Delivered First Quarter Expectations
Engagement Recovery Momentum Continues
Reaffirms April Increase to Full Year
Outlook
HAMILTON, Bermuda, June 13,
2024 /PRNewswire/ -- Signet Jewelers Limited
("Signet" or the "Company") (NYSE: SIG), the world's largest
retailer of diamond jewelry, today announced its results for the 13
weeks ended May 4, 2024 ("first quarter Fiscal 2025").
"Our results reflect notable acceleration from a sluggish
February to the top half of expectations, with an even stronger
May," said Signet Chief Executive Officer Virginia C. Drosos. "Compared to the previous
quarter, we increased North
America engagement unit sales by 400 basis points excluding
Digital banners. Further, customers continue to respond well to our
new product offerings and loyalty program, reflected in a
meaningful improvement in comparable sales for Fashion since
February. We expect continued momentum in the second quarter,
leading to a positive same store sales inflection in the second
half of Fiscal 25."
"Our flexible operating model continues to work as designed,
leading to adjusted merchandise margin expansion of 100 basis
points, continued working capital optimization, and improved free
cash flow over the prior year," said Joan
Hilson, Chief Financial, Strategy & Services Officer.
"Signet's strong balance sheet provides a clear line of sight to
redeeming all convertible preferred shares. We are reaffirming our
increased full year guidance."
First Quarter Fiscal 2025 Highlights:
- Sales of $1.5 billion, down
$157.2 million or 9.4% (down
9.6%(1) on a constant currency basis) to Q1 of
FY24.
- Same store sales ("SSS")(2) down 8.9% to Q1 of
FY24.
- Operating income of $49.8
million, down $51.9 million
from Q1 of FY24.
- Adjusted operating income(1) of $57.8 million, down $48.7
million from Q1 of FY24.
- Diluted loss per share of $0.90,
compared to a diluted earnings per share ("EPS") $1.79 in Q1 of FY24. The current year diluted
loss per share reflects the impact of a deemed dividend of
$85.1 million related to the
redemption of half of the preferred shares in Q1.
- Adjusted diluted EPS(1) of $1.11, compared to $1.78 in Q1 of FY24.
- Cash and cash equivalents, at quarter end, of $729.3 million, compared to $655.9 million in Q1 of FY24.
- Year-to-date cash used in operating activities of $158.2 million, compared to $381.8 million in Q1 of FY24.
- Repurchased $7.4 million, or
approximately 73,000 common shares, during the first quarter.
(1)
|
Certain non-GAAP
financial measures used within this release have been renamed this
quarter. There have been no changes to how these non-GAAP measures
are defined or reconciled to the most directly comparable GAAP
measures. See the non-GAAP financial measures section below for
additional information.
|
(2)
|
Same store sales
include physical stores and eCommerce sales.
|
(in millions, except
per share amounts)
|
|
Fiscal 25
Q1
|
|
Fiscal 24
Q1
|
Sales
|
|
$ 1,510.8
|
|
$ 1,668.0
|
SSS % change (1)
(2)
|
|
(8.9) %
|
|
(13.9) %
|
GAAP
|
|
|
|
|
Operating
income
|
|
$
49.8
|
|
$
101.7
|
Operating
margin
|
|
3.3 %
|
|
6.1 %
|
Diluted EPS (loss per
share)
|
|
$
(0.90)
|
|
$
1.79
|
Adjusted
(3)
|
|
|
|
|
Adjusted operating
income
|
|
$
57.8
|
|
$
106.5
|
Adjusted operating
margin
|
|
3.8 %
|
|
6.4 %
|
Adjusted diluted
EPS
|
|
$
1.11
|
|
$
1.78
|
(1)
|
Same store sales
include physical stores and eCommerce sales.
|
(2)
|
Fiscal 2025 Q1 same
store sales have been calculated by aligning the sales weeks of the
current quarter to the equivalent sales weeks in the prior fiscal
year period.
|
(3)
|
See non-GAAP financial
measures below.
|
First Quarter Fiscal 2025 Results:
|
Change
from previous year
|
|
|
First Quarter Fiscal
2025
|
Same
store
sales (1)
|
|
Non-same
store sales,
net
|
|
Total sales at
constant
exchange rate
(2)
|
|
Exchange
translation
impact
|
|
Total
sales
as reported
|
|
Total
sales
(in millions)
|
North America
segment
|
(9.2) %
|
|
0.2 %
|
|
(9.0) %
|
|
— %
|
|
(9.0) %
|
|
$
1,420.0
|
International
segment
|
(3.2) %
|
|
(16.3) %
|
|
(19.5) %
|
|
2.5 %
|
|
(17.0) %
|
|
$
77.2
|
Other segment
(3)
|
nm
|
|
nm
|
|
nm
|
|
nm
|
|
nm
|
|
$
13.6
|
Signet
|
(8.9) %
|
|
(0.7) %
|
|
(9.6) %
|
|
0.2 %
|
|
(9.4) %
|
|
$
1,510.8
|
(1)
|
The 53rd week in Fiscal
2024 has resulted in a shift as the current fiscal year began a
week later than the previous fiscal year. As such, same store sales
for Fiscal 2025 have been calculated by aligning the sales weeks of
the current quarter to the equivalent sales weeks in the prior
fiscal year quarter. Total reported sales continue to be calculated
based on the reported fiscal periods.
