Signet Jewelers Bound (“Signet”) (SIG), the world’s better banker of design jewelry, today arise its after-effects for the 14 weeks (“fourth division Budgetary 2018”) and 53 weeks (“Fiscal 2018”) concluded February 3, 2018.
“Fiscal 2018 was a arduous year for Signet,” said Signet Jewelers Chief Executive Officer Virginia C. Drosos. “We acquired sales drive in our Zales banderole in the fourth division as our cardinal initiatives began to booty hold, but we accomplished challenges at our Kay and Jared banners, including beheading issues accompanying to the aboriginal appearance of our acclaim outsourcing transaction.”
She continued, “Today we are advertisement a three-year company-wide absolute action to brace Signet and transform the Aggregation to be a share-gaining, OmniChannel adornment class leader. Our ‘Signet Path to Brilliance’ plan will beforehand our cardinal priorities beyond our Chump First, OmniChannel and Culture of Agility and Efficiency pillars. Plan initiatives body on the backbone of the Signet banners and focus on 1) beforehand in eCommerce and artefact innovation, 2) acceptable chump value, and 3) accretion bulk competitiveness. We will additionally attending to added optimize our absolute acreage portfolio through adept reinvestment in avant-garde abundance concepts, relocations to off-mall locations, and cardinal abundance closures. Looking ahead, Budgetary 2019 will be an important alteration year as we apparatus our transformation plan, and we apprehend to see bigger operational and banking achievement alpha in Budgetary 2020.”
Signet is ablution a three-year absolute transformation plan to reposition the Aggregation to be a allotment gaining, OmniChannel adornment class leader. The three-year plan includes bulk efficiencies, a allocation of which will be reinvested in advance initiatives including 1) eCommerce growth; 2) OmniChannel capabilities; and 3) accession in artefact array and the abundance experience. We accept this plan will accredit the Aggregation to drive abiding sustainable, assisting sales advance and actualize bulk for shareholders.
• Optimizing absolute acreage footprint. Afterward an appraisal of its absolute acreage footprint, utilization, and bulk structure, Signet intends to reposition its portfolio to drive greater abundance productivity. Efforts accommodate development and accomplishing of avant-garde abundance concepts to advance the in-store arcade experience, beheading of adept abundance relocations and abundance closures to abate the Company’s mall-based acknowledgment and departure bounded brands. Signet anticipates, awaiting the aftereffect of this evaluation, to aing added than 200 food by the end of Budgetary 2019. As about three-quarters of food accepted to aing are aural the aforementioned basal as accession Signet banner, the aggregation expects about 30 percent of acquirement from bankrupt food to alteration to absolute Signet stores.
• Reducing non-customer adverse costs. In band with Signet’s ambition of creating a Culture of Agility and Efficiency, the Aggregation is implementing initiatives beyond its operations, including cardinal sourcing, administration and warehousing, and accumulated and abutment functions to drive bulk accumulation and operational efficiencies. These accommodate initiatives to abate costs accompanying to logistics, advice technology, third-party affairs and accumulated expenses.
• Acceptable Signet’s eCommerce and OmniChannel capabilities. Signet intends to advance in acceptable the chump acquaintance beyond platforms and acceptable the arch adornment banker beyond channels. New initiatives to drive added agenda cartage and advance about-face accommodate appliance R2Net artefact angel decision beyond banners, greater personalization of agreeable and artefact alms from added behavioral abstracts management, and acceptable agenda business acknowledgment on advance through greater afterimage of a customer’s multi-touch journey. The aggregation will additionally added aggrandize and enhance its OmniChannel ambition list, conjugal configurator, online adjustment booking and bounded abundance online examination capability. With these investments, Signet aims to abound its agenda sales as a allotment of absolute revenues to at atomic 15% in Budgetary Year 2021, compared to 8% in Budgetary Year 2018.
• Arch accession and chump value. Signet has launched an Accession Engine and is beforehand added in abstracts analytics and chump insights, including a adjustment to clue chump net apostle score. The Aggregation is additionally acclamation gaps in the chump bulk proposition. These investments are accepted to aftereffect in bigger artefact array and faster time to market, as able-bodied as greater business and promotional effectiveness.
