Q3 Results Within Expectations
Preferred Shares Fully Redeemed
Updates Fiscal 2025 Guidance
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 November 2, 2024 (“third quarter
Fiscal 2025”).
"The Signet team delivered Q3 results within our expectations,
reflecting a nearly 3-point sequential improvement in same store
sales. New fashion merchandise, which carries a higher transaction
value, and continued recovery in engagement, combined to maintain
both average transaction value and merchandise margin in a
competitive environment. Our updated Fiscal 2025 guidance reflects
further integration challenges in Blue Nile and James Allen,
leadership transition costs, and the accretive impact from the
early completion of preferred shares redemption," said Joan Hilson,
Chief Financial and Operating Officer. “I'm pleased to welcome J.K.
and look forward to partnering with him to develop and capture
additional opportunities for growth in the coming years."
"I’d like to thank the team for the warm reception I’ve received
since joining Signet a month ago. I've been impressed by the team's
laser focus on executing this holiday season,” said J.K. Symancyk,
Chief Executive Officer. “As we look forward into next fiscal year,
I believe there are opportunities to evolve our strategy to further
fuel customer and shareholder value. I look forward to sharing more
details on this work and our plans in the coming months."
Third Quarter Fiscal 2025 Highlights:
- Sales of $1.3 billion, down $42.5 million or 3.1% (down 3.4%(1)
on a constant currency basis) to Q3 of FY24.
- Same store sales (“SSS”)(2) down 0.7% to Q3 of FY24.
- Operating income of $9.2 million, down from $13.3 million in Q3
of FY24.
- Adjusted operating income(1) of $16.2 million, down from $23.9
million in Q3 of FY24.
- Diluted earnings per share ("EPS") of $0.12, compared to $0.07
in Q3 of FY24. The current quarter EPS includes $0.13 of
restructuring and related charges.
- Adjusted diluted EPS(1) of $0.24, compared to $0.24 in Q3 of
FY24.
- Cash and cash equivalents, at quarter end, of $157.7 million,
compared to $643.8 million in Q3 of FY24.
- Repurchased $66.5 million, or approximately 743,000 common
shares, during the third quarter.
(1)
See the non-GAAP financial measures
section below.
(2)
Same store sales include physical stores
and eCommerce sales. As described further below, third quarter
Fiscal 2025 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.
(in millions, except per share
amounts)
Fiscal 25 Q3
Fiscal 24 Q3
YTD Fiscal 2025
YTD Fiscal 2024
Sales
$
1,349.4
$
1,391.9
$
4,351.2
$
4,673.5
SSS % change (1) (2)
(0.7
)%
(11.8
)%
(4.6
)%
(12.6
)%
GAAP
Operating income (loss)
$
9.2
$
13.3
$
(41.9
)
$
205.2
Operating margin
0.7
%
1.0
%
(1.0
)%
4.4
%
Diluted EPS (loss per share)
$
0.12
$
0.07
$
(3.07
)
$
3.39
Adjusted (3)
Adjusted operating income
$
16.2
$
23.9
$
142.6
$
233.1
Adjusted operating margin
1.2
%
1.7
%
3.3
%
5.0
%
Adjusted diluted EPS
$
0.24
$
0.24
$
2.62
$
3.71
(1)
Same store sales include physical stores
and eCommerce sales.
(2)
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 and year to date periods to the equivalent sales weeks in
the prior fiscal year. Total reported sales continue to be
calculated based on the reported fiscal periods.
(3)
See non-GAAP financial measures below.
Third Quarter Fiscal 2025 Results:
Change from previous
year
Third 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
(0.8
)%
(1.4
)%
(2.2
)%
(0.1
)%
(2.3
)%
$
1,262.0
International segment
1.6
%
(17.1
)%
(15.5
)%
4.1
%
(11.4
)%
$
83.3
Other segment (3)
nm
nm
nm
nm
nm
$
4.1
Signet
(0.7
)%
(2.7
)%
(3.4
)%
0.3
%
(3.1
)%
$
1,349.4
(1)
As noted above, third quarter Fiscal 2025
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.