|
(2)
|
See non-GAAP financial
measures below.
|
(3)
|
Includes sales from
Signet's diamond sourcing operation.
|
nm
|
Not
meaningful.
|
By reportable segment:
North America
- Total sales of $1.4 billion, down
$141.2 million or 9.0% to Q1 of FY24
reflecting a decrease of 1.6% in total average transaction value
("ATV"), on a lower number of transactions.
- SSS declined 9.2% compared to Q1 of FY24.
International
- Total sales of $77.2 million,
down $15.8 million or 17.0% to Q1 of
FY24 (down 19.5% on a constant currency basis) reflecting a
decrease of 15.3% in total ATV driven by the previously announced
sale of prestige watch locations, as well as a lower number of
transactions.
- SSS declined 3.2% versus Q1 of FY24.
Gross margin was $572.4 million,
down from $632.0 million in Q1 of
FY24. Gross margin was 37.9% of sales, or flat to Q1 of FY24 as
favorable merchandise margins, including a more than 300 basis
point improvement in Digital banners (James
Allen and Blue Nile), and a higher mix of Services business
offset by deleveraging of fixed costs such as store occupancy.
SG&A was $515.4 million, down
from $530.4 million in Q1 of FY24.
SG&A was 34.1% of sales, 230 basis points higher versus Q1 of
FY24. The change in SG&A as a percentage of sales was primarily
driven by deleverage on fixed costs.
Operating income was $49.8 million
or 3.3% of sales, compared to $101.7
million, or 6.1% of sales in the prior year first
quarter.
Adjusted operating income was $57.8
million, or 3.8% of sales, compared to $106.5 million, or 6.4% of sales in the prior
year first quarter.
|
|
First quarter Fiscal
2025
|
|
First quarter Fiscal
2024
|
Operating income in
millions
|
|
$
|
|
% of
sales
|
|
$
|
|
% of
sales
|
North America
segment
|
|
$
83.2
|
|
5.9 %
|
|
$
124.7
|
|
8.0 %
|
International
segment
|
|
(13.0)
|
|
(16.8) %
|
|
(6.9)
|
|
(7.4) %
|
Other
segment
|
|
(3.1)
|
|
nm
|
|
(0.7)
|
|
nm
|
Corporate and
unallocated expenses
|
|
(17.3)
|
|
nm
|
|
(15.4)
|
|
nm
|
Total operating
income
|
|
$
49.8
|
|
3.3 %
|
|
$
101.7
|
|
6.1 %
|
|
|
First quarter Fiscal
2025
|
|
First quarter Fiscal
2024
|
Adjusted operating
income in millions (1)
|
|
$
|
|
% of
sales
|
|
$
|
|
% of
sales
|
North America
segment
|
|
$
85.2
|
|
6.0 %
|
|
$
129.5
|
|
8.3 %
|
International
segment
|
|
(7.0)
|
|
(9.1) %
|
|
(6.9)
|
|
(7.4) %
|
Other
segment
|
|
(3.1)
|
|
nm
|
|
(0.7)
|
|
nm
|
Corporate and
unallocated expenses
|
|
(17.3)
|
|
nm
|
|
(15.4)
|
|
nm
|
Total adjusted
operating income
|
|
$
57.8
|
|
3.8 %
|
|
$
106.5
|
|
6.4 %
|
(1)
|
See non-GAAP financial
measures below.
|
nm
|
Not
meaningful.
|
The current quarter income tax expense was $6.5 million compared to income tax expense of
$9.5 million in Q1 of FY24.
Adjusted income tax expense was $8.4 million compared to $14.7 million in Q1 of FY24.
Diluted loss per share was $0.90,
down from diluted EPS of $1.79 in Q1
of FY24. Diluted loss per share in the current quarter primarily
includes $1.91 for deemed dividends
for the premium on redemption of preferred shares, $0.10 of restructuring charges and $0.04 of asset impairments. Excluding these
charges (and related tax and dilution effects), diluted EPS was
$1.11 on an adjusted basis.
