Signet Jewelers Limited · NYSE:SIG
Signet Jewelers — Non-Deal Roadshow (July 2010)
104 slides from Signet Jewelers's roadshow presentation, July 2010
Slide 1: Competitive Advantages Reinforcing Sector Leadership
“Competitive Advantages Reinforcing Sector Leadership” July 2010
Slide 2: Safe Harbor Statement
Safe Harbor Statement (Private Securities Litigation Reform Act of 1995) This presentation contains statements which are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, based upon management’s beliefs and expectations as well a
Slide 3: World's Largest Specialty Jeweler
World’s Largest Specialty Jeweler Group sales $3,290.7 million – 78% US/22% UK Kay Jewelers - #1 mid market brand H.Samuel - #1 in UK Sales: $1,508.2 m Stores: 923 in 50 states Sales: £247.8m Stores: 347 Jared - #1 Off-Mall “Category Killer” Ernest Jones - #1 UK upper middle market Sales: $722.5m St
Slide 4: Why Invest in Signet
Why Invest in Signet Ö Market leadership in US & UK Ö Effective strategy in tough environment Ö Strengthening significant competitive advantages Ö Gaining profitable market share in sector undergoing accelerated rationalization Ö Strong balance sheet and cash flow Ö Well positioned for recovery 4
Slide 5: Group Strategy & Objectives
Group Strategy & Objectives Ö Group Strategy for fiscal 2010 & 2011 Ö enhance position as strongest middle market specialty retail jeweler Ö focus on profit & cash flow maximization to further strengthen balance sheet Ö reduce business risk Ö Group Financial Objectives in fiscal 2010 Ö $100 million
Slide 6: Outperformed Financial Objectives in Fiscal 2010
Outperformed Financial Objectives in Fiscal 2010 Ö Same store sales down 0.4% Ö US up 0.2% Ö UK down 2.4% Ö Income before taxes $241.8m Ö fiscal 2009: $(326.5)m, underlying $200.9m (1) Ö underlying increase 14.0% (1) Ö Basic earnings per share $1.92 Ö fiscal 2009: $(4.62), underlying $1.57 (1) Ö und
Slide 7: Strengths Driving Share Gains
Strengths Driving Share Gains Ö Excellence in customer service Ö staff training, development and incentivization programs Ö High quality real estate Ö strict operational and financial criteria applied over time Ö Significant brand equity and awareness Ö consistent high level of customer satisfaction
Slide 8: Consistent Gains in US Market Share
Consistent Gains in US Market Share 1999 2004 2007 2008 2009 Signet 5.2% 7.4% 8.7% 8.6% 9.1% Zale(1,2,3) 5.8% 7.8% 6.3% 5.5% 4.9% Tiffany(1) 3.1% 3.8% 4.8% 4.9% 4.7% Blue Nile(1) 0.1% 0.6% 1.0% 0.9% 1.0% Finlay(1,2) nil nil 0.7% 1.0% Liquidated Friedman(1) 1.3% 1.5% na Liquidated - Whitehall(1) 1.3%
Slide 9: Developed Differentiated Ranges
Developed Differentiated Ranges 9
Slide 10: Industry Leading Performance
Industry Leading Performance Sales Operating EBIT/Total Growth Margin Assets(a) 5 year 5 year 5 year 2004 to 2008 c.a.g.r. average average Signet UK(b) (1.4)% 11.4% 22.9% Typical UK Specialty Jewelers(c) (2.5)% 5.7% 8.2% Total number of specialty jewelry stores in UK ~7,300 (a) Total assets excludes
Slide 11: Broadly Maintain Successful Strategy in Fiscal 2011
Broadly Maintain Successful Strategy in Fiscal 2011 Ö Enhance position as strongest middle market specialty retail jeweler Ö take advantage of capacity reduction Ö many firms less able to compete Ö focus on sustainable competitive advantages Ö Reduce business risk Ö aim to improve store productivity
Slide 12: Free Cash Flow Objective Fiscal 2011
Free Cash Flow Objective Fiscal 2011 Ö Fiscal 2011 free cash inflow objective of between $150 million and $200 million Ö limited scope for a further substantial reduction in working capital Ö Capital expenditure planned to be ~$80 million Ö No shareholder distributions in fiscal 2011 12
Slide 13: Encouraging Start to Fiscal 2011