(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 $1.3 billion, down $29.1 million or 2.3% to Q3
of FY24 reflecting a total average transaction value ("ATV") flat
to last year, on a lower number of transactions.
- SSS declined 0.8% compared to Q3 of FY24.
International
- Total sales of $83.3 million, down $10.7 million or 11.4% to Q3
of FY24 (down 15.5% on a constant currency basis) reflecting a
decrease of 13.4% in total ATV driven by the previously announced
sale of prestige watch locations, as well as a lower number of
transactions.
- SSS increased 1.6% compared to Q3 of FY24.
Gross margin was $485.3 million, down from $501.3 million in Q3
of FY24. Gross margin was 36.0% of sales, flat to Q3 of FY24.
SG&A was $469.6 million, down from $484.2 million in Q3 of
FY24. SG&A was 34.8% of sales, flat to Q3 of FY24 and
reflecting approximately $2.0 million of leadership transition
costs.
Operating income was $9.2 million, or 0.7% of sales, compared to
$13.3 million, or 1.0% of sales, in Q3 of FY24.
Adjusted operating income was $16.2 million, or 1.2% of sales,
compared to $23.9 million, or 1.7% of sales, in Q3 of FY24.
Third quarter Fiscal
2025
Third quarter Fiscal
2024
Operating income (loss) in
millions
$
% of sales
$
% of sales
North America segment
$
24.1
1.9
%
$
39.2
3.0
%
International segment
(3.7
)
(4.4
)%
(9.0
)
(9.6
)%
Other segment
(1.6
)
nm
(3.1
)
nm
Corporate and unallocated expenses
(9.6
)
nm
(13.8
)
nm
Total operating income
$
9.2
0.7
%
$
13.3
1.0
%
Third quarter Fiscal
2025
Third quarter Fiscal
2024
Adjusted operating income (loss) in
millions (1)
$
% of sales
$
% of sales
North America segment
$
29.9
2.4
%
$
47.1
3.6
%
International segment
(3.3
)
(4.0
)%
(6.3
)
(6.7
)%
Other segment
(1.6
)
nm
(3.1
)
nm
Corporate and unallocated expenses
(8.8
)
nm
(13.8
)
nm
Total adjusted operating income
$
16.2
1.2
%
$
23.9
1.7
%
(1) See non-GAAP financial
measures below.
nm Not meaningful.
The current quarter income tax expense was $1.4 million compared
to $1.9 million in Q3 of FY24. Adjusted income tax expense was $3.2
million compared to $4.6 million in Q3 of FY24.
Diluted EPS was $0.12, up from $0.07 in Q3 of FY24. Diluted EPS
in the current quarter includes $0.13 of restructuring and related
charges. Excluding these charges (and related tax effects), diluted
EPS was $0.24 on an adjusted basis.
The preferred shares had minimal impact on either diluted EPS or
adjusted diluted EPS for the third quarter of Fiscal 2025.
Balance Sheet and Statement of Cash Flows Highlights:
Year to date cash used in operating activities was $189.8
million compared to cash used in operating activities of $205.3
million in Q3 of FY24. Cash and cash equivalents were $157.7
million as of quarter end, compared to $643.8 million in Q3 of FY24
due to approximately $1 billion of cash outlays to redeem preferred
shares and retire unsecured notes over the last 12 months.
Inventory ended the quarter at $2.1 billion, up $40.5 million or
1.9% to Q3 of FY24, reflecting an increase in new merchandise ahead
of the holiday shopping season.
In the third quarter, the remaining 212,500 preferred shares
were redeemed for an aggregate purchase price of approximately $270
million.
The Company ended the third quarter with an Adjusted Debt to
Adjusted EBITDAR ratio of 2.1x on a trailing 12-month basis, well
below the stated goal of at or below 2.5x, and was 2.0x on an
Adjusted Net Debt basis. Net Debt to Adjusted EBITDA was 0.1x 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 fourth quarter
of Fiscal 2025, payable February 21, 2025 to shareholders of record
on January 24, 2025, with an ex-dividend date of January 24,
2025.