Loss per share in the first quarter of Fiscal 2025 excludes the
anti-dilutive impact of the preferred shares in the share count
based on the net loss attributable to common shareholders recorded
in the first quarter of Fiscal 2025. Adjusted diluted EPS in the
current quarter includes the impact of the preferred shares in the
dilutive share count based on the level of adjusted net income
attributable to common shareholders this quarter.
Balance Sheet and Statement of Cash Flows Highlights:
Year to date cash used in operating activities was $158.2 million compared to cash used in
operating activities of $381.8
million in Q1 of FY24. Cash and cash equivalents were
$729.3 million as of quarter end,
compared to $655.9 million in Q1
of FY24. The Company paid $414.1 million to redeem half of the
preferred shares, including accrued dividends, on April 15, 2024. Subsequent to the end of the
first quarter, Signet redeemed an additional 100,000 Preferred
Shares, or 32% of the remaining preferred shares, for an aggregate
price of approximately $129.0 million, which represents common
share volume weighted average price of approximately $97 per share. Inventory ended the quarter at
$2.0 billion, down $199.9 million or 9.2% to Q1 of FY24, driven by
Signet's demand planning efforts and life cycle management.
The Company ended the first quarter with an Adjusted Debt to
Adjusted EBITDAR ratio of 2.2x on a trailing 12-month basis, well
below the stated goal of at or below 2.5x, and was 1.6x on an
Adjusted Net Debt basis. Net Debt to Adjusted EBITDA was (0.3)x on
a trailing 12-month basis.
Capital Returns to Shareholders:
Signet's Board of Directors has declared a quarterly cash
dividend on common shares of $0.29
per share for the second quarter of Fiscal 2025, payable
August 23, 2024 to shareholders of
record on July 26, 2024, with an
ex-dividend date of July 26,
2024.
In the first quarter Signet repurchased approximately 73,000
common shares at an average cost per share of $101.10, or $7.4 million.
Second Quarter and Full Year Fiscal 2025 Guidance:
Signet's second quarter Fiscal 2025 guidance for sales, same
store sales, operating income and adjusted EBITDA is provided on an
adjusted basis:
|
Second
Quarter
|
Total sales
|
$1.46 billion to $1.52
billion
|
Same store
sales
|
(6)% to (2)%
|
Operating income
(1)
|
$50 million to $75
million
|
Adjusted EBITDA
(1)
|
$98 million to $123
million
|
(1)
|
See description of
non-GAAP financial measures below.
|
Forecasted adjusted
operating income and adjusted EBITDA exclude potential
non-recurring charges, such as restructuring charges, asset
impairments or integration-related costs. However, given the
potential impact of non-recurring charges to the GAAP operating
income, we cannot provide forecasted GAAP operating income or the
probable significance of such items without unreasonable efforts.
As such, we do not present a reconciliation of forecasted adjusted
operating income or adjusted EBITDA to corresponding forecasted
GAAP amounts.
|
Signet's full year Fiscal 2025 guidance for sales, same store
sales, operating income, adjusted EBITDA, and diluted EPS is
provided on an adjusted basis:
|
Fiscal
2025
|
Total sales
|
$6.66 billion to $7.02
billion
|
Same store
sales
|
(4.5)% to
+0.5%
|
Operating income
(1)
|
$590 million to $675
million
|
Adjusted EBITDA
(1)
|
$780 million to $865
million
|
Diluted EPS
(1)
|
$9.90 to
$11.52
|
(1)
|
See description of
non-GAAP financial measures below.
|
Forecasted adjusted
operating income, adjusted EBITDA and adjusted diluted EPS provided
above exclude potential non-recurring charges, such as
restructuring charges, asset impairments or integration-related
costs. 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 adjusted operating
income, adjusted EBITDA and adjusted diluted EPS to corresponding
forecasted GAAP amounts.
|
The Company's Fiscal 2025 outlook is based on the following
assumptions:
- The Company expects an approximately 1.5% to 2.0% negative
impact to sales from integration issues with its Digital banners.
The Company expects to resolve the issues in the second half of the
year but is not reflected as such in guidance. Importantly, the
issues are not tied to nor impacting the eCommerce channels of our
core banners, which are performing well.
- Approximately $225 million in
non-comparable sales headwinds reflecting over $100 million from the 53rd week in Fiscal 2024,
approximately $75 million in the UK
from the sale of previously announced prestige watch locations in
the UK and up to 30 Ernest Jones store closures, and approximately
$50 million from total store closures
in North America in Fiscal 2024
and Fiscal 2025. The Company anticipates net square footage decline
of 1% to flat for the year.
- The Company continues to expect a three-year recovery in US
engagement rates, with Fiscal 2025 engagement incidents increasing
5% to 10% to Fiscal 2024.
- Approximately $150 million to
$180 million in new cost savings
initiatives leveraging technology such as AI, sourcing
efficiencies, and spend discipline.
