Reaffirms Guidance for FY2024 excluding
Profitable Sale of 15 U.K. Stores
Engagement Recovery
Tracking as Expected
Total Inventory Down 14%
Year-over-year
HAMILTON, Bermuda, Dec. 5, 2023
/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 28, 2023 ("third
quarter Fiscal 2024").
"We delivered earnings on the high end of our expectations
driven by continued progress on our strategic goals. We believe our
extensive consumer insights provide a competitive advantage that
has contributed to continued bridal market share gains and
consistency in average transaction value again this quarter," said
Signet Chief Executive Officer Virginia C.
Drosos. "Trends through Black Friday weekend, including
sequential improvement in engagement trends, are performing in line
with guidance expectations for the fourth quarter. As we enter the
holiday season, jewelry remains a top of mind gifting category for
consumers in a value conscious shopping environment."
"We're reaffirming guidance for FY2024 with the full year
outlook updated for the profitable and strategic sale of 15
primarily luxury watch stores in the U.K. We continue to make
progress expanding gross margin through merchandise and sourcing
strategies and growth in services revenue," said Joan Hilson, Chief Financial, Strategy &
Services Officer. "Cost savings initiatives are on track and
healthy inventory enables product newness as we enter the holiday
season and improved free cash flow, allowing Signet to return
nearly $160 million to shareholders
already this year."
Third Quarter Fiscal 2024 Highlights:
- Sales of $1.4 billion, down
$190.8 million or 12.1% (down
12.4%(1) on a constant currency basis) to Q3 of
FY23.
- Same store sales ("SSS")(2) down 11.8% to Q3 of
FY23.
- GAAP operating income of $13.3
million, down $35.1 million
from Q3 of FY23. Q3 of FY24 includes $7.5
million for integration-related charges for Blue Nile. Q3 of
FY23 included $9.5 million related to
the fair value adjustment of acquired inventory as well as
acquisition and integration-related charges.
- Non-GAAP operating income(1) of $23.9 million, down $34.0
million from Q3 of FY23.
- GAAP diluted earnings per share ("EPS") of $0.07, compared to $0.60 in Q3 of FY23, including $0.16 in integration-related charges for Blue
Nile.
- Non-GAAP diluted EPS(1) of $0.24, compared to $0.74 in Q3 of FY23.
- Cash and cash equivalents, at quarter end, of $643.8 million, compared to $327.3 million in Q3 of FY23.
- Year-to-date cash used in operating activities of $205.3 million, compared to cash used of
$155.5 million at this time last
year, including approximately $200
million for payment of legal settlements in the current
year.
- Repurchased $35.1 million, or
approximately 0.5 million shares, during the third quarter.
(1)
|
See non-GAAP financial
measures below.
|
(2)
|
Same store sales
include physical stores and eCommerce sales. Blue Nile is now
included in SSS beginning in the third quarter of Fiscal
2024.
|
(in millions, except
per share amounts)
|
|
Fiscal 24
Q3
|
|
Fiscal 23
Q3
|
|
YTD Fiscal
2024
|
|
YTD Fiscal
2023
|
Sales
|
|
$ 1,391.9
|
|
$ 1,582.7
|
|
$
4,673.5
|
|
$
5,175.9
|
SSS % change
(1)
|
|
(11.8) %
|
|
(7.6) %
|
|
(12.6) %
|
|
(4.4) %
|
GAAP
|
|
|
|
|
|
|
|
|
Operating
income
|
|
$
13.3
|
|
$
48.4
|
|
$
205.2
|
|
$
235.4
|
Operating
margin
|
|
1.0 %
|
|
3.1 %
|
|
4.4 %
|
|
4.5 %
|
GAAP diluted
EPS
|
|
$
0.07
|
|
$
0.60
|
|
$
3.39
|
|
$
1.49
|
Non-GAAP
(2)
|
|
|
|
|
|
|
|
|
Non-GAAP operating
income
|
|
$
23.9
|
|
$
57.9
|
|
$
233.1
|
|
$
445.7
|
Non-GAAP operating
margin
|
|
1.7 %
|
|
3.7 %
|
|
5.0 %
|
|
8.6 %
|
Non-GAAP diluted
EPS
|
|
$
0.24
|
|
$
0.74
|
|
$
3.71
|
|
$
6.36
|
|
(1)
Same store sales include physical stores and eCommerce
sales. Blue Nile is now included in SSS beginning in the third
quarter of Fiscal 2024.
|
(2)
See non-GAAP financial measures below.
|
Third Quarter
Fiscal 2024 Results:
|
|
|
Change
from previous year
|
|
|
Third Quarter Fiscal
2024
|
Same
store
sales
|
|
Non-same
store sales,
net
(2)
|
|
Total sales at
constant
exchange rate
(3)
|
|
Exchange
translation
impact
|
|
Total
sales
as reported
|
|
Total
sales
(in millions)
|
North America
segment
|
(12.3) %
|
|
0.5 %
|
|
(11.8) %
|
|
(0.1) %
|
|
(11.9) %
|
|
$
1,291.1
|
International
segment
|
(4.6) %
|
|
(3.9) %
|
|
(8.5) %
|
|
7.1 %
|
|
(1.4) %
|
|
$
94.0
|
Other segment
(1)
|
nm
|
|
nm
|
|
nm
|
|
nm
|
|
nm
|
|
$
6.8
|
Signet
|
(11.8) %
|
|
(0.6) %
|
|
(12.4) %
|
|
0.3 %
|
|
(12.1) %
|
|
$
1,391.9
|
|
|
(1)
|
Includes sales from
Signet's diamond sourcing operation.
|
(2)
|
Includes sales from
acquired businesses which were not included in the results for the
full comparable period. Blue Nile was included in SSS beginning in
the third quarter of Fiscal 2024.
|
(3)
|
See non-GAAP financial
measures below.
|
nm Not
meaningful.
|
By reportable segment:
North America
- Total sales of $1.3 billion, down
11.9% to Q3 of FY23 reflecting an increase of 1.1% in total average
transaction value ("ATV"), driven by a lift from Blue Nile of
approximately 1%, on a lower number of transactions.