In the third quarter Signet repurchased approximately 743,000
common shares at an average cost per share of $89.54, or $66.5
million. The Company had approximately $747.3 million in share
repurchase authorization remaining at the end of the third
quarter.
Fourth Quarter and Full Year Fiscal 2025 Guidance:
Fourth Quarter
Total sales
$2.38 billion to $2.46
billion
Same store sales
Flat to 3%
Adjusted operating income (1)
$397 million to $427 million
Adjusted EBITDA (1)
$441 million to $471 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.
Fiscal 2025
Total sales
$6.74 billion to $6.81
billion
Same store sales
(3%) to (2%)
Adjusted operating income (1)
$540 million to $570 million
Adjusted EBITDA (1)
$715 million to $745 million
Adjusted diluted EPS (1)
$9.62 to $10.08
(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 guidance is based on the following
assumptions:
- Fashion same store sales down low single-digits to
approximately flat.
- North America engagement units approximately flat excluding
Digital banners (James Allen and Blue Nile), or down 5% to
low-single digits when included.
- Approximately (1.5%) impact to sales from Digital banners.
- $190 to $200 million in cost savings initiatives.
- Capital expenditures between $160 to $170 million.
- Annual tax rate of 18.0% to 18.5%, excluding potential discrete
items.
- Approximately 46.2 million weighted diluted shares for Fiscal
2025, and exit the year with approximately 43.5 million diluted
shares.
- Net square footage decline of approximately 1% for the
year.
Our Purpose and Sustainability:
The Signet Team Member Relief Fund ("STMRF"), which provides
financial assistance to employees facing personal hardships such as
those caused by natural disasters or other emergencies, distributed
vital support during the Fall 2024 hurricane season. Following the
devastation caused by Hurricanes Helene and Milton, the STMRF
provided more than $93,000 in aid to 193 team members who
demonstrated a need for short-term, emergency assistance. This
support allowed team members to recover faster while expressing a
tangible impact of Signet’s Love for All sustainability goals.
Conference Call:
A conference call is scheduled for December 5, 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
International All Other Location: (Toll - Local - New York) – +1
646 564 2877 Conference ID 42846 Registration for the listen-only
webcast is available at the following link:
https://events.q4inc.com/attendee/793823202
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: executing major
business or strategic initiatives, such as expansion of the
services business, realizing the benefits of our restructuring
plans or new transformation strategies that the Company may develop
in the future; difficulty or delay in executing or integrating an
acquisition; the impact of the Israel-Hamas conflict on the
operations of our quality control and technology centers in Israel;
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, the pace at which
engagements are expected to recover from the disruption in the
dating cycle on engagements caused by COVID-19, and the Company’s
ability to capture market share of the bridal category upon the
recovery of engagements; 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 further
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 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 store associates in regions experiencing low
unemployment rates and key executive talent during periods of
leadership transition, such as the recent appointment of a new
Chief Executive Officer; 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; risks
associated with the Company’s use of artificial intelligence;
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, or acts of war (including the ongoing Russia-Ukraine and
Israel-Hamas conflicts).
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.