- Planned capital expenditures of approximately $160 million to $180
million, reflecting investments in 20 to 30 new stores,
nearly 300 renovations with focus on Kay, Jared and Diamonds Direct
stores, Connected Commerce capabilities, and digital and technology
advancement.
- Annual tax rate of 19% to 20% excludes potential discrete
items.
- Approximately $1.1 billion
allocated to retirement of debt, redemption of preferred shares and
open-market common share repurchases in Fiscal 2025.
Our Purpose and Sustainable Growth:
Signet reaffirmed its commitment to leadership in sustainable
business practices in the Company's latest Corporate Citizenship
& Sustainability Report released this week. The Report, which
uses the Company's Sustainability framework defined by Love for All
People, Love for Our Team and Love for Our Planet and Products,
introduces revised 2030 Corporate Sustainability Goals to improve
impact and measurability across its global operations. The Report
details incremental progress achieved during Fiscal 2024 including
the integration of environmental considerations into
Signet's product packaging and store operations. It also
describes how Signet delivers positive social impact, such as the
largest single-year donation to St. Jude Children's Research
Hospital toward a new $100 million
commitment to increase survivorship from childhood cancers in the
U.S. and around the world.
Conference Call:
A conference call is scheduled for June 13, 2024 at
8:30 a.m. ET and a simultaneous audio
webcast is available at www.signetjewelers.com.
The call details are:
Toll Free – North America +1
800 549 8228
Local – Toronto +1 289 819
1520
Conference ID 59089
Registration for the listen-only webcast is available at the
following link:
https://events.q4inc.com/attendee/422676577
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, James Allen, 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 plans; the impact of
the Israel-Hamas conflict on our operations; the negative impacts
that public health crisis, disease outbreak, epidemic or 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
COVID-19 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 future Preferred Share conversions, 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 adopted 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
Israel-Hamas conflict, the potential sale or divestiture of the De
Beers Diamond Company and its diamond mining operations by parent
company Anglo-American plc, and 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 costs, retail prices, 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 accounting for changes in
consumer traffic in 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; ability to
deliver on our environmental, social and governance goals; 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
or our third-party providers' 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, increased security costs, 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 2024
Annual Report on Form 10-K filed with the SEC on March 21,
2024 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 previously referred to certain non-GAAP measures as
non-GAAP operating income, non-GAAP operating margin
and non-GAAP diluted EPS. Beginning in Fiscal 2025, these
non-GAAP measures are now referred to as adjusted operating
income, adjusted operating margin and adjusted
diluted EPS, respectively. There have been no changes to how
these non-GAAP measures are defined or reconciled to the most
directly comparable GAAP measures.
The Company reports the following non-GAAP financial measures:
sales changes on a constant currency basis, free cash flow,
adjusted operating income, adjusted operating margin, adjusted
diluted earnings per share ("EPS"), adjusted earnings before
interest, income taxes, depreciation and amortization ("adjusted
EBITDA") and adjusted EBITDAR, and the debt and net debt leverage
ratios, including on an adjusted basis.
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.
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.
Adjusted 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
adjusted operating margin, defined as adjusted operating income as
a percentage of total sales, to further evaluate the effectiveness
and efficiency of the Company's flexible operating model.
Adjusted 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 are used to estimate adjusted income tax
expense, and represent the discrete amount that affected the
diluted EPS during the period.
Adjusted EBITDA 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 EBITDAR takes
this 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.