- SSS declined 12.3% compared to Q3 of FY23.
International
- Total sales of $94.0 million,
down 1.4% to Q3 of FY23 (down 8.5% on a constant currency basis)
reflecting an increase of 2.7% in total ATV on a lower number of
transactions.
- SSS declined 4.6% versus Q3 of FY23.
GAAP gross margin was $501.3
million, down from $552.6
million in Q3 of FY23. GAAP gross margin was 36.0% of sales,
or 110 basis points higher versus Q3 of FY23 as favorable
merchandise margins and a higher mix of Services business offset
investments in digital banners and deleveraging of fixed costs such
as store occupancy.
GAAP SG&A was $484.2 million,
down from $501.7 million in Q3 of
FY23. GAAP SG&A was 34.8% of sales, 310 basis points higher
versus Q3 of FY23. The change in SG&A was driven by deleverage
resulting from investments in digital banners and strategic
initiatives in Signet's seasonally lowest revenue quarter.
GAAP operating income was $13.3
million or 1.0% of sales, down $35.1
million to Q3 of FY23.
Non-GAAP operating income was $23.9
million, or 1.7% of sales, compared to $57.9 million, or 3.7% of sales in the prior year
third quarter. Non-GAAP operating income in the current quarter
excluded $7.5 million for
integration-related charges for Blue Nile.
|
|
Third quarter Fiscal
2024
|
|
Third quarter Fiscal
2023
|
GAAP Operating
income in millions
|
|
$
|
|
% of
sales
|
|
$
|
|
% of
sales
|
North America
segment
|
|
$
39.2
|
|
3.0 %
|
|
$
65.4
|
|
4.5 %
|
International
segment
|
|
(9.0)
|
|
(9.6) %
|
|
(6.5)
|
|
(6.8) %
|
Other
segment
|
|
(3.1)
|
|
nm
|
|
(0.3)
|
|
nm
|
Corporate and
unallocated expenses
|
|
(13.8)
|
|
nm
|
|
(10.2)
|
|
nm
|
Total GAAP operating
income
|
|
$
13.3
|
|
1.0 %
|
|
$
48.4
|
|
3.1 %
|
|
|
|
Third quarter Fiscal
2024
|
|
Third quarter Fiscal
2023
|
Non-GAAP Operating
income in millions (1)
|
|
$
|
|
% of
sales
|
|
$
|
|
% of
sales
|
North America
segment
|
|
$
47.1
|
|
3.6 %
|
|
$
74.9
|
|
5.1 %
|
International
segment
|
|
(6.3)
|
|
(6.7) %
|
|
(6.5)
|
|
(6.8) %
|
Other
segment
|
|
(3.1)
|
|
nm
|
|
(0.3)
|
|
nm
|
Corporate and
unallocated expenses
|
|
(13.8)
|
|
nm
|
|
(10.2)
|
|
nm
|
Total Non-GAAP
operating income
|
|
$
23.9
|
|
1.7 %
|
|
$
57.9
|
|
3.7 %
|
|
(1)
See non-GAAP financial measures below.
|
nm Not
meaningful.
|
The current quarter GAAP income tax expense was $1.9 million compared to income tax expense of
$4.6 million in Q3 of FY23. On a
non-GAAP basis, income tax expense was $4.6
million compared to income tax expense of $7.1 million in Q3 of FY23.
GAAP diluted EPS was $0.07, down
from $0.60 per diluted share in Q3 of
FY23. GAAP diluted EPS in the current quarter includes $0.16 for integration-related charges for Blue
Nile, $0.04 of restructuring charges
and $0.03 of divestiture-related
costs. Excluding these charges (and related tax effects), diluted
EPS was $0.24 on a non-GAAP
basis.
GAAP EPS and non-GAAP EPS for the third quarter of Fiscal 2024
do not include the impact of the preferred shares in the dilutive
share count, as their effect was antidilutive.
Balance Sheet and Statement of Cash Flows Highlights:
Year to date cash used in operating activities was $205.3 million compared to cash used in operating
activities of $155.5 million at this
time last year. Cash and cash equivalents were $643.8 million as of quarter end, compared to
$327.3 million at the end of Q3 of
FY23. The Company ended the third quarter with an Adjusted Debt to
Adjusted EBITDAR ratio of 2.3x on a trailing 12-month basis, well
below the stated goal of less than 2.75x, and was 1.8x on an
Adjusted Net Debt basis.
Inventory ended the quarter at $2.1
billion, down $333.3 million
to Q3 of FY23, or approximately 14% below Q3 of FY23, driven by
Signet's consumer insights to predict dynamic conditions and demand
planning efforts.