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) provided by 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 to evaluate its overall
liquidity needs and determine 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 sheets, 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 and cash equivalents 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
39 weeks ended
(in millions)
November 2, 2024
October 28, 2023
Net cash used in operating activities
$
(189.8
)
$
(205.3
)
Purchase of property, plant and
equipment
(114.4
)
(89.4
)
Free cash flow
$
(304.2
)
$
(294.7
)
Adjusted operating income
13 weeks ended
39 weeks ended
(in millions)
November 2, 2024
October 28, 2023
November 2, 2024
October 28, 2023
Total operating income (loss)
$
9.2
$
13.3
$
(41.9
)
$
205.2
Asset impairments (1)
0.4
0.2
168.5
3.7
Restructuring and related charges (2)
5.8
1.6
11.6
5.8
Loss on divestitures, net (3)
—
1.3
2.5
1.3
Integration-related expenses (4)
—
7.5
1.1
20.1
CEO transition costs (5)
0.8
—
0.8
—
Litigation charges (6)
—
—
—
(3.0
)
Total adjusted operating income
$
16.2
$
23.9
$
142.6
$
233.1
North America segment adjusted operating income
13 weeks ended
39 weeks ended
(in millions)
November 2, 2024
October 28, 2023
November 2, 2024
October 28, 2023
North America segment operating income
$
24.1
$
39.2
$
30.1
$
281.0
Asset impairments (1)
0.4
0.2
167.8
3.7
Restructuring and related charges (2)
5.4
0.2
6.2
4.4
Integration-related expenses (4)
—
7.5
1.1
20.1
Litigation charges (6)
—
—
—
(3.0
)
North America segment adjusted operating
income
$
29.9
$
47.1
$
205.2
$
306.2
International segment adjusted operating loss
13 weeks ended
39 weeks ended
(in millions)
November 2, 2024
October 28, 2023
November 2, 2024
October 28, 2023
International segment operating loss
$
(3.7
)
$
(9.0
)
$
(20.9
)
$
(22.9
)
Restructuring and related charges (2)
0.4
1.4
5.4
1.4
Asset impairments (1)
—
—
0.7
—
Loss on divestitures, net (3)
—
1.3
2.5
1.3
International segment adjusted operating
loss
$
(3.3
)
$
(6.3
)
$
(12.3
)
$
(20.2
)
Corporate and unallocated expenses adjusted operating
loss
13 weeks ended
39 weeks ended
(in millions)
November 2, 2024
October 28, 2023
November 2, 2024
October 28, 2023
Corporate and unallocated expenses
operating loss
$
(9.6
)
$
(13.8
)
$
(43.8
)
$
(48.1
)
CEO transition costs (5)
0.8
—
0.8
—
Corporate and unallocated expenses
adjusted operating loss
$
(8.8
)
$
(13.8
)
$
(43.0
)
$
(48.1
)
Adjusted income tax provision
13 weeks ended
39 weeks ended
(in millions)
November 2, 2024
October 28, 2023
November 2, 2024
October 28, 2023
Income tax expense
$
1.4
$
1.9
$
9.5
$
28.6
Asset impairments (1)
0.1
—
11.4
0.9
Restructuring and related charges (2)
1.5
0.5
3.0
1.6
Loss on divestitures, net (3)
—
0.3
0.6
0.3
Integration-related expenses (4)
—
1.9
0.2
5.0
CEO transition costs (5)
0.2
—
0.2
—
Pension settlement loss
—
—
—
4.1
Litigation charges (6)
—
—
—
(0.8
)
Adjusted income tax expense
$
3.2
$
4.6
$
24.9
$
39.7
Adjusted effective tax rate
13 weeks ended
39 weeks ended
November 2, 2024
October 28, 2023
November 2, 2024
October 28, 2023
Effective tax rate
16.7
%
14.0
%
(31.8
)%
13.4
%
Asset impairments (1)
0.2
%
—
%
35.5
%
0.2
%
Restructuring and related charges (2)
3.4
%
0.9
%
9.3
%
0.4
%
Loss on divestitures, net (3)
—
%
0.6
%
1.9
%
0.1
%
Integration-related expenses (4)
—
%
3.5
%
0.6
%
1.5
%
CEO transition costs (5)
0.5
%
—
%
0.6
%
—
%
Pension settlement loss
—
%