Encouraging Start to Fiscal 2011 Q1 Fiscal 2011 Results Ö Same store sales: up 5.8% Ö US up 7.2% Ö UK down 0.2% Ö Income before income taxes: $76.8m Ö up 85.5% Ö Basic earnings per share: $0.61 Ö up 96.8% Ö Free cash flow(1) now expected at top of $150m to $200m range for fiscal 2011 (1) Non-GAAP me
Slide 14: Drivers of Medium Term Performance
Drivers of Medium Term Performance Ö Economic environment Ö Aim to win profitable market share in existing stores to drive sales Ö Ability to leverage cost base to improve operating margins Ö potential for US net bad debt to improve nearer to historic levels Ö Demanding Return On Investment and oper
Slide 15: Sales Outlook
Sales Outlook Ö Potential recovery in jewelry market Ö US jewelry sales in 2009 down 8.9% from 2007 peak Ö UK jewelry sales little changed for 5 years Ö market recovery driven by economy Ö Significant share opportunity Ö increasing competitive strengths Ö sector rationalization continues, particular
Slide 16: Opportunity to Reduce Net Bad Debt Rate
Opportunity to Reduce Net Bad Debt Rate Ö In-house credit participation Ö 50% - 55% of US sales Ö ~5% of UK sales but outsourced Ö Net bad debt levels Ö fiscal 1997 to 2007 between 2.8% & 3.4% of US sales Ö reached 5.6% of US sales in fiscal 2010 Ö 120 bpts reduction in rate in Q1 fiscal 2011 Ö Comp
Slide 17: Opportunity to Regain Historic Returns
Opportunity to Regain Historic Returns(1) (2) Operating Margin (%) ROCE (%) 12.7 12.9 13.2 26.2 11.3 12.1 11.7 11.4 25.8 24.9 26.1 23.4 22.3 22.4 9.8 8.4 17.3 (3) 6.9 (3) 11.4 9.6 01 02 03 04 05 06 07 08 09 10 04 10 03 02 01 06 07 08 05 09 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Slide 18: US Jewelry
US Jewelry “Further growth from a proven strategy” 18
Slide 19: US Market Characteristics
US Market Characteristics Ö $58.9 billion total jewelry market Ö ~40% world diamond sales Ö $28.3 billion specialty jewelry market Ö Signet US Ö market leader with 9.1% share Ö 1.8x size of second largest operator Ö sales driven by bridal (45%-50%) and gift giving categories Ö ~75% of sales diamond
Slide 20: Kay
Kay Fiscal Fiscal Fiscal 2005 2009 2010 Sales (million) $1,174 $1,439 $1,508 Stores at y.e. 742 926 923 Average sales per store (‘000) $1,584 $1,536 $1,582 Average selling price $282 $331 $307 Ö~ 1,250 square feet of selling space ÖCustomer’s household income $35k to $100k ÖSales ~50% greater than n
Slide 21: Jared
Jared Fiscal Fiscal Fiscal 2005 2009 2010 Sales (million) $415 $726 $723 Stores at y.e. 93 171 178 Average sales per store (‘000) $4,975 $4,491 $4,046 Average selling price $644 $769(1) $713(1) Ö~4,800 square feet of selling space ÖCustomer’s household income $50k to $150k ÖThird largest mid market
Slide 22: Opportunity to Regain Historic Returns
Opportunity to Regain Historic Returns(1) (2) Operating Margin/Bad Debt (%) ROCE (%) 12.4 11.1 12.1 12.4 12.8 12.8 12.0 23.0 21.7 21.3 22.2 22.1 21.2 9.8 9.2 19.9 (3) 6.8 15.1 11.1 8.1(3) -3.4 -3.2 -2.8 -2.8 -2.8 -3.0 -2.8 -3.4 -4.9 -5.6 01 06 07 03 05 02 04 09 10 08 01 02 03 04 05 06 07 08 09 10 20
Slide 23: Encouraging Performance in Q1 Fiscal 2011
Encouraging Performance in Q1 Fiscal 2011 Q1 Fiscal 2011 Fiscal 2010 Same store ASP Same store ASP sales sales Kay 4.2% 6.0% 4.4% (7.4)% Regional brands 2.7% (1.4)% (4.0)% (4.8)% Jared 15.8% 2.9%(1) (6.0)% (7.3)%(1) US division 7.2% 0.2% Space change (0.4)% 0.6% Total sales US division 6.8% 0.8% Gro
Slide 24: US Sales Outlook
US Sales Outlook Ö Potential recovery in specialty jewelry sales Ö 2009 sales down 9.8% from 2007 peak Ö recovery driven by economy, but outlook unclear Ö Market share opportunity Ö competitive strengths Ö consolidation continues Ö many remaining competitors operationally weakened and/or financially
Slide 25: Long Term Industry Growth