The debt and net debt leverage ratios are non-GAAP measures
calculated by dividing Signet's debt or net debt by adjusted
EBITDA. Debt as used in these ratios is defined as current or
long-term debt recorded in the condensed consolidated balance sheet
plus Preferred Shares. Net debt as used in these ratios is debt
less the cash and cash equivalents on hand as of the balance sheet
date. 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. Management
believes these financial measures are helpful to investors and
analysts to analyze trends in Signet's business and evaluate
Signet's performance. The debt and adjusted debt leverage ratios
are key to the Company's capital allocation strategy as measures of
the Company's optimized capital structure. The net debt and
adjusted net debt leverage ratios are supplemental to the debt and
adjusted debt ratios as both investors and management find it
useful to consider cash on hand available to pay down debt. These
ratios are presented on a trailing twelve-month ("TTM") basis,
which uses either adjusted EBITDA or 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
|
13 weeks
ended
|
(in millions)
|
May 4,
2024
|
|
April 29,
2023
|
Net cash used in
operating activities
|
$
(158.2)
|
|
$
(381.8)
|
Purchase of property,
plant and equipment
|
(23.3)
|
|
(27.1)
|
Free cash
flow
|
$
(181.5)
|
|
$
(408.9)
|
Adjusted operating income
|
13 weeks
ended
|
(in millions)
|
May 4,
2024
|
|
April 29,
2023
|
Total operating
income
|
$
49.8
|
|
$
101.7
|
Restructuring charges
(1)
|
4.6
|
|
—
|
Asset impairments
(1)
|
1.9
|
|
—
|
Loss on divestitures,
net (2)
|
1.3
|
|
—
|
Integration-related
expenses (3)
|
0.2
|
|
7.8
|
Litigation charges
(4)
|
—
|
|
(3.0)
|
Total adjusted
operating income
|
$
57.8
|
|
$
106.5
|
North America segment
adjusted operating income
|
13 weeks
ended
|
(in millions)
|
May 4,
2024
|
|
April 29,
2023
|
North America segment
operating income
|
$
83.2
|
|
$
124.7
|
Restructuring charges
(1)
|
0.6
|
|
—
|
Asset impairments
(1)
|
1.2
|
|
—
|
Integration-related
expenses (3)
|
0.2
|
|
7.8
|
Litigation charges
(4)
|
—
|
|
(3.0)
|
North America segment
adjusted operating income
|
$
85.2
|
|
$
129.5
|
International segment adjusted operating loss
|
13 weeks
ended
|
(in millions)
|
May 4,
2024
|
|
April 29,
2023
|
International segment
operating loss
|
$
(13.0)
|
|
$
(6.9)
|
Restructuring charges
(1)
|
4.0
|
|
—
|
Asset impairments
(1)
|
0.7
|
|
—
|
Loss on divestitures,
net (2)
|
1.3
|
|
—
|
International segment
adjusted operating loss
|
$
(7.0)
|
|
$
(6.9)
|
Adjusted income tax provision
|
13 weeks
ended
|
(in
millions)
|
May 4,
2024
|
|
April 29,
2023
|
Income tax
expense
|
$
6.5
|
|
$
9.5
|
Restructuring charges
(1)
|
1.1
|
|
—
|
Asset impairments
(1)
|
0.5
|
|
—
|
Loss on divestitures,
net (2)
|
0.3
|
|
—
|
Integration-related
expenses (3)
|
—
|
|
1.9
|
Pension settlement
loss
|
—
|
|
4.1
|
Litigation charges
(4)
|
—
|
|
(0.8)
|
Adjusted income tax
expense
|
$
8.4
|
|
$
14.7
|
Adjusted effective tax rate
|
13 weeks
ended
|
|
May 4,
2024
|
|
April 29,
2023
|
Effective tax
rate
|
11.1 %
|
|
8.9 %
|
Restructuring charges
(1)
|
0.9 %
|
|
— %
|
Asset impairments
(1)
|
0.4 %
|
|
— %
|
Loss on divestitures,
net (2)
|
0.2 %
|
|
— %
|
Integration-related
expenses (3)
|
— %
|
|
1.5 %
|
Pension settlement
loss
|
— %
|
|
3.4 %
|
Litigation charges
(4)
|
— %
|
|
(0.7) %
|
Adjusted effective tax
rate
|
12.6 %
|
|
13.1 %
|
Adjusted diluted EPS
|
13 weeks
ended
|
|
May 4,
2024
|
|
April 29,
2023
|
Diluted EPS
|
$
(0.90)
|
|
$
1.79
|
Restructuring charges
(1)
|
0.10
|
|
—
|
Asset impairments
(1)
|
0.04
|
|
—
|
Loss on divestitures,
net (2)
|
0.03
|
|
—
|
Integration-related
expenses (3)
|
—
|
|
0.14
|
Litigation charges
(4)
|
—
|
|
(0.06)
|
Tax impact of items
above (5)