—
%
—
%
1.1
%
Litigation charges (6)
—
%
—
%
—
%
(0.2
)%
Adjusted effective tax rate
20.8
%
19.0
%
16.1
%
16.5
%
Adjusted diluted EPS
13 weeks ended
39 weeks ended
(in millions)
November 2, 2024
October 28, 2023
November 2, 2024
October 28, 2023
Diluted EPS
$
0.12
$
0.07
$
(3.07
)
$
3.39
Asset impairments (1)
0.01
—
3.80
0.07
Restructuring and related charges (2)
0.13
0.04
0.26
0.11
Loss on divestitures, net (3)
—
0.03
0.06
0.02
Integration-related expenses (4)
—
0.16
0.02
0.38
CEO transition costs (5)
0.02
—
0.02
—
Litigation charges (6)
—
—
—
(0.06
)
Tax impact of items above (7)
(0.04
)
(0.06
)
(0.35
)
(0.20
)
Deemed dividend on redemption of Preferred
Shares (8)
—
—
1.92
—
Dilution effect (9)
—
—
(0.04
)
—
Adjusted diluted EPS
$
0.24
$
0.24
$
2.62
$
3.71
Adjusted EBITDA and adjusted EBITDAR
39 weeks ended
53 week period ended
52 week period ended
53 week period ended
52 week period ended
(in millions)
November 2, 2024
October 28, 2023
October 29, 2022
February 3, 2024
January 28, 2023
November 2, 2024
October 28, 2023
Calculation:
A
B
C
D
E
A + D - B
B + E - C
Net (loss) income
$
(39.4
)
$
184.2
$
99.4
$
810.4
$
376.7
$
586.8
$
461.5
Income taxes
9.5
28.6
(15.0
)
(170.6
)
74.5
(189.7
)
118.1
Interest (income) expense, net
(10.0
)
(10.0
)
11.4
(18.7
)
13.5
(18.7
)
(7.9
)
Depreciation and amortization
110.6
129.4
123.5
161.9
164.5
143.1
170.4
Amortization of unfavorable contracts
(1.4
)
(1.4
)
(1.4
)
(1.8
)
(1.8
)
(1.8
)
(1.8
)
Other non-operating (income) expense, net
(10)
(2.0
)
2.4
139.6
0.4
140.2
(4.0
)
3.0
Share-based compensation
20.4
36.4
34.3
41.1
42.0
25.1
44.1
Other accounting adjustments (11)
184.5
27.9
210.3
21.3
245.5
177.9
63.1
Adjusted EBITDA
$
272.2
$
397.5
$
602.1
$
844.0
$
1,055.1
$
718.7
$
850.5
Rent expense
327.8
330.7
332.4
439.8
446.5
436.9
444.8
Adjusted EBITDAR
$
600.0
$
728.2
$
934.5
$
1,283.8
$
1,501.6
$
1,155.6
$
1,295.3
Debt and net debt leverage ratios
As of
(in millions)
November 2, 2024
October 28, 2023
Debt and net
debt:
Current portion of long-term debt
$
—
$
147.6
Long-term debt
253.0
—
Redeemable Series A Convertible Preference
Shares
—
655.1
Debt
$
253.0
$
802.7
Less: Cash and cash equivalents
157.7
643.8
Net debt
$
95.3
$
158.9
TTM Adjusted EBITDA
$
718.7
$
850.5
Debt leverage ratio
0.4x
0.9x
Net debt leverage ratio
0.1x
0.2x
Adjusted debt and adjusted net debt leverage ratios
As of
(in millions)
November 2, 2024
October 28, 2023
Adjusted debt and
adjusted net debt:
Current portion of long-term debt
$
—
$
147.6
Long-term debt
253.0
—
Redeemable Series A Convertible Preference
Shares
—
655.1
Adjustments:
TTM 5x rent expense
2,184.5
2,224.0
Adjusted debt
$
2,437.5
$
3,026.7
Less: Cash and cash equivalents
157.7
643.8
Adjusted net debt
$
2,279.8
$
2,382.9
TTM Adjusted EBITDAR
$
1,155.6
$
1,295.3
Adjusted debt leverage ratio
2.1x
2.3x
Adjusted net debt leverage
ratio
2.0x
1.8x
Footnotes to Non-GAAP Reconciliation Tables
(1)
Primarily includes asset impairment
charges related to goodwill and indefinite-lived intangible assets
recognized in the second quarter.
(2)
Restructuring and related charges were
incurred primarily as a result of the Company’s rationalization of
its store footprint and reorganization of certain centralized
functions. The 13 and 39 weeks ended November 2, 2024 include $0.6
million recorded to cost of sales.
(3)
Includes net losses from the previously
announced divestiture of the UK prestige watch business.
