—
|
|
—
|
|
3.86
|
|
—
|
Acquisition and
integration-related
costs (1)
|
|
0.19
|
|
—
|
|
—
|
|
0.41
|
|
0.02
|
Gain on sale of
in-house finance
receivables
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.02)
|
Gain on early
extinguishment of
debt
|
|
—
|
|
—
|
|
(0.13)
|
|
—
|
|
—
|
Dilution effect
(2)
|
|
—
|
|
—
|
|
—
|
|
(0.51)
|
|
—
|
Tax impact of items
above
|
|
(0.05)
|
|
0.01
|
|
0.01
|
|
(1.59)
|
|
—
|
Non-GAAP Diluted
EPS
|
|
$
0.74
|
|
$
1.43
|
|
$
(0.76)
|
|
$
6.36
|
|
$
7.22
|
|
(1) Acquisition and
integration-related costs include the impact of the fair value
step-up for inventory from Diamonds Direct and Blue Nile; as well
as direct transaction-related and integration costs, primarily
professional fees and severance, incurred for the acquisition of
Blue Nile in Fiscal 2023; Fiscal 2022 included direct
transaction-related costs for the acquisition of
Rocksbox.
|
|
(2) The
adjusted diluted weighted average common shares outstanding for the
39 weeks ended October 29, 2022 includes the dilutive effect
of the 8.1 million preferred shares which were excluded from
the calculation of GAAP diluted EPS for the same period, as their
effect was antidilutive.
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
|
|
|
13 weeks
ended
|
|
39 weeks
ended
|
(in millions, except
per share amounts)
|
|
October 29,
2022
|
|
October 30,
2021
|
|
October 29,
2022
|
|
October 30,
2021
|
Sales
|
|
$
1,582.7
|
|
$
1,537.8
|
|
$
5,175.9
|
|
$
5,014.7
|
Cost of
sales
|
|
(1,030.1)
|
|
(962.2)
|
|
(3,234.9)
|
|
(3,043.1)
|
Gross
margin
|
|
552.6
|
|
575.6
|
|
1,941.0
|
|
1,971.6
|
Selling, general and
administrative expenses
|
|
(501.7)
|
|
(470.5)
|
|
(1,512.1)
|
|
(1,485.1)
|
Other operating income
(expense)
|
|
(2.5)
|
|
1.8
|
|
(193.5)
|
|
14.5
|
Operating
income
|
|
48.4
|
|
106.9
|
|
235.4
|
|
501.0
|
Interest expense,
net
|
|
(3.6)
|
|
(4.1)
|
|
(11.4)
|
|
(12.4)
|
Other non-operating
expense, net
|
|
(2.7)
|
|
(1.1)
|
|
(139.6)
|
|
(0.9)
|
Income before income
taxes
|
|
42.1
|
|
101.7
|
|
84.4
|
|
487.7
|
Income taxes
|
|
(4.6)
|
|
(9.1)
|
|
15.0
|
|
(32.1)
|
Net income
|
|
$
37.5
|
|
$
92.6
|
|
$
99.4
|
|
$
455.6
|
Dividends on redeemable
convertible preferred shares
|
|
(8.7)
|
|
(8.7)
|
|
(25.9)
|
|
(25.9)
|
Net income
attributable to common shareholders
|
|
$
28.8
|
|
$
83.9
|
|
$
73.5
|
|
$
429.7
|
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.62
|
|
$
1.59
|
|
$
1.56
|
|
$
8.17
|
Diluted
|
|
$
0.60
|
|
$
1.45
|
|
$
1.49
|
|
$
7.27
|
Weighted average common
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
46.1
|
|
52.9
|
|
47.1
|
|
52.6
|
Diluted
|
|
48.1
|
|
63.7
|
|
49.2
|
|
62.7
|
|
|
|
|
|
|
|
|
|
Dividends declared per
common share
|
|
$
0.20
|
|
$
0.18
|
|
$
0.60
|
|
$
0.36