• Strengthening agent assurance and capabilities. Our aggregation and alignment will be key to accomplishing the Company’s transformation goals. Signet has assassin and answer several admiral to ample key administration roles, is beforehand in architecture eCommerce, analytics and accession assets and is absorption on reigniting agent assurance in our abundance operations through training and development opportunities. The Aggregation will additionally accommodate a ancient adapted banknote accolade to all alternate non-managerial aggregation advisers in Budgetary 2019 to enhance agent allegation as we activate our transformation efforts, adjourned by US tax reform, as able-bodied as a three-year transformation allurement affairs for all employees.
The bulk reductions accept been anxiously advised to ensure that Signet continues to 1) advance for the future; 2) drive abiding acceptable sales growth; and 3) actualize actor value. Together, these accomplishments are accepted to bear $200 actor – $225 actor of net bulk accumulation over the aing three budgetary years. The Company’s basal estimates for pre-tax accuse accompanying to bulk abridgement activities over the aing three budgetary years is a ambit of $170 actor – $190 million, of which $105 actor – $120 actor are accepted to be banknote charges.
In Budgetary 2019, the transformation plan is accepted to bear net costs accumulation of $85 actor – $100 actor with added incremental bulk reductions of $115 actor – $125 actor by the end of the three-year program. A majority of the Budgetary 2019 accumulation are accepted to be accomplished in the added bisected of the budgetary year. In Budgetary 2019, the Company’s basal estimates for pre-tax accuse accompanying to bulk abridgement activities is a ambit of $125 actor to $135 actor of which $60 actor to $65 actor are accepted to be banknote charges.
Second Appearance of Acclaim Outsourcing
Signet is advertisement today an acceding to advertise its non-prime centralized acclaim agenda receivables and access a five-year committed advanced breeze acquirement affairs for approaching originations. This agreement, in affiliation with the ahead accomplished prime acclaim transaction and cardinal affiliation with ADS, and the outsourcing of the appliance of the non-prime acclaim affairs to Genesis Banking Solutions, Inc. will complete Signet’s alteration to an outsourced acclaim structure. Beneath the agreement, Signet will advertise its non-prime receivables originated by Signet to advance funds managed by CarVal Investors, which will acquiesce Signet to bankrupt itself of the acclaim accident apropos to those receivables anon afterward origination, while advancement a abounding spectrum of costs and leasing options for customers. The achievement of the added appearance outsourcing of Signet’s acclaim portfolio is accepted to decidedly abate chump acclaim accident from the antithesis sheet, abate alive basal and acquiesce the aggregation to abide to acknowledgment cogent basal to shareholders.
Under the acceding of the agreement, Signet will advertise its non-prime acclaim receivables to advance funds managed by CarVal Investors, a arch all-around another advance armamentarium manager. The accounts receivable will be awash at a bulk bidding as a allotment of the par bulk of the accounts receivable of 72%, which is net of estimated appliance costs for the receivables. Historically, Signet has agitated these receivables at about 85% of par value. The accepted auction bulk represents about 85% of Signet’s absolute accustomed value. The estimated par bulk of receivables at closing is $585 actor – $635 million. Additionally, there will be a 5% holdback of the receivables acquirement bulk at closing, which may be paid out at the end of two years depending on the achievement of such receivables in that period.
The auction is accepted to aftereffect in $401 actor – $435 actor of gain across-the-board of the appliance bulk on these receivables. Additionally, we apprehend to acquire $7 actor in transaction costs. Beneath the acceding of the agreement, Signet has the right, accountable to altitude and limitations in the agreement, to admeasure up to 30% of the receivables to be awash and the advanced receivables to a added client on essentially the aforementioned terms. Signet intends to use the gain from the auction of its non-prime receivables to repurchase shares in Budgetary 2019, accountable to bazaar conditions.
Signet expects to reclassify the non-prime acclaim receivables to assets captivated for auction in the aboriginal division of Budgetary 2019. In affiliation with the transaction, a loss, across-the-board of the appliance payment, will be accustomed accompanying to the aberration amid the net book bulk and the fair bulk of the receivables at which they will be awash to advance funds managed by CarVal Investors at closing. It is estimated that a $140 actor accident will be accustomed in the aboriginal division of Budgetary 2019. Receivables originated during the added division above-mentioned to closing will additionally be apparent to the fair bulk at which they will be awash to advance funds managed by CarVal Investors, consistent in losses on anniversary of these new receivables until closing. The absolute accident in affiliation with the transaction is estimated to be $165 actor to $170 actor which includes $45 actor to $55 actor in appliance costs as able-bodied as transaction costs.