(4)
Fiscal 2025 includes severance and
retention expenses related to the integration of Blue Nile which
were recorded to SG&A. Fiscal 2024 includes primarily severance
and retention, exit and disposal, 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.
(5)
Primarily includes professional fees
incurred for the search for the Company’s recently appointed CEO
which were recorded to SG&A.
(6)
Includes a credit to income related to the
adjustment of a prior litigation accrual recognized in Fiscal
2023.
(7)
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.
(8)
The Company recorded a deemed dividend to
net income (loss) attributable to common shareholders of $85.2
million in Fiscal 2025, which represents the excess of the
conversion value of the Preferred Shares over their carrying value
upon redemption and includes $1.6 million of related expenses.
(9)
Adjusted diluted EPS for the 39 weeks
ended November 2, 2024 was calculated using 45.9 million diluted
weighted average common shares outstanding. The additional dilutive
shares were excluded from the calculation of GAAP diluted EPS as
their effect was antidilutive.
(10)
For the 39 weeks ended October 29, 2022
and 52 weeks ended January 28, 2023 non-operating expenses
primarily includes pre-tax pension settlement charges of $132.8
million and $133.7 million, respectively.
(11)
Other accounting adjustments are inclusive
of those items described within footnotes 1 through 6 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
39 weeks ended
(in millions, except per share
amounts)
November 2, 2024
October 28, 2023
November 2, 2024
October 28, 2023
Sales
$
1,349.4
$
1,391.9
$
4,351.2
$
4,673.5
Cost of sales
(864.1
)
(890.6
)
(2,727.2
)
(2,929.4
)
Gross margin
485.3
501.3
1,624.0
1,744.1
Selling, general and administrative
expenses
(469.6
)
(484.2
)
(1,483.4
)
(1,525.8
)
Asset impairments, net
(0.7
)
(0.1
)
(169.3
)
(5.7
)
Other operating expense, net
(5.8
)
(3.7
)
(13.2
)
(7.4
)
Operating income (loss)
9.2
13.3
(41.9
)
205.2
Interest (expense) income, net
(1.0
)
2.6
10.0
10.0
Other non-operating income (expense),
net
0.2
(2.3
)
2.0
(2.4
)
Income (loss) before income taxes
8.4
13.6
(29.9
)
212.8
Income taxes
(1.4
)
(1.9
)
(9.5
)
(28.6
)
Net income (loss)
$
7.0
$
11.7
$
(39.4
)
$
184.2
Dividends on redeemable convertible
preferred shares
(1.6
)
(8.7
)
(96.8
)
(25.9
)
Net income (loss) attributable to common
shareholders
$
5.4
$
3.0
$
(136.2
)
$
158.3
Earnings (loss) per common share:
Basic
$
0.12
$
0.07
$
(3.07
)
$
3.51
Diluted
$
0.12
$
0.07
$
(3.07
)
$
3.39
Weighted average common shares
outstanding:
Basic
43.9
44.7
44.3
45.1
Diluted
44.7
45.6
44.3
54.3
Dividends declared per common share
$
0.29
$
0.23
$
0.87
$
0.69
Condensed Consolidated Balance Sheets (Unaudited)
(in millions)
November 2, 2024
February 3, 2024
October 28, 2023
Assets
Current assets:
Cash and cash equivalents
$
157.7
$
1,378.7
$
643.8
Inventories
2,136.2
1,936.6
2,095.7
Income taxes
70.7
9.4
9.1
Other current assets
174.2
211.9
269.7
Total current assets
2,538.8
3,536.6
3,018.3
Non-current assets:
Property, plant and equipment, net
501.0
497.7
509.8
Operating lease right-of-use assets
1,034.2
1,001.8
1,023.1
Goodwill
631.5
754.5
754.5
Intangible assets, net
358.7
402.8
405.6
Other assets
320.3
319.3
316.3
Deferred tax assets
300.8
300.5
37.3
Total assets
$
5,685.3
$
6,813.2
$
6,064.9
Liabilities, Redeemable convertible
preferred shares, and Shareholders’ equity
Current liabilities:
Current portion of long-term debt