|
(0.04)
|
|
(0.09)
|
Deemed dividend on
redemption of Preferred Shares (6)
|
1.91
|
|
—
|
Dilution effect
(7)
|
(0.03)
|
|
—
|
Adjusted diluted
EPS
|
$
1.11
|
|
$
1.78
|
Adjusted EBITDA and adjusted EBITDAR
|
13 weeks
ended
|
|
53 week
period
ended
|
|
52 week
period
ended
|
|
53 week
period
ended
|
|
52 week
period
ended
|
(in millions)
|
May 4,
2024
|
|
April 29,
2023
|
|
April 30,
2022
|
|
February 3,
2024
|
|
January 28,
2023
|
|
May 4,
2024
|
|
April 29,
2023
|
Calculation:
|
A
|
|
B
|
|
C
|
|
D
|
|
E
|
|
A + D - B
|
|
B + E - C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
52.1
|
|
$
97.4
|
|
$
(83.5)
|
|
$ 810.4
|
|
$ 376.7
|
|
$
765.1
|
|
$ 557.6
|
Income taxes
|
6.5
|
|
9.5
|
|
(55.2)
|
|
(170.6)
|
|
74.5
|
|
(173.6)
|
|
139.2
|
Interest (income)
expense, net
|
(8.6)
|
|
(5.6)
|
|
4.4
|
|
(18.7)
|
|
13.5
|
|
(21.7)
|
|
3.5
|
Depreciation and
amortization
|
36.6
|
|
43.1
|
|
40.0
|
|
161.9
|
|
164.5
|
|
155.4
|
|
167.6
|
Amortization of
unfavorable
contracts
|
(0.5)
|
|
(0.5)
|
|
(0.5)
|
|
(1.8)
|
|
(1.8)
|
|
(1.8)
|
|
(1.8)
|
Other non-operating
(income)
expense, net (8)
|
(0.2)
|
|
0.4
|
|
134.5
|
|
0.4
|
|
140.2
|
|
(0.2)
|
|
6.1
|
Share-based
compensation
|
7.6
|
|
11.3
|
|
10.5
|
|
41.1
|
|
42.0
|
|
37.4
|
|
42.8
|
Other accounting
adjustments (9)
|
8.0
|
|
4.8
|
|
194.4
|
|
21.3
|
|
245.5
|
|
24.5
|
|
55.9
|
Adjusted
EBITDA
|
$
101.5
|
|
$ 160.4
|
|
$ 244.6
|
|
$ 844.0
|
|
$
1,055.1
|
|
$
785.1
|
|
$ 970.9
|
Rent expense
|
109.3
|
|
111.0
|
|
110.1
|
|
439.8
|
|
446.5
|
|
438.1
|
|
447.4
|
Adjusted
EBITDAR
|
$
210.8
|
|
$ 271.4
|
|
$ 354.7
|
|
$
1,283.8
|
|
$
1,501.6
|
|
$
1,223.2
|
|
$
1,418.3
|
Debt and net debt leverage ratios
|
As of
|
(in millions)
|
May 4,
2024
|
|
April 29,
2023
|
Debt and net
debt:
|
|
|
|
Current portion of
long-term debt
|
$
147.8
|
|
$
—
|
Long-term
debt
|
—
|
|
147.5
|
Redeemable Series A
Convertible Preference Shares
|
328.0
|
|
654.3
|
Debt
|
$
475.8
|
|
$
801.8
|
Less: Cash and cash
equivalents
|
729.3
|
|
655.9
|
Net
debt
|
$
(253.5)
|
|
$
145.9
|
|
|
|
|
TTM Adjusted
EBITDA
|
$
785.1
|
|
$
970.9
|
|
|
|
|
Debt leverage
ratio
|
0.6x
|
|
0.8x
|
|
|
|
|
Net debt leverage
ratio
|
-0.3x
|
|
0.2x
|
Adjusted debt and adjusted net debt leverage ratios
|
As of
|
(in millions)
|
May 4,
2024
|
|
April 29,
2023
|
Adjusted debt and
adjusted net debt:
|
|
|
|
Current portion of
long-term debt
|
$
147.8
|
|
$
—
|
Long-term
debt
|
—
|
|
147.5
|
Redeemable Series A
Convertible Preference Shares
|
328.0
|
|
654.3
|
Adjustments:
|
|
|
|
TTM 5x rent
expense
|
2,190.5
|
|
2,237.0
|
Adjusted
debt
|
$
2,666.3
|
|
$
3,038.8
|
Less: Cash and cash
equivalents
|
729.3
|
|
655.9
|
Adjusted net
debt
|
$
1,937.0
|
|
$
2,382.9
|
|
|
|
|
TTM Adjusted
EBITDAR
|
$
1,223.2
|
|
$
1,418.3
|
|
|
|
|
Adjusted debt
leverage ratio
|
2.2x
|
|
2.1x
|
|
|
|
|
Adjusted net debt
leverage ratio
|
1.6x
|
|
1.7x
|
Footnotes to Non-GAAP Reconciliation Tables
(1)
|
Restructuring and asset
impairment charges were incurred primarily as a result of the
Company's rationalization of store footprint and reorganization of
certain centralized functions.
|
(2)
|
Includes net losses
from the previously announced divestiture of the UK prestige watch
business.
|
(3)
|
Fiscal 2025 includes
severance and retention expenses related to the integration of Blue
Nile which were recorded to SG&A. Fiscal 2024 includes expenses
related to integration of Blue Nile, primarily severance and
retention, and exit and disposal costs, of which $1.3 million
and $6.5 million were recorded to cost of sales and SG&A,
respectively.
|
(4)
|
Includes a credit to
income related to the adjustment of a prior litigation accrual
recognized in Fiscal 2023.
|
(5)
|
The Fiscal 2024 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.