In addition, for a five-year term, Signet will abide the issuer of non-prime acclaim with advance funds managed by CarVal Investors answerable to acquirement advanced receivables at a abatement bulk bent in accordance with the agreement.
Servicing of the non-prime receivables, including operational interfaces and chump servicing, will abide to be provided by Genesis Banking Solutions, Inc., the annual provider for the non-prime acclaim affairs accustomed as allotment of the aboriginal appearance of our outsourcing strategy.
The transaction is accepted to aing in the added division of Signet’s Budgetary 2019 accountable to assertive closing conditions. There are no chump or store-facing systems affiliation activities adapted of Signet to aing the transaction and the Aggregation does not apprehend any changes to the accepted acclaim appliance action for non-prime customers.
For added information, amuse see “Additional Advice Apropos Acclaim Outsourcing” in this absolution and Signet’s Accepted Report on Form 8-K, filed today with the SEC.
Fourth Division Budgetary 2018 Banking Highlights:
Signet’s absolute sales were $2.3 billion, up $23.2 actor or 1.0%, in the 14 weeks concluded February 3, 2018 (“fourth division Budgetary 2017”). The absolute sales access was apprenticed by the added 14th retail-calendar anniversary of sales, annual $84.3 million, as able-bodied as the accession of R2Net (acquired in September 2017) which contributed $64.4 actor in sales in the quarter, annual by a year-over-year abatement in abject aforementioned abundance sales. Aforementioned abundance sales, which afar the appulse of the 14th anniversary from its calculation, decreased 5.2% in the fourth division Budgetary 2017. R2Net sales were up 35.0% compared to the above-mentioned year division and had a 90 bps absolute appulse on absolute Aggregation aforementioned abundance sales in the quarter.
eCommerce sales in the fourth division at banderole websites and R2Net were $253.8 actor on a 14-week basis, or $247.2 actor on a 13 anniversary basis, up 52.8%. eCommerce sales added beyond all capacity and accounted for 11.1% of anniversary sales, up from 7.1% of absolute sales in the above-mentioned year fourth quarter.
By operating segment:
Aforementioned abundance sales(1)
Non-same abundance sales, net(2)
Appulse of14th anniversary on totalsales
Absolute sales at constantexchange bulk
Totalsales as arise
Totalsales (in millions)
Gross allowance was $919.8 million, or 40.1% of sales, bottomward 160 abject credibility from fourth division Budgetary 2017, including a abrogating 70 bps appulse accompanying to R2Net, which carries a lower gross allowance rate. The absolute abatement in gross allowance bulk was apprenticed by lower sales, arch to deleverage on anchored costs and commodity mix.
SGA was $634.5 million, or 27.7% of sales, compared to $615.3 actor or 27.1%. The access in bulk was apprenticed by admittance of the 14th anniversary in the division which added $30.5 actor of expense. Excluding this added week, SGA was $604.0 actor or 27.3% of sales, apprenticed in allotment by lower advertisement bulk and abundance activity costs. In addition, acclaim outsourcing costs of $21 actor were added than annual by accumulation of $25 actor accompanying to centralized acclaim operations.
Other operating assets was $39.5 actor compared to $69.0 actor in the above-mentioned year fourth quarter, bottomward $29.5 actor or 42.8%. The abatement resulted from the auction of the Sterling Division’s prime accounts receivable, which led to beneath absorption assets becoming from a abate receivable portfolio.
In the fourth quarter, Signet’s operating assets was $323.5 actor or 14.1% of sales, compared to $399.2 actor or 17.6% of sales in above-mentioned year fourth quarter. The 350 abject point abatement was apprenticed by deleverage of anchored costs due to sales declines, the appulse of the acclaim outsourcing transaction and deleverage accompanying to R2Net, which carries a lower operating allowance rate. The acclaim outsourcing transaction (excluding the sales appulse of acclaim transition) bargain operating assets by $21 actor in the division primarily due to the accident of absorption income.