$
—
$
147.7
$
147.6
Accounts payable
642.5
735.1
644.9
Accrued expenses and other current
liabilities
351.6
400.2
412.1
Deferred revenue
337.7
362.9
346.2
Operating lease liabilities
263.8
260.3
267.7
Income taxes
38.6
69.8
52.6
Total current liabilities
1,634.2
1,976.0
1,871.1
Non-current liabilities:
Long-term debt
253.0
—
—
Operating lease liabilities
851.6
835.7
855.1
Other liabilities
88.1
96.0
94.6
Deferred revenue
864.3
881.8
856.5
Deferred tax liabilities
195.1
201.7
160.3
Total liabilities
3,886.3
3,991.2
3,837.6
Commitments and contingencies
Redeemable Series A Convertible Preference
Shares
—
655.5
655.1
Shareholders’ equity:
Common shares
12.6
12.6
12.6
Additional paid-in capital
118.7
230.7
227.1
Other reserves
0.4
0.4
0.4
Treasury shares at cost
(1,725.5
)
(1,646.9
)
(1,626.5
)
Retained earnings
3,657.5
3,835.0
3,227.7
Accumulated other comprehensive loss
(264.7
)
(265.3
)
(269.1
)
Total shareholders’ equity
1,799.0
2,166.5
1,572.2
Total liabilities, redeemable convertible
preferred shares and shareholders’ equity
$
5,685.3
$
6,813.2
$
6,064.9
Condensed Consolidated Statements of Cash Flows
(Unaudited)
39 weeks ended
(in millions)
November 2, 2024
October 28, 2023
Operating activities
Net (loss) income
$
(39.4
)
$
184.2
Adjustments to reconcile net (loss) income
to net cash used in operating activities:
Depreciation and amortization
110.6
129.4
Amortization of unfavorable contracts
(1.4
)
(1.4
)
Share-based compensation
20.4
36.4
Deferred taxation
(6.5
)
40.2
Asset impairments, net
169.3
5.7
Other non-cash movements
4.3
4.3
Changes in operating assets and
liabilities:
Inventories
(189.5
)
14.8
Other assets
38.0
(41.7
)
Accounts payable
(101.5
)
(221.5
)
Accrued expenses and other liabilities
(45.9
)
(253.2
)
Change in operating lease assets and
liabilities
(14.0
)
(34.5
)
Deferred revenue
(41.8
)
(48.0
)
Income tax receivable and payable
(92.4
)
(20.0
)
Net cash used in operating activities
(189.8
)
(205.3
)
Investing activities
Purchase of property, plant and
equipment
(114.4
)
(89.4
)
Other investing activities, net
(6.6
)
(4.5
)
Net cash used in investing activities
(121.0
)
(93.9
)
Financing activities
Dividends paid on common shares
(36.0
)
(29.7
)
Dividends paid on redeemable convertible
preferred shares
(18.5
)
(24.6
)
Repurchase of common shares
(113.8
)
(117.5
)
Repurchase of redeemable convertible
preferred shares
(812.9
)
—
Repayment of Senior Notes
(147.8
)
—
Proceeds from ABL
253.0
—
Payment of debt issuance costs
(4.3
)
—
Other financing activities, net
(28.2
)
(47.9
)
Net cash used in financing activities
(908.5
)
(219.7
)
Cash and cash equivalents at beginning of
period
1,378.7
1,166.8
Decrease in cash and cash equivalents
(1,219.3
)
(518.9
)
Effect of exchange rate changes on cash
and cash equivalents
(1.7
)
(4.1
)
Cash and cash equivalents at end of
period
$
157.7
$
643.8
Real Estate Portfolio:
Signet has a diversified real estate portfolio. On November 2,
2024, Signet operated 2,655 stores totaling 4.1 million square feet
of selling space. Compared to year-end Fiscal 2024, store count
decreased by 43 and square feet of selling space decreased
0.7%.
Store count by segment
February 3, 2024
Openings
Closures
November 2, 2024
North America segment
2,411
8
(30
)
2,389
International segment
287
—
(21
)
266
Signet
2,698
8
(51
)
2,655
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241205380631/en/
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
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