Long Term Industry Growth US Jewelry and Watch Market(a) ~40% of world diamond sales(b) 70 60 r (4. 5)% yea 50 4. 8 %; 2 er m on g t $bn 40 .r. l 30 c.a.g 20 10 0 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 • Specialty sales • Non-specialty sales • Inter
Slide 26: Rationalization of Top US Brands
Rationalization of Top US Brands Mid market brands Sales $m No. of stores Calendar 2009 2008 2004 2009 2008 2004 Kay(1) 1,508 1,439 1,174 923 926 832 Zales(1,2) Gordons(1,2) 1,110 1,363 { 1,071 314 693 202 784 261 757 287 Jared(1) 723 726 415 178 154 135 Fred Meyer(3,4) 375 410 475 376 386 436 Helzb
Slide 27: Accelerated Consolidation in US
Accelerated Consolidation in US Ö Until 2008 about a net 400 specialty jewelry firms closed each year Ö Calendar 2008 & 2009 Ö estimated closure of ~12% of industry doors Ö estimated 8%-10% of industry sales Ö Calendar 2010 Ö likely to remain above historic level Ö Many of those that remain are weak
Slide 28: Signet US Leading Performance
Signet US Leading Performance Operating EBIT/Total Total Calendar 2008 Performance Margin Assets(1) Sales Signet US(2) 6.8% 7.5% (6.3)% Zale Corp(3) (6.1)% (9.2)% (15.1)% Typical US Chain Jeweler(4) 2.7% 1.3% (13.2)% Calendar 2009 Performance Signet US(5) 8.7% 9.8% 0.8% Zale Corp(3) (13.2)% (19.6)%
Slide 29: Our People Make The Difference
“Our People Make The Difference” Ö Our culture has taken years to develop, and is unique and difficult to recreate Ö Customer service remains central to selling jewelry Ö Consistent training and feedback on sales performance and customer experience Ö Clear measurable expectations Ö Strong team incen
Slide 30: Great Merchandising For Our Store Teams
Great Merchandising For Our Store Teams Ö Most efficient and flexible supply chain Ö Individual store by store merchandising Ö Superior merchandising systems Ö enables testing Ö early identification of trends Ö Successful development of differentiated ranges Ö Strong vendor relationships 30
Slide 31: US Differentiated Merchandise
US Differentiated Merchandise Ö Demonstrated unique ability in mid market Ö Over 1,300 stores, sales of more than $2,500m Ö national television advertising Ö best in class executional expertise Ö strong balance sheet Ö now “go to” retailer for vendors Ö Advantages Ö stand out from competitors Ö less
Slide 32: US Merchandise Margin Drivers
US Merchandise Margin Drivers Ö Commodity costs Ö diamond prices up on Q1 fiscal 2010 but down on fiscal 2009 • ~55% COGS Ö year to date gold costs up 23% calendar 2010 v calendar 2009 • ~20% COGS • implementing price increases for selected merchandise Ö Use balance sheet strength to our advantage Ö
Slide 33: Outstanding Marketing Support For Our Store Teams
Outstanding Marketing Support For Our Store Teams Ö Leading share of voice and great execution Ö Ability to use national television advertising Ö built store brand awareness Ö market differentiated product Ö Sophisticated customer relationship marketing Ö Sector leading “brick & click” capability 33
Slide 34: Superior Credit Programs For Our Store Teams
Superior Credit Programs For Our Store Teams Ö Tailored to our customers needs and jewelry sales Ö Leading authorization and collections system built on jewelry sector data Ö Focus on collection Ö Executed to our customer service standards Ö Q1 improving trends, nearer to long term performance 34
Slide 35: Further Evidence of Improved Trend in Receivables in Q1
Further Evidence of Improved Trend in Receivables in Q1 6.0 15.0 5.0 12.0 4.0 Net bad 9.0 Average debt 3.0 monthly as % of total 2.0 6.0 collection rate % sales 1.0 3.0 0.0 0.0 sc 02 sc 03 sc 04 sc 05 sc 06 sc 07 sc 08 sc 09 sc 10 11 20 20 20 20 20 20 20 20 20 20 al al al al al al al al al al sc Fi
Slide 36: US Receivables Performance