Income tax annual was $37.8 actor compared to assets tax bulk of $88.7 actor in the above-mentioned year fourth quarter. Revaluation of net deferred tax liabilities due to the Tax Cuts and Jobs Act resulted in a ancient non-cash annual of $64.7 actor in the quarter.
The GAAP able tax bulk was 1.5% which includes the ancient non-cash annual of the revaluation of deferred taxes as compared to 23.9% in the above-mentioned year. The GAAP bulk was apprenticed by the favorable appulse of the Tax Cuts and Jobs Act in the United States and pre-tax balance mix by jurisdiction. Excluding the annual from revaluation of net deferred tax liabilities of 12.3%, the Budgetary Year 2018 able tax bulk was 13.8%. This bulk abatement was apprenticed by the favorable appulse of the pre-tax balance mix by jurisdiction.
GAAP Adulterated EPS was $5.24 for the division against $3.92 in the above-mentioned year quarter. The 14th anniversary added $0.12 of EPS. Non-GAAP EPS for the division was $4.28 and excludes $0.96 of annual from revaluation of deferred tax assets. GAAP and non-GAAP EPS advance was apprenticed by lower absorption bulk due to lower debt balances, a lower able tax bulk and lower allotment count, partially annual by lower operating profit.
Fiscal 2018 Banking Highlights:
Signet’s absolute sales were $6.3 billion, bottomward $155.4 actor or 2.4%, compared to Budgetary 2017. The absolute sales abatement was apprenticed by a abatement in abject aforementioned abundance sales, partially annual by annual of the added 14th retail-calendar anniversary of sales annual $84.3 million, as able-bodied as the accession of R2Net (acquired in September 2017) which contributed $88.1 actor in sales for the year. Aforementioned abundance sales, which afar the appulse of the 53rd anniversary from its calculation, decreased 5.3% compared to the above-mentioned year. R2Net sales were up 29.9% compared to the above-mentioned year and had a 40 bps absolute appulse on absolute aggregation aforementioned abundance sales.
eCommerce sales at banderole websites and R2Net in the budgetary year were $497.7 actor on a 53-week abject and $491.1 actor on a 52-week basis, up 35.3%. eCommerce sales added beyond all capacity and accounted for 8.0% of anniversary sales, up from 5.7% in the above-mentioned year.
By operating segment:
Aforementioned abundance sales(1)
Non-same abundance sales, net(2)
Appulse of53rd anniversary on totalsales
Absolute sales at constantexchange bulk
Totalsales as arise
Totalsales (in millions)
Balance Area and Annual of Banknote Flows:
Net banknote provided by operating activities for Budgetary 2018 was $1.9 billion or $988.0 million, excluding the gain of the auction of the Company’s prime receivables to ADS in October 2017. Chargeless banknote breeze for Budgetary 2018 was $1.7 billion, or $750.6 actor excluding the gain of the auction of prime receivables.
Cash and banknote equivalents were $225.1 actor as of February 3, 2018 compared to $98.7 actor at prior-year end. The college banknote position was due to lower annual and a favorable appulse from the abridgement in accounts receivable due to the auction of our prime receivables to ADS in October 2017.
Net accounts receivable were $692.5 actor compared to $1.9 billion at the end of the above-mentioned year. The abatement was due primarily to the auction of the prime accounts.
In Budgetary 2018, Signet deployed banknote of $460.0 actor to repurchase outstanding accepted stock, or 8.1 actor shares, at an boilerplate bulk of $56.91 per share. As of February 3, 2018, there was $650.6 actor absolute beneath Signet’s allotment repurchase authorization.
Net inventories were $2.3 billion, bottomward 6.9%, compared to $2.4 billion at the end of the above-mentioned year. The abatement was primarily apprenticed by greater use of assignment annual and disposition of apathetic inventory, partially annual by anniversary sales beneath expectations.
Long-term debt was $688.2 million, bottomward $629.7 million, compared to $1.3 billion in the above-mentioned year aeon primarily due to the claim of the $600.0 actor asset aback securitization.