|
(6)
|
The Company recorded a
deemed dividend to net income attributable to common shareholders
of $85.1 million, which represents the excess of the conversion
value of the Preferred Shares over their carrying value, and
includes $1.5 million of related expenses.
|
(7)
|
First quarter of Fiscal
2025 adjusted diluted EPS was calculated using 48.0 million
diluted weighted average common shares outstanding. The additional
dilutive shares were excluded from the calculation of diluted EPS
as their effect was antidilutive.
|
(8)
|
For the 13 weeks ended
April 30, 2022 and 52 weeks ended January 28, 2023
non-operating expenses primarily includes pre-tax pension
settlement charges of $131.9 million and $133.7 million,
respectively.
|
(9)
|
Other accounting
adjustments are inclusive of those items described within footnotes
1 through 4 above. Additional accounting adjustments include
litigation charges; acquisition and integration-related expenses,
including 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 related to the acquisition of Blue
Nile; and certain asset impairments as previously disclosed in
prior periods.
|
Condensed Consolidated Statements of Operations
(Unaudited)
|
|
13 weeks
ended
|
(in millions, except
per share amounts)
|
|
May 4,
2024
|
|
April 29,
2023
|
Sales
|
|
$
1,510.8
|
|
$
1,668.0
|
Cost of
sales
|
|
(938.4)
|
|
(1,036.0)
|
Gross
margin
|
|
572.4
|
|
632.0
|
Selling, general and
administrative expenses
|
|
(515.4)
|
|
(530.4)
|
Other operating
(expense) income, net
|
|
(7.2)
|
|
0.1
|
Operating
income
|
|
49.8
|
|
101.7
|
Interest income,
net
|
|
8.6
|
|
5.6
|
Other non-operating
income (expense), net
|
|
0.2
|
|
(0.4)
|
Income before income
taxes
|
|
58.6
|
|
106.9
|
Income taxes
|
|
(6.5)
|
|
(9.5)
|
Net income
|
|
$
52.1
|
|
$
97.4
|
Dividends on redeemable
convertible preferred shares
|
|
(92.2)
|
|
(8.6)
|
Net (loss) income
attributable to common shareholders
|
|
$
(40.1)
|
|
$
88.8
|
|
|
|
|
|
Earnings (loss) per
common share:
|
|
|
|
|
Basic
|
|
$
(0.90)
|
|
$
1.96
|
Diluted
|
|
$
(0.90)
|
|
$
1.79
|
Weighted average common
shares outstanding:
|
|
|
|
|
Basic
|
|
44.6
|
|
45.3
|
Diluted
|
|
44.6
|
|
54.5
|
|
|
|
|
|
Dividends declared per
common share
|
|
$
0.29
|
|
$
0.23
|
Condensed Consolidated Balance Sheets (Unaudited)
(in
millions)
|
|
May 4,
2024
|
|
February 3,
2024
|
|
April 29,
2023
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$ 729.3
|
|
$
1,378.7
|
|
$ 655.9
|
Inventories
|
|
1,983.6
|
|
1,936.6
|
|
2,183.5
|
Income
taxes
|
|
9.3
|
|
9.4
|
|
45.4
|
Other current
assets
|
|
202.4
|
|
211.9
|
|
198.3
|
Total current
assets
|
|
2,924.6
|
|
3,536.6
|
|
3,083.1
|
Non-current
assets:
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
475.1
|
|
497.7
|
|
568.2
|
Operating lease
right-of-use assets
|
|
979.4
|
|
1,001.8
|
|
1,072.7
|
Goodwill
|
|
754.5
|
|
754.5
|
|
751.4
|
Intangible assets,
net
|
|
402.2
|
|
402.8
|
|
406.8
|
Other assets
|
|
315.2
|
|
319.3
|
|
286.2
|
Deferred tax
assets
|
|
300.2
|
|
300.5
|
|
37.0
|
Total assets
|
|
$
6,151.2
|
|
$
6,813.2
|
|
$
6,205.4
|
Liabilities,
Redeemable convertible preferred shares, and Shareholders'
equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$ 147.8
|
|
$ 147.7
|
|
$
—
|
Accounts
payable
|
|
599.3
|
|
735.1
|
|
701.5
|
Accrued expenses and
other current liabilities
|
|
356.0
|
|
400.2
|
|
378.1
|
Deferred
revenue
|
|
360.6
|
|
362.9
|
|
368.7
|
Operating lease
liabilities
|
|
253.0
|
|
260.3
|
|
273.9
|
Income
taxes
|
|
31.4
|
|
69.8
|
|
53.3
|
Total current
liabilities
|
|