Disposition of Select UK Stores:
Subsequent to the third quarter, the Company completed selling
15 primarily luxury watch stores, within the Ernest Jones banner,
to the Watches of Switzerland Group, with the potential for up to
six additional retail locations by the end of the fourth quarter.
The accretive sale multiple from the 15 stores generated proceeds
of approximately $53 million, subject
to customary post-closing adjustments. This sale is estimated to
result in a pre-tax gain of approximately $12 million which will be reflected in Signet's
Q4 results; however, it will be excluded from the non-GAAP
operating income as one-time in nature. The divestiture of this
non-strategic business allows Signet to more quickly apply key
elements of our U.K. transformation plan. The proceeds of the sale
will be used for general corporate purposes.
Capital Returns to Shareholders:
Signet's Board of Directors has declared a quarterly cash
dividend on common shares of $0.23
per share for the fourth quarter of Fiscal 2024, payable
February 23, 2024 to shareholders of
record on January 26, 2024, with an
ex-dividend date of January 25,
2024.
As of market close on December
1st, Signet has repurchased approximately 1.8
million shares at an average cost per share of $71.57, or $128.5
million, including $35.1
million during the third quarter. Approximately
$672 million remains under the Company's multi-year
authorization.
Fourth Quarter and Full Year Fiscal 2024 Guidance:
Forecasted non-GAAP operating income and diluted EPS provided
below excludes potential non-recurring charges, such as
restructuring charges, asset impairments or integration-related
costs associated with the acquisition of Blue Nile. However, given
the potential impact of non-recurring charges to the GAAP operating
income and diluted EPS, we cannot provide forecasted GAAP operating
income or diluted EPS or the probable significance of such items
without unreasonable efforts. As such, we do not present a
reconciliation of forecasted non-GAAP operating income and diluted
EPS to corresponding forecasted GAAP amounts.
Signet's fourth quarter and full year Fiscal 2024 guidance for
sales, operating income and diluted EPS is provided on a non-GAAP
basis.
|
Fourth
Quarter
|
|
Fiscal 2024
(2)
|
Total sales
|
$2.40 billion to $2.60
billion
|
|
$7.07 billion to $7.27
billion
|
Operating income
(1)
|
$397 million to $437
million
|
|
$630 million to $670
million
|
Diluted EPS
(1)
|
|
|
$9.55 to
$10.18
|
|
|
(1)
|
See description of
non-GAAP financial measures below.
|
(2)
|
Fiscal 2024 is a
53-week fiscal year for Signet, ending February 3, 2024, driven by
the retail industry calendar. The additional week will occur in Q4
of Fiscal 2024
|
The Company's fourth quarter and full year Fiscal 2024 outlook
is based on the following assumptions:
- Updated for the strategic sale of 15 luxury watch stores in the
U.K. in the fourth quarter, including approximately $25 million of revenue and $5 million of 4-wall operating income.
- Fiscal 2024 is a 53-week fiscal year. Signet estimates that
sales for the 53rd week in the fourth quarter of Fiscal 2024
between $80 million and $100 million.
- The Company's guidance contemplates annual market share gains
against this total industry performance range.
- Planned capital investments up to $200
million, reflecting investments in banner differentiation,
including stores, Connected Commerce capabilities, and digital and
technology advancement.
- The Company continues to expect headwinds in engagements with
recovery beginning in the fourth quarter, and further rebound over
the next three years. Bridal overall, inclusive of engagements,
historically represents nearly 50% of Signet's merchandise
sales.
- Annual tax rate of approximately 19% excludes additional
discrete items.
- Diluted EPS for Fiscal 2024 includes the repurchase of an
additional 0.5 million shares during Q3 and 0.1 million shares
during Q4 of FY24, the dilutive effect of the 8.2 million preferred
shares and excludes the impact of any further share repurchases
beyond what is reported today.
Our Purpose and Sustainable Growth:
As a company with a Purpose-inspired business strategy, Signet
is committed to ongoing leadership in Corporate Citizenship &
Sustainability. Signet released its Fiscal 2023 Corporate
Citizenship & Sustainability Report including a progress report
on its 2030 Corporate Sustainability Goals. The report reflects the
Company's commitment to its Corporate Sustainability framework
defined by Love for All People; Love for Our Team; and Love for Our
Planet and Products. Since the release of its Corporate
Sustainability Goals approximately two years ago, the Company has
successfully integrated the Inspiring Brilliance business strategy
and long-term corporate sustainability initiatives into its culture
and day-to-day business operations. Signet recently celebrated
reaching the $100 million mark in
funds raised throughout its 25-year partnership with St. Jude
Children's Research Hospital®. It also announced a new,
additional $100 million commitment to
St. Jude, which will help to
further increase survivorship in the
United States and around the globe where survivorship rates
are much lower.
Conference Call:
A conference call is scheduled for December 5, 2023 at
8:30 a.m. ET and a simultaneous audio
webcast is available at www.signetjewelers.com.
The call details are:
Local – Toronto +1 416 764
8658
Toll Free – North America +1
888 886 7786
Conference ID 91124850
Registration for the listen-only webcast is available at the
following link:
https://events.q4inc.com/attendee/242426949
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 operates approximately 2,700 stores primarily
under the name brands of Kay Jewelers, Zales, Jared, Banter by
Piercing Pagoda, Diamonds Direct, Blue Nile, JamesAllen.com,
Rocksbox, Peoples Jewellers, H. Samuel, and Ernest Jones. 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.bluenile.com,
www.jamesallen.com,
www.rocksbox.com, www.peoplesjewellers.com, www.hsamuel.co.uk,
www.ernestjones.co.uk.