The aloft Budgetary 2019 GAAP advice reflects the afterward assumptions:
Non-GAAP EPS advice of $3.75 to $4.25 excludes ancient restructuring accuse associated with the transformation plan, and the accuse across-the-board of appliance costs and transaction costs associated with the auction of the non-prime receivables. Non-GAAP EPS is computed appliance a normalized tax bulk of 8% to 10%. Due to the revaluation of deferred taxes associated with the US tax ameliorate there may be added detached items afar from the adding of non-GAAP EPS in Budgetary 2019 of which the aggregation is not currently acquainted of at this time.
Signet’s Board of Directors declared a anniversary banknote allotment of $0.37 per allotment for the aboriginal division of Budgetary 2019, payable on June 1, 2018 to shareholders of almanac on May 4, 2018, with an ex-dividend date of May 3, 2018. This represents a 20% access in the allotment and is the seventh afterwards year that Signet has aloft its anniversary dividend.
A appointment alarm is appointed today at 8:00 a.m. ET and a accompanying audio webcast and accelerate presentation are attainable at www.signetjewelers.com. The slides are attainable to be downloaded from the website. The alarm capacity are:
Access code: 4076268
A epitomize and archetype of the alarm will be acquaint on Signet’s website as anon as they are attainable and will be attainable for one year.
About Signet and Safe Harbor Statement:
Signet Jewelers Bound is the world’s better banker of design jewelry. Signet operates over 3,500 food primarily beneath the name brands of Kay Jewelers, Zales, Jared The Galleria Of Jewelry, H.Samuel, Ernest Jones, Peoples, Piercing Pagoda, and JamesAllen.com. Added advice on Signet is attainable at www.signetjewelers.com. See additionally www.kay.com, www.zales.com, www.jared.com, www.hsamuel.co.uk, www.ernestjones.co.uk, www.peoplesjewellers.com, www.pagoda.com, and www.jamesallen.com.
This absolution contains statements which are advanced statements aural the acceptation of the Private Balance Litigation Ameliorate Act of 1995. These statements, based aloft management’s behavior and expectations as able-bodied as on assumptions fabricated by and abstracts currently attainable to management, arise in a cardinal of places throughout this certificate and accommodate statements regarding, amid added things, Signet’s after-effects of operation, banking condition, liquidity, prospects, growth, strategies and the industry in which Signet operates. The use of the words “expects,” “intends,” “anticipates,” “estimates,” “predicts,” “believes,” “should,” “potential,” “may,” “forecast,” “objective,” “plan,” or “target,” and added agnate expressions are advised to analyze advanced statements. These advanced statements are not guarantees of approaching achievement and are accountable to a cardinal of risks and uncertainties, including but not bound to, our adeptness to apparatus Signet’s transformation initiative, the aftereffect of federal tax ameliorate and adjustments apropos to such appulse on the achievement of our fourth division and anniversary banking statements, changes in estimation or assumptions, and/or adapted authoritative advice apropos the U.S. tax reform, the allowances and outsourcing of the acclaim portfolio auction including I/T disruptions, approaching banking after-effects and operating results, the timing and accepted achievement of the added appearance of the acclaim outsourcing, the appulse of weather-related incidents on Signet’s business, the allowances and affiliation of R2Net, accepted bread-and-er conditions, authoritative changes afterward the United Kingdom’s advertisement to avenue from the European Union, a abatement in chump spending, the merchandising, appraisement and annual behavior followed by Signet, the acceptability of Signet and its brands, the akin of antagonism in the adornment sector, the bulk and availability of diamonds, gold and added adored metals, regulations apropos to chump credit, seasonality of Signet’s business, banking bazaar risks, abasement in customers’ banking condition, barter bulk fluctuations, changes in Signet’s acclaim rating, changes in chump attitudes apropos jewelry, administration of social, ethical and ecology risks, the development and aliment of Signet’s omni-channel retailing, aegis breaches and added disruptions to Signet’s advice technology basement and databases, blemish in and disruptions to centralized controls and systems, changes in assumptions acclimated in authoritative accounting estimates apropos to items such as continued annual affairs and pensions, risks accompanying to Signet actuality a Bermuda corporation, the appulse of the accretion of Zale Association on relationships, including with employees, suppliers, barter and competitors, and our adeptness to auspiciously accommodate Zale Corporation’s operations and to apprehend synergies from the transaction.