1,748.1
|
|
1,976.0
|
|
1,775.5
|
Non-current
liabilities:
|
|
|
|
|
|
|
Long-term
debt
|
|
—
|
|
—
|
|
147.5
|
Operating lease
liabilities
|
|
818.5
|
|
835.7
|
|
902.0
|
Other
liabilities
|
|
93.9
|
|
96.0
|
|
96.8
|
Deferred
revenue
|
|
878.9
|
|
881.8
|
|
874.9
|
Deferred tax
liabilities
|
|
202.0
|
|
201.7
|
|
172.9
|
Total
liabilities
|
|
3,741.4
|
|
3,991.2
|
|
3,969.6
|
Commitments and
contingencies
|
|
|
|
|
|
|
Redeemable Series A
Convertible Preference Shares
|
|
328.0
|
|
655.5
|
|
654.3
|
Shareholders'
equity:
|
|
|
|
|
|
|
Common
shares
|
|
12.6
|
|
12.6
|
|
12.6
|
Additional paid-in
capital
|
|
181.6
|
|
230.7
|
|
210.5
|
Other
reserves
|
|
0.4
|
|
0.4
|
|
0.4
|
Treasury shares at
cost
|
|
(1,622.9)
|
|
(1,646.9)
|
|
(1,556.5)
|
Retained
earnings
|
|
3,779.7
|
|
3,835.0
|
|
3,182.0
|
Accumulated other
comprehensive loss
|
|
(269.6)
|
|
(265.3)
|
|
(267.5)
|
Total shareholders'
equity
|
|
2,081.8
|
|
2,166.5
|
|
1,581.5
|
Total liabilities,
redeemable convertible preferred shares and shareholders'
equity
|
|
$
6,151.2
|
|
$
6,813.2
|
|
$
6,205.4
|
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
13 weeks
ended
|
(in
millions)
|
|
May 4,
2024
|
|
April 29,
2023
|
Operating
activities
|
|
|
|
|
Net income
|
|
$
52.1
|
|
$
97.4
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
36.6
|
|
43.1
|
Amortization of
unfavorable contracts
|
|
(0.5)
|
|
(0.5)
|
Share-based
compensation
|
|
7.6
|
|
11.3
|
Deferred
taxation
|
|
0.5
|
|
51.5
|
Other non-cash
movements
|
|
5.7
|
|
2.5
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Inventories
|
|
(48.9)
|
|
(29.8)
|
Other
assets
|
|
12.3
|
|
(27.6)
|
Accounts
payable
|
|
(136.7)
|
|
(170.3)
|
Accrued expenses and
other liabilities
|
|
(40.8)
|
|
(264.9)
|
Change in operating
lease assets and liabilities
|
|
(2.8)
|
|
(31.3)
|
Deferred
revenue
|
|
(4.7)
|
|
(7.8)
|
Income tax receivable
and payable
|
|
(38.6)
|
|
(55.4)
|
Net cash used in
operating activities
|
|
(158.2)
|
|
(381.8)
|
Investing
activities
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(23.3)
|
|
(27.1)
|
Other investing
activities, net
|
|
1.8
|
|
—
|
Net cash used in
investing activities
|
|
(21.5)
|
|
(27.1)
|
Financing
activities
|
|
|
|
|
Dividends paid on
common shares
|
|
(10.2)
|
|
(9.0)
|
Dividends paid on
redeemable convertible preferred shares
|
|
(10.3)
|
|
(8.2)
|
Repurchase of common
shares
|
|
(7.4)
|
|
(39.1)
|
Repurchase of
redeemable convertible preferred shares
|
|
(412.0)
|
|
—
|
Other financing
activities, net
|
|
(27.6)
|
|
(44.4)
|
Net cash used in
financing activities
|
|
(467.5)
|
|
(100.7)
|
Cash and cash
equivalents at beginning of period
|
|
1,378.7
|
|
1,166.8
|
Decrease in cash and
cash equivalents
|
|
(647.2)
|
|
(509.6)
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
(2.2)
|
|
(1.3)
|
Cash and cash
equivalents at end of period
|
|
$
729.3
|
|
$
655.9
|
Real Estate Portfolio:
Signet has a diversified real estate portfolio. On May 4,
2024, Signet operated 2,676 stores totaling 4.1 million square feet
of selling space. Compared to year-end Fiscal 2024, store count
decreased by 22 and square feet of selling space decreased
0.6%.
Store count by
segment
|
February 3,
2024
|
|
Openings
|
|
Closures
|
|
May 4,
2024
|
North America
segment
|
2,411
|
|
1
|
|
(7)
|
|
2,405
|
International
segment
|
287
|
|
—
|
|
(16)
|
|
271
|
Signet
|
2,698
|
|
1
|
|
(23)
|
|
2,676
|
View original
content:https://www.prnewswire.com/news-releases/signet-jewelers-reports-first-quarter-fiscal-2025-results-302171543.html
SOURCE Signet Jewelers Ltd.