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; executing other major business or strategic
initiatives, such as expansion of the services business or
realizing the benefits of our restructuring plan; the impact of the
Israel-Hamas conflict on our operations; 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,
including without limitation risks relating to shifts in consumer
spending away from the jewelry category, trends toward more
experiential purchases such as travel, disruptions in the dating
cycle caused by the pandemic and the pace at which such impacts on
engagements are expected to recover, and the impacts of the
expiration of government stimulus on overall consumer spending
(including the recent expiration of student loan relief); general
economic or market conditions, including impacts of inflation 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;
disruptions in our supply chain; our ability to attract and retain
labor; 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, which has occurred and may
continue to deteriorate; our ability to achieve the benefits
related to the outsourcing of the credit portfolio, including due
to technology disruptions and/or disruptions arising from changes
to or termination of the relevant outsourcing agreements, as well
as a potential increase in credit costs due to the current interest
rate environment; 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 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; 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 issued in the state of California or proposed by the SEC; 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 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, including operating in attractive trade
areas and mall locations; 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 other 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 assets including cash which
could be affected by failure of a financial institution or
conditions affecting the banking system and financial markets as a
whole; changes in assumptions used in making accounting estimates
relating to items such as extended service plans; 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 and Israel-Hamas conflicts), 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 2023
Annual Report on Form 10-K filed with the SEC on March 16,
2023 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:
Rob
Ballew
Senior Vice President, Investor Relations
robert.ballew@signetjewelers.com
or
investorrelations@signetjewelers.com
Media:
Colleen
Rooney
Chief Communications & ESG Officer
+1-330-668-5932
colleen.rooney@signetjewelers.com
Non-GAAP Financial Measures
In addition to reporting the Company's financial results in
accordance with generally accepted accounting principles ("GAAP"),
the Company reports certain financial measures on a non-GAAP basis.
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 and liquidity. 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.
The Company reports the following non-GAAP financial measures:
non-GAAP operating income, non-GAAP operating margin, non-GAAP
diluted earnings per share ("EPS"), free cash flow, sales changes
on a constant currency basis, and adjusted debt and adjusted net
debt leverage ratios.
Non-GAAP operating income is a non-GAAP measure defined as
operating income excluding the impact of certain items which
management believes are not necessarily reflective of normal
operational performance during a period. Management finds the
information useful when analyzing operating results to
appropriately evaluate the performance of the business without the
impact of these certain items. Management believes the
consideration of measures that exclude such items can assist in the
comparison of operational performance in different periods which
may or may not include such items. Management also utilizes
non-GAAP operating margin, defined as non-GAAP operating income as
a percentage of total sales, to further evaluate the effectiveness
and efficiency of the Company's flexible operating model.
Non-GAAP diluted EPS is a non-GAAP measure defined as diluted
EPS excluding the impact of certain items which management believes
are not necessarily reflective of normal operational performance
during a period. Management finds the information useful when
analyzing financial results in order to appropriately evaluate the
performance of the business without the impact of these certain
items. In particular, management believes the consideration of
measures that exclude such items can assist in the comparison of
performance in different periods which may or may not include such
items. The Company estimates the tax effect of all non-GAAP
adjustments by applying a statutory tax rate to each item. The
income tax items represent the discrete amount that affected the
diluted EPS during the period.
Free cash flow is a non-GAAP measure defined as the net cash
used in operating activities less purchases of property, plant and
equipment. Management considers this metric to be 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 is an indicator
frequently used by management in evaluating its overall liquidity
needs and determining appropriate capital allocation strategies.
Free cash flow does not represent the residual cash flow available
for discretionary purposes.
The Company 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.
The adjusted debt and adjusted net debt leverage ratios are
non-GAAP measures calculated by dividing Signet's adjusted debt or
adjusted net debt by adjusted EBITDAR. Adjusted debt is a non-GAAP
measure defined as debt recorded in the condensed consolidated
balance sheet, plus Preferred Shares, plus an adjustment for
operating leases (5x annual rent expense). Adjusted net debt, a
non-GAAP measure, is adjusted debt less the cash and cash
equivalents on hand as of the balance sheet dates. Adjusted EBITDAR
is a non-GAAP measure, defined as earnings before interest and
income taxes, depreciation and amortization, share-based
compensation expense, other non-operating expense, net and certain
non-GAAP accounting adjustments ("Adjusted EBITDA") and further
excludes minimum fixed rent expense for properties occupied under
operating leases. Adjusted EBITDA and Adjusted EBITDAR are
considered important indicators of operating performance as they
exclude the effects of financing and investing activities by
eliminating the effects of interest, depreciation and amortization
costs and certain accounting adjustments. Management believes these
financial measures are helpful to investors and analysts to analyze
trends in Signet's business and evaluate Signet's performance. The
adjusted debt leverage ratio is a key priority of the Company's
capital allocation strategy used in measuring the Company's
optimized capital structure. The adjusted net debt leverage is
supplemental to this ratio as it is deemed useful to both investors
and management to consider cash on hand available to pay down debt.
The adjusted debt and adjusted net debt leverage ratios are
presented on a trailing twelve-month ("TTM") basis, which uses
Adjusted EBITDAR calculated on the prior four fiscal quarters.