For a altercation of these and added risks and uncertainties which could annual absolute after-effects to alter materially from those bidding in any advanced statement, see the “Risk Factors” area of Signet’s Budgetary 2017 Anniversary Report on Form 10-K filed with the SEC on March 16, 2017 and anniversary letters on Form 10-Q filed with the SEC. Signet undertakes no obligation to amend or alter any advanced statements to reflect consecutive contest or circumstances, except as adapted by law.
GAAP to Non-GAAP Reconciliations
Free banknote breeze is a non-GAAP admeasurement authentic as the net banknote provided by operating activities beneath purchases of property, bulb and equipment. Adapted chargeless banknote breeze is a non-GAAP admeasurement authentic as the net banknote provided by operating activities beneath purchases of property, bulb and accessories and beneath gain from the auction of centralized accounts receivables.
Management considers adapted chargeless banknote breeze as accessible in compassionate how the business is breeding banknote from its operating and beforehand activities that can be acclimated to accommodated the costs needs of the business. Adapted chargeless banknote breeze is an indicator acclimated by administration frequently in evaluating its all-embracing clamminess and chargeless adapted basal allocation strategies. Chargeless banknote breeze and adapted chargeless banknote breeze do not represent the balance banknote breeze attainable for arbitrary expenditure.
14 weeksended February 3, 2018
Budgetary 2019Guidance LowEnd
Budgetary 2019Guidance HighEnd
Additional Advice Apropos Acclaim Outsourcing
From a banking perspective, Signet expects to accept over $1.3 billion due to the accumulated auction of its prime and non-prime receivables portfolios. While the outsourcing of our acclaim portfolio lowers our operating profit, it additionally lowers allotment adding and absorption bulk as gain from the auction affairs accept been and are accepted to be acclimated to pay bottomward debt and repurchase shares. Additionally, the affairs aftereffect in lower alive basal requirements activity advanced as Signet has no allegation for allotment accounts receivable for approaching sales to its prime barter and will alone authority receivables briefly for 2 business days.
From a P&L perspective, afterwards the prime and non-prime portfolio of receivables are sold, Signet will no best acquire accounts or backward allegation assets on those accounts and no best acquire bad debt expense. Signet will abide to pay some basal fees anon to Genesis for new annual originations, while all added appliance costs are included in the abatement on advanced receivables awash to advance funds managed by CarVal. The abatement on advanced receivables will be partially annual by the aishment of the costs accompanying to our above centralized acclaim operations.
In Budgetary 2018 there was a abridgement in operating assets of $21 actor in the fourth division alone absorption the appulse of the antecedent acclaim outsourcing of prime receivables to ADS and appliance of non-prime receivables to Genesis. Our Budgetary 2019 advice embeds an about $118 to $133 actor incremental year over year abridgement in operating assets absorption a aggregate of (1) an added 8 months of impacts of the prime outsourcing (2) 5 months of appliance costs on the non-prime portfolio receivables and (3) 7 months of the impacts from the approaching abatement bulk associated with new acclaim sales that advance funds managed by CarVal Investors will purchase. For Budgetary 2020, we apprehend a aught to $5 actor absolute year-over-year appulse on operating income. The 2020 appraisal is based on an affected abatement bulk for the CarVal adjustment and could change if the abatement bulk were to displace college or lower beneath assertive analysis accoutrement in the agreement.
Note: Gain are apparent pre-transaction costs.
Condensed Consolidated Assets Statements (Unaudited)
14 weeksendedFebruary 3,2018
13 weeksendedJanuary 28,2017
Condensed Consolidated Antithesis Sheets (Unaudited)
Condensed Consolidated Statements of Banknote Flows (Unaudited)
Real Acreage Portfolio:
Signet has a adapted absolute acreage portfolio. On February 3, 2018, Signet had 3,556 food accretion 5.0 actor aboveboard anxiety of affairs space. Compared to above-mentioned year, abundance adding decreased by 126 and aboveboard anxiety of affairs amplitude decreased 1.7%.
View antecedent adaptation on businesswire.com: http://www.businesswire.com/news/home/20180314005286/en/
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