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
|
(in millions, except
par value per share amount)
|
|
October 29,
2022
|
|
January 29,
2022
|
|
October 30,
2021
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
327.3
|
|
$ 1,418.3
|
|
$ 1,516.9
|
Accounts
receivable
|
|
29.8
|
|
19.9
|
|
19.3
|
Other current
assets
|
|
180.1
|
|
208.6
|
|
194.9
|
Income
taxes
|
|
222.0
|
|
23.2
|
|
115.4
|
Inventories
|
|
2,429.0
|
|
2,060.4
|
|
2,148.3
|
Total current
assets
|
|
3,188.2
|
|
3,730.4
|
|
3,994.8
|
Non-current
assets:
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
591.6
|
|
575.9
|
|
513.2
|
Operating lease
right-of-use assets
|
|
1,091.5
|
|
1,206.6
|
|
1,195.3
|
Goodwill
|
|
752.3
|
|
484.6
|
|
245.0
|
Intangible assets,
net
|
|
413.5
|
|
314.2
|
|
189.2
|
Other assets
|
|
275.8
|
|
226.1
|
|
215.0
|
Deferred tax
assets
|
|
33.1
|
|
37.3
|
|
35.0
|
Total assets
|
|
$
6,346.0
|
|
$ 6,575.1
|
|
$ 6,387.5
|
Liabilities,
Redeemable convertible preferred shares, and
Shareholders' equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Loans and
overdrafts
|
|
$
—
|
|
$
—
|
|
$
0.3
|
Accounts
payable
|
|
800.2
|
|
899.8
|
|
868.2
|
Accrued expenses and
other current liabilities
|
|
623.2
|
|
501.6
|
|
469.2
|
Deferred
revenue
|
|
335.3
|
|
341.3
|
|
307.0
|
Operating lease
liabilities
|
|
266.1
|
|
300.0
|
|
304.4
|
Income
taxes
|
|
22.7
|
|
28.0
|
|
22.7
|
Total current
liabilities
|
|
2,047.5
|
|
2,070.7
|
|
1,971.8
|
Non-current
liabilities:
|
|
|
|
|
|
|
Long-term
debt
|
|
147.3
|
|
147.1
|
|
147.0
|
Operating lease
liabilities
|
|
917.0
|
|
1,005.1
|
|
994.0
|
Other
liabilities
|
|
98.8
|
|
117.6
|
|
129.1
|
Deferred
revenue
|
|
878.1
|
|
857.6
|
|
813.2
|
Deferred tax
liabilities
|
|
245.8
|
|
160.9
|
|
146.1
|
Total
liabilities
|
|
4,334.5
|
|
4,359.0
|
|
4,201.2
|
Commitments and
contingencies
|
|
|
|
|
|
|
Series A redeemable
convertible preferred shares
|
|
653.4
|
|
652.1
|
|
651.7
|
Shareholders'
equity:
|
|
|
|
|
|
|
Common
shares
|
|
12.6
|
|
12.6
|
|
12.6
|
Additional paid-in
capital
|
|
252.3
|
|
231.2
|
|
271.8
|
Other
reserves
|
|
0.4
|
|
0.4
|
|
0.4
|
Treasury shares, at
cost
|
|
(1,510.2)
|
|
(1,206.7)
|
|
(986.3)
|
Retained
earnings
|
|
2,885.2
|
|
2,877.4
|
|
2,580.7
|
Accumulated other
comprehensive loss
|
|
(282.2)
|
|
(350.9)
|
|
(344.6)
|
Total shareholders'
equity
|
|
1,358.1
|
|
1,564.0
|
|
1,534.6
|
Total liabilities,
redeemable convertible preferred shares and shareholders'
equity
|
|
$
6,346.0
|
|
$ 6,575.1
|
|
$ 6,387.5
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
|
|
|
39 weeks
ended
|
(in
millions)
|
|
October 29,
2022
|
|
October 30,
2021
|
Cash flows from
operating activities
|
|
|
|
|
Net income
|
|
$
99.4
|
|
$
455.6
|
Adjustments to
reconcile net income to net cash (used in) provided by
operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
123.5
|
|
122.9
|
Amortization of
unfavorable contracts
|
|
(1.4)
|
|
(2.9)
|
Share-based
compensation
|
|
34.3
|
|
36.4
|
Deferred
taxation
|
|
63.2
|
|
(20.1)
|
Pension settlement
loss
|
|
132.8
|
|
—
|
Other non-cash
movements
|
|
7.8
|
|
4.0
|
Changes in operating
assets and liabilities, net of acquisitions:
|
|
|
|
|
(Increase) decrease in
accounts receivable
|
|
(9.9)
|
|
13.0
|
Proceeds from sale of
in-house finance receivables
|
|
—
|
|
81.3
|
Decrease (increase) in
other assets and other receivables
|
|
0.6
|
|
(12.9)
|
Increase in
inventories
|
|
(305.6)
|
|
(112.1)
|
(Decrease) increase in
accounts payable
|
|
(177.6)
|
|
36.8
|
Increase (decrease) in
accrued expenses and other liabilities
|
|
105.6
|
|
(25.6)
|
Change in operating
lease assets and liabilities
|
|
(5.9)
|
|
(59.9)
|
(Decrease) increase in
deferred revenue
|
|
(7.0)
|
|
47.1
|
Change in income tax
receivable and payable
|
|
(206.1)
|
|
(67.3)
|
Pension plan
contributions
|
|
(9.2)
|
|
(12.4)
|
Net cash (used in)
provided by operating activities
|
|
(155.5)
|
|
483.9
|
Investing
activities
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(94.3)
|
|
(50.5)
|
Acquisitions, net of
cash acquired
|
|
(397.8)
|
|
(14.6)
|
Other investing
activities, net
|
|
(16.3)
|
|
2.1
|
Net cash used in
investing activities
|
|
(508.4)
|
|
(63.0)
|
Financing
activities
|
|
|
|
|
Dividends paid on
common shares
|
|
(27.4)
|
|
(9.5)
|
Dividends paid on
redeemable convertible preferred shares
|
|
(24.6)
|
|
(16.4)
|
Repurchase of common
shares
|
|
(311.2)
|
|
(41.1)
|
Payment of debt
issuance costs
|
|
—
|
|
(3.9)
|
Increase of bank
overdrafts
|
|
—
|
|
0.3
|
Other financing
activities, net
|
|
(44.3)
|
|
(7.5)
|
Net cash used in
financing activities
|
|
(407.5)
|
|
(78.1)
|
Cash and cash
equivalents at beginning of period
|
|
1,418.3
|
|
1,172.5
|
(Decrease) increase in
cash and cash equivalents
|
|
(1,071.4)
|
|
342.8
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
(19.6)
|
|
1.6
|
Cash and cash
equivalents at end of period
|
|
$
327.3
|
|
$
1,516.9
|
Real Estate Portfolio:
Signet has a diversified real estate portfolio. On
October 29, 2022, Signet had 2,846 stores totaling 4.2 million
square feet of selling space. Compared to year-end Fiscal 2022,
store count decreased and square feet of selling space increased
0.8%.
Store count by
segment
|
January 29,
2022
|
|
Openings
(1)
|
|
Closures
|
|
October 29,
2022
|
North America
segment
|
2,506
|
|
53
|
|
(47)
|
|
2,512
|
International
segment
|
348
|
|
1
|
|
(15)
|
|
334
|
Signet
|
2,854
|
|
54
|
|
(62)
|
|
2,846
|
|
(1) Includes
23 locations acquired from Blue Nile in Fiscal 2023.
|
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SOURCE Signet Jewelers Ltd.