The following information provides reconciliations of the most
comparable financial measures calculated and presented in
accordance with GAAP to presented non-GAAP financial measures.
Free cash
flow
|
|
|
|
39 weeks
ended
|
(in millions)
|
|
October 28,
2023
|
|
October 29,
2022
|
Net cash used in
operating activities
|
|
$
(205.3)
|
|
$
(155.5)
|
Purchase of property,
plant and equipment
|
|
(89.4)
|
|
(94.3)
|
Free cash
flow
|
|
$
(294.7)
|
|
$
(249.8)
|
Non-GAAP operating
income
|
|
|
13 weeks
ended
|
|
39 weeks
ended
|
(in millions)
|
October 28,
2023
|
|
October 29,
2022
|
|
October 28,
2023
|
|
October 29,
2022
|
Total GAAP operating
income
|
$
13.3
|
|
$
48.4
|
|
$
205.2
|
|
$
235.4
|
Litigation charges
(1)
|
—
|
|
—
|
|
(3.0)
|
|
190.0
|
Acquisition and
integration-related expenses (2)
|
7.5
|
|
9.5
|
|
20.1
|
|
20.3
|
Restructuring charges
(3)
|
1.6
|
|
—
|
|
5.8
|
|
—
|
Asset impairments
(3)
|
0.2
|
|
—
|
|
3.7
|
|
—
|
Divestiture-related
costs (4)
|
1.3
|
|
—
|
|
1.3
|
|
—
|
Total non-GAAP
operating income
|
$
23.9
|
|
$
57.9
|
|
$
233.1
|
|
$
445.7
|
North America
segment non-GAAP operating income
|
|
|
13 weeks
ended
|
39 weeks
ended
|
(in millions)
|
October 28,
2023
|
|
October 29,
2022
|
|
October 28,
2023
|
|
October 29,
2022
|
North America segment
GAAP operating income
|
$
39.2
|
|
$
65.4
|
|
$
281.0
|
|
$
300.3
|
Litigation charges
(1)
|
—
|
|
—
|
|
(3.0)
|
|
190.0
|
Acquisition and
integration-related expenses (2)
|
7.5
|
|
9.5
|
|
20.1
|
|
20.3
|
Restructuring charges
(3)
|
0.2
|
|
—
|
|
4.4
|
|
—
|
Asset impairments
(3)
|
0.2
|
|
—
|
|
3.7
|
|
—
|
North America segment
non-GAAP operating income
|
$
47.1
|
|
$
74.9
|
|
$
306.2
|
|
$
510.6
|
International
segment non-GAAP operating loss
|
|
|
13 weeks
ended
|
39 weeks
ended
|
(in millions)
|
October 28,
2023
|
|
October 29,
2022
|
|
October 28,
2023
|
|
October 29,
2022
|
International segment
GAAP operating loss
|
$
(9.0)
|
|
$
(6.5)
|
|
$
(22.9)
|
|
$
(14.9)
|
Restructuring charges
(3)
|
1.4
|
|
—
|
|
1.4
|
|
—
|
Divestiture-related
costs (4)
|
1.3
|
|
—
|
|
1.3
|
|
—
|
International segment
non-GAAP operating loss
|
$
(6.3)
|
|
$
(6.5)
|
|
$
(20.2)
|
|
$
(14.9)
|
Non-GAAP income tax
provision
|
|
|
13 weeks
ended
|
|
39 weeks
ended
|
(in
millions)
|
October 28,
2023
|
|
October 29,
2022
|
|
October 28,
2023
|
|
October 29,
2022
|
GAAP income tax expense
(benefit)
|
$
1.9
|
|
$
4.6
|
|
$
28.6
|
|
$
(15.0)
|
Litigation charges
(1)
|
—
|
|
—
|
|
(0.8)
|
|
47.7
|
Pension settlement loss
(5)
|
—
|
|
—
|
|
4.1
|
|
25.2
|
Acquisition and
integration-related expenses (2)
|
1.9
|
|
2.5
|
|
5.0
|
|
5.1
|
Restructuring charges
(3)
|
0.5
|
|
—
|
|
1.6
|
|
—
|
Asset impairments
(3)
|
—
|
|
—
|
|
0.9
|
|
—
|
Divestiture-related
costs (4)
|
0.3
|
|
—
|
|
0.3
|
|
—
|
Non-GAAP income tax
expense
|
$
4.6
|
|
$
7.1
|
|
$
39.7
|
|
$
63.0
|
Non-GAAP effective
tax rate
|
|
|
13 weeks
ended
|
|
October 28,
2023
|
|
October 29,
2022
|
GAAP effective tax
rate
|
14.0 %
|
|
10.9 %
|
Acquisition and
integration-related expenses (2)
|
3.5 %
|
|
2.9 %
|
Restructuring charges
(3)
|
0.9 %
|
|
— %
|
Divestiture-related
costs (4)
|
0.6 %
|
|
— %
|
Non-GAAP effective tax
rate
|
19.0 %
|
|
13.8 %
|
Non-GAAP diluted
EPS
|
|
|
13 weeks
ended
|
|
39 weeks
ended
|
|
October 28,
2023
|
|
October 29,
2022
|
|
October 28,
2023
|
|
October 29,
2022
|
GAAP diluted
EPS
|
$
0.07
|
|
$
0.60
|
|
$
3.39
|
|
$
1.49
|
Litigation charges
(1)
|
—
|
|
—
|
|
(0.06)
|
|
3.86
|
Pension settlement loss
(5)
|
—
|
|
—
|
|
—
|
|
2.70
|
Acquisition and
integration-related expenses (2)
|
0.16
|
|
0.19
|
|
0.38
|
|
0.41
|
Restructuring charges
(3)
|
0.04
|
|
—
|
|
0.11
|
|
—
|
Asset impairments
(3)
|
—
|
|
—
|
|
0.07
|
|
—
|
Divestiture-related
costs (4)
|
0.03
|
|
—
|
|
0.02
|
|
—
|
Dilution effect
(6)
|
—
|
|
—
|
|
—
|
|
(0.51)
|
Tax impact of items
above (7)
|
(0.06)
|
|
(0.05)
|
|
(0.20)
|
|
(1.59)
|
Non-GAAP diluted
EPS
|
$
0.24
|
|
$
0.74
|
|
$
3.71
|
|
$
6.36
|
Adjusted debt and
adjusted net debt leverage ratios
|
|
|
As of
|
(in millions)
|
October 28,
2023
|
|
October 29,
2022
|
Adjusted debt and
adjusted net debt:
|
|
|
|
Current portion of
long-term debt
|
$
147.6
|
|
$
—
|
Long-term
debt
|
—
|
|
147.3
|
Redeemable Series A
Convertible Preference Shares
|
655.1
|
|
653.4
|
Adjustments:
|
|
|
|
5x Rent
expense
|
2,224.0
|
|
2,227.5
|
Adjusted
debt
|
$
3,026.7
|
|
$
3,028.2
|
Less: Cash and cash
equivalents
|
643.8
|
|
327.3
|
Adjusted net
debt
|
$
2,382.9
|
|
$
2,700.9
|
|
|
|
|
TTM Adjusted
EBITDAR
|
$
1,295.3
|
|
$
1,508.2
|
|
|
|
|
Adjusted debt
leverage ratio
|
2.3x
|
|
2.0x
|
|
|
|
|
Adjusted net debt
leverage ratio
|
1.8x
|
|
1.8x
|
|
39 weeks
ended
|
|
52 week period
ended
|
|
52 week period
ended
|
(in millions)
|
October 28,
2023
|
|
October 29,
2022
|
|
October 30,
2021
|
|
January 28,
2023
|
|
January 29,
2022
|
|
October 28,
2023
|
|
October 29,
2022
|
Calculation:
|
A
|
|
B
|
|
C
|
|
D
|
|
E
|
|
A + D - B
|
|
B + E - C
|
Adjusted
EBITDAR:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
184.2
|
|
$
99.4
|
|
$
455.6
|
|
$
376.7
|
|
$
769.9
|
|
$
461.5
|
|
$
413.7
|
Income taxes
|
28.6
|
|
(15.0)
|
|
32.1
|
|
74.5
|
|
114.5
|
|
118.1
|
|
67.4
|
Interest (income)
expense, net
|
(10.0)
|
|
11.4
|
|
12.4
|
|
13.5
|
|
16.9
|
|
(7.9)
|
|
15.9
|
Depreciation and
amortization
|
129.4
|
|
123.5
|
|
122.9
|
|
164.5
|
|
163.5
|
|
170.4
|
|
164.1
|
Amortization of
unfavorable
contracts
|
(1.4)
|
|
(1.4)
|
|
(2.9)
|
|
(1.8)
|
|
(3.3)
|
|
(1.8)
|
|
(1.8)
|
Share-based
compensation
|
36.4
|
|
34.3
|
|
36.4
|
|
42.0
|
|
45.8
|
|
44.1
|
|
43.7
|
Other non-operating
expense,
net (5)
|
2.4
|
|
139.6
|
|
0.9
|
|
140.2
|
|
2.1
|
|
3
|
|
140.8
|
Other accounting
adjustments (8)
|
27.9
|
|
210.3
|
|
(3.9)
|
|
245.5
|
|
4.7
|
|
63.1
|
|
218.9
|
Adjusted
EBITDA
|
$
397.5
|
|
$
602.1
|
|
$
653.5
|
|
$
1,055.1
|
|
$
1,114.1
|
|
$
850.5
|
|
$
1,062.7
|
Rent expense
|
330.7
|
|
332.4
|
|
330.2
|
|
446.5
|
|
443.3
|
|
444.8
|
|
445.5
|
Adjusted
EBITDAR
|
$
728.2
|
|
$
934.5
|
|
$
983.7
|
|
$
1,501.6
|
|
$
1,557.4
|
|
$
1,295.3
|
|
$
1,508.2
|
Footnotes to
Non-GAAP Reconciliation Tables
|
|
(1)
|
Fiscal 2024 includes a
credit to income related to the adjustment of the prior litigation
accrual. Fiscal 2023 includes charges for settlement of a
previously disclosed litigation matter.
|
(2)
|
Acquisition and
integration-related expenses include integration costs, primarily
severance and retention, exit and disposal costs, and system
decommissioning costs incurred for the integration of Blue Nile.
The 13 and 39 weeks ended October 28, 2023 includes $0.0
million and $1.4 million, respectively, recorded to cost of
sales, and $7.5 million and $18.7 million, respectively,
recorded to SG&A. Fiscal 2023 included the impact of the fair
value step-up for inventory from Diamonds Direct and Blue Nile
which was recorded to cost of sales, as well as professional fees
and severance incurred for the acquisition of Blue Nile which were
recorded to SG&A.
|
(3)
|
Fiscal 2024
restructuring and asset impairment charges were incurred as a
result of the Company's rationalization of store footprint and
reorganization of certain centralized functions.
|
(4)
|
Includes costs related
to the planned divestiture of the UK prestige watch
business.
|
(5)
|
Non-operating expenses
includes primarily pre-tax pension settlement charges of $132.8
million and $133.7 million during the 39 weeks ended
October 29, 2022, and 52 weeks ended January 28, 2023,
respectively.
|
(6)
|
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.
|
(7)
|
The tax effect includes
a $0.07 impact of the other comprehensive income recognized in
earnings from the release of the remaining tax benefit associated
with the buy-out of the UK pension completed in the first quarter
of Fiscal 2024.
|
(8)
|
Other accounting
adjustments are inclusive of those items described within footnotes
1 through 4 above. Additional accounting adjustments include
certain asset impairment charges, charges in connection with the
Company's transformation plan, as well as the gains associated with
the sale of customer in-house finance receivables as previously
disclosed in prior periods.
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
|
|
|
13 weeks
ended
|
|
39 weeks
ended
|
(in millions, except
per share amounts)
|
|
October 28,
2023
|
|
October 29,
2022
|
|
October 28,
2023
|
|
October 29,
2022
|
Sales
|
|
$
1,391.9
|
|
$
1,582.7
|
|
$
4,673.5
|
|
$
5,175.9
|
Cost of
sales
|
|
(890.6)
|
|
(1,030.1)
|
|
(2,929.4)
|
|
(3,234.9)
|
Gross
margin
|
|
501.3
|
|
552.6
|
|
1,744.1
|
|
1,941.0
|
Selling, general and
administrative expenses
|
|
(484.2)
|
|
(501.7)
|
|
(1,525.8)
|
|
(1,512.1)
|
Other operating
expense, net
|
|
(3.8)
|
|
(2.5)
|
|
(13.1)
|
|
(193.5)
|
Operating
income
|
|
13.3
|
|
48.4
|
|
205.2
|
|
235.4
|
Interest income
(expense), net
|
|
2.6
|
|
(3.6)
|
|
10.0
|
|
(11.4)
|
Other non-operating
expense, net
|
|
(2.3)
|
|
(2.7)
|
|
(2.4)
|
|
(139.6)
|
Income before income
taxes
|
|
13.6
|
|
42.1
|
|
212.8
|
|
84.4
|
Income taxes
|
|
(1.9)
|
|
(4.6)
|
|
(28.6)
|
|
15.0
|
Net income
|
|
$
11.7
|
|
$
37.5
|
|
$
184.2
|
|
$
99.4
|
Dividends on redeemable
convertible preferred shares
|
|
(8.7)
|
|
(8.7)
|
|
(25.9)
|
|
(25.9)
|
Net income
attributable to common shareholders
|
|
$
3.0
|
|
$
28.8
|
|
$
158.3
|
|
$
73.5
|
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.07
|
|
$
0.62
|
|
$
3.51
|
|
$
1.56
|
Diluted
|
|
$
0.07
|
|
$
0.60
|
|
$
3.39
|
|
$
1.49
|
Weighted average common
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
44.7
|
|
46.1
|
|
45.1
|
|
47.1
|
Diluted
|
|
45.6
|
|
48.1
|
|
54.3
|
|
49.2
|
|
|
|
|
|
|
|
|
|
Dividends declared per
common share
|
|
$
0.23
|
|
$
0.20
|
|
$
0.69
|
|
$
0.60
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
|
(in
millions)
|
|
October 28,
2023
|
|
January 28,
2023
|
|
October 29,
2022
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
643.8
|
|
$
1,166.8
|
|
$ 327.3
|
Accounts
receivable
|
|
10.9
|
|
14.5
|
|
29.8
|
Other current
assets
|
|
258.8
|
|
165.9
|
|
180.1
|
Income
taxes
|
|
9.1
|
|
9.6
|
|
222.0
|
Inventories
|
|
2,095.7
|
|
2,150.3
|
|
2,429.0
|
Total current
assets
|
|
3,018.3
|
|
3,507.1
|
|
3,188.2
|
Non-current
assets:
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
509.8
|
|
586.5
|
|
591.6
|
Operating lease
right-of-use assets
|
|
1,023.1
|
|
1,049.3
|
|
1,091.5
|
Goodwill
|
|
754.5
|
|
751.7
|
|
752.3
|
Intangible assets,
net
|
|
405.6
|
|
407.4
|
|
413.5
|
Other assets
|
|
316.3
|
|
281.7
|
|
275.8
|
Deferred tax
assets
|
|
37.3
|
|
36.7
|
|
33.1
|
Total assets
|
|
$
6,064.9
|
|
$
6,620.4
|
|
$
6,346.0
|
Liabilities,
Redeemable convertible preferred shares, and Shareholders'
equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
147.6
|
|
$
—
|
|
$
—
|
Accounts
payable
|
|
644.9
|
|
879.0
|
|
800.2
|
Accrued expenses and
other current liabilities
|
|
412.1
|
|
638.7
|
|
623.2
|
Deferred
revenue
|
|
346.2
|
|
369.5
|
|
335.3
|
Operating lease
liabilities
|
|
267.7
|
|
288.2
|
|
266.1
|
Income
taxes
|
|
52.6
|
|
72.7
|
|
22.7
|
Total current
liabilities
|
|
1,871.1
|
|
2,248.1
|
|
2,047.5
|
Non-current
liabilities:
|
|
|
|
|
|
|
Long-term
debt
|
|
—
|
|
147.4
|
|
147.3
|
Operating lease
liabilities
|
|
855.1
|
|
894.7
|
|
917.0
|
Other
liabilities
|
|
94.6
|
|
100.1
|
|
98.8
|
Deferred
revenue
|
|
856.5
|
|
880.1
|
|
878.1
|
Deferred tax
liabilities
|
|
160.3
|
|
117.6
|
|
245.8
|
Total
liabilities
|
|
3,837.6
|
|
4,388.0
|
|
4,334.5
|
Commitments and
contingencies
|
|
|
|
|
|
|
Redeemable Series A
Convertible Preference Shares
|
|
655.1
|
|
653.8
|
|
653.4
|
Shareholders'
equity:
|
|
|
|
|
|
|
Common
shares
|
|
12.6
|
|
12.6
|
|
12.6
|
Additional paid-in
capital
|
|
227.1
|
|
259.7
|
|
252.3
|
Other
reserves
|
|
0.4
|
|
0.4
|
|
0.4
|
Treasury shares at
cost
|
|
(1,626.5)
|
|
(1,574.7)
|
|
(1,510.2)
|
Retained
earnings
|
|
3,227.7
|
|
3,144.8
|
|
2,885.2
|
Accumulated other
comprehensive loss
|
|
(269.1)
|
|
(264.2)
|
|
(282.2)
|
Total shareholders'
equity
|
|
1,572.2
|
|
1,578.6
|
|
1,358.1
|
Total liabilities,
redeemable convertible preferred shares and shareholders'
equity
|
|
$
6,064.9
|
|
$
6,620.4
|
|
$
6,346.0
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
|
|
|
39 weeks
ended
|
(in
millions)
|
|
October 28,
2023
|
|
October 29,
2022
|
Operating
activities
|
|
|
|
|
Net income
|
|
$
184.2
|
|
$
99.4
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
129.4
|
|
123.5
|
Amortization of
unfavorable contracts
|
|
(1.4)
|
|
(1.4)
|
Share-based
compensation
|
|
36.4
|
|
34.3
|
Deferred
taxation
|
|
40.2
|
|
63.2
|
Pension settlement
loss
|
|
0.2
|
|
132.8
|
Other non-cash
movements
|
|
9.8
|
|
7.8
|
Changes in operating
assets and liabilities, net of acquisitions:
|
|
|
|
|
Decrease (increase) in
accounts receivable
|
|
3.5
|
|
(9.9)
|
(Increase) decrease in
other assets
|
|
(45.2)
|
|
0.6
|
Decrease (increase) in
inventories
|
|
14.8
|
|
(305.6)
|
Decrease in accounts
payable
|
|
(221.5)
|
|
(177.6)
|
(Decrease) increase in
accrued expenses and other liabilities
|
|
(253.2)
|
|
105.6
|
Change in operating
lease assets and liabilities
|
|
(34.5)
|
|
(5.9)
|
Decrease in deferred
revenue
|
|
(48.0)
|
|
(7.0)
|
Change in income tax
receivable and payable
|
|
(20.0)
|
|
(206.1)
|
Pension plan
contributions
|
|
—
|
|
(9.2)
|
Net cash used in
operating activities
|
|
(205.3)
|
|
(155.5)
|
Investing
activities
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(89.4)
|
|
(94.3)
|
Acquisitions
|
|
(6.0)
|
|
(397.8)
|
Other investing
activities, net
|
|
1.5
|
|
(16.3)
|
Net cash used in
investing activities
|
|
(93.9)
|
|
(508.4)
|
Financing
activities
|
|
|
|
|
Dividends paid on
common shares
|
|
(29.7)
|
|
(27.4)
|
Dividends paid on
redeemable convertible preferred shares
|
|
(24.6)
|
|
(24.6)
|
Repurchase of common
shares
|
|
(117.5)
|
|
(311.2)
|
Other financing
activities, net
|
|
(47.9)
|
|
(44.3)
|
Net cash used in
financing activities
|
|
(219.7)
|
|
(407.5)
|
Cash and cash
equivalents at beginning of period
|
|
1,166.8
|
|
1,418.3
|
Decrease in cash and
cash equivalents
|
|
(518.9)
|
|
(1,071.4)
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
(4.1)
|
|
(19.6)
|
Cash and cash
equivalents at end of period
|
|
$
643.8
|
|
$
327.3
|
Real Estate Portfolio:
Signet has a diversified real estate portfolio. On
October 28, 2023, Signet had 2,747 stores totaling 4.2 million
square feet of selling space. Compared to year-end Fiscal 2023,
store count decreased by 61 and square feet of selling space
decreased 1.3%.
Store count by
segment
|
January 28,
2023
|
|
Openings
|
|
Closures
|
|
October 28,
2023
|
North America
segment
|
2,475
|
|
9
|
|
(44)
|
|
2,440
|
International
segment
|
333
|
|
8
|
|
(34)
|
|
307
|
Signet
|
2,808
|
|
17
|
|
(78)
|
|
2,747
|
View original
content:https://www.prnewswire.com/news-releases/signet-jewelers-reports-third-quarter-fiscal-2024-results-302005276.html
SOURCE Signet Jewelers Ltd.