36 as % debt sales of total Net bad Fi sc a Fi l 1 0.0 1.0 2.0 3.0 4.0 5.0 6.0 sc 99 Fi al 1 7 sc 99 a Fi l 1 8 sc 99 a Fi l 2 9 sc 00 Fi al 2 0 sc 00 a Fi l 2 1 sc 00 a Fi l 2 2 sc 00 a Fi l 2 3 sc 00 Fi al 2 4 sc 00 a Fi l 2 5 sc 00 a Fi l 2 6 sc 00 Fi al 2 7 sc 00 a Fi l 2 8 sc 00 al 9 20 10 0.0
Slide 37: Credit an Important Element of Sales Transaction
Credit an Important Element of Sales Transaction Ö Sales enabler not a sales driver Ö over half of business transacted on credit Ö customers need/prefer to use private label for jewelry Ö Used by sales associates to trade customer up Ö higher ASP of about $1,000 Ö Highly effective target marketing v
Slide 38: In-house Credit Operation A Competitive Advantage
In-house Credit Operation A Competitive Advantage Ö Optimizes control of the business Ö We manage in context of our business priorities, including gross merchandise margin on sale Ö Tailored program to our customers’ needs Ö score cards specific to our customers Ö rapid collection with targeted stra
Slide 39: Best Support Systems For Our Store Teams
Best Support Systems For Our Store Teams Ö Superior systems are a competitive advantage Ö Benefits Ö enhanced customer service Ö better gross merchandise margin Ö more efficient use of inventory Ö sophisticated customer relationship marketing Ö credit procedures for specialty jewelry sector 39
Slide 40: US Changes in Square Footage
US Changes in Square Footage Kay Change Kay Off in Mall Mall Regionals Jared(1) Total Space Jan 2008 789 105 351 154 1,399 10% Jan 2009 795 131 304 171 1,401 4% Openings 5(2) 3 1 7 16 Closures (6) (5) (45)(2) - (56) Jan 2010 794 129 260 178 1,361 (1)% Openings (forecast) 4 2 - 2 8 Closures (approx.)
Slide 41: Planned Increase in US Capital Expenditure
Planned Increase in US Capital Expenditure Fiscal Fiscal Fiscal $ million 2011 plan 2010 2009 New stores ~5 10.1 39.0 Remodels and relocations ~35 8.1 17.3 Non-store ~20 12.9 20.4 Total ~60 31.1 76.7 Ö Other store capex up $27m on fiscal 2010 Ö 16 Jared remodels Ö 22 Kay remodels Ö Return MIS spend
Slide 42: Tight Control of US Expenses
Tight Control of US Expenses Ö Controllable expenses forecast to be broadly flat Ö benefit from net space reduction Ö Adverse impact from: Ö absence of $13.4 million one-off benefit from change in vacation entitlement policy Ö direct adverse impact of TiLA in fiscal 2011 estimated as net $15-20 mill
Slide 43: UK Jewelry
UK Jewelry “Making existing space work harder” 43
Slide 44: UK Market Characteristics
UK Market Characteristics Ö Market size ~£4.8 billion Ö Signet market share ~11% Ö store base bigger than next 5 UK specialty competitors combined Ö ~60% larger than 3rd largest US mid market jeweler Ö Signet UK’s merchandise mix broader than US 44
Slide 45: H.Samuel
H.Samuel Fiscal Fiscal Fiscal 2005 2009 2010 Sales (million) £282 £250 £248 Stores at y.e. 398 352 347 Average sales per store (‘000) £723 £718 £712 Average selling price £37 £48 £52 Merchandise mix Gold jewelry 31% 27% 28% Diamond jewelry 19% 22% 22% Watches 23% 26% 25% ÖCustomer’s household income
Slide 46: Ernest Jones
Ernest Jones Fiscal Fiscal Fiscal 2005 2009 2010 Sales (million) £221 £208 £210 Stores at y.e. 204 206 205 Average sales per store (‘000) £1,150 £1,047 £1,027 Average selling price £141 £202 £228(1) Merchandise mix Gold jewelry 17% 13% 14% Diamond jewelry 40% 40% 39% Watches 31% 35% 35% ÖCustomer’s
Slide 47: Q1 fiscal 2011 Performance
Q1 fiscal 2011 Performance Q1 Fiscal 2010 Fiscal 2010 Same store ASP Same store ASP sales sales H.Samuel (2.1)% 5.9% (1.7)% 7.88% Ernest Jones 1.8% 11.6%(1) (3.2)% 12.5%(1) UK division (0.2)% (2.4)% Space change (1.5)% 2.3% Total sales UK division (1.7)% (0.1)% at constant exchange rates Gross merch
Slide 48: Opportunity to Regain Historic Returns
Opportunity to Regain Historic Returns(1) (2) Operating Margin (%) ROCE (%) 15.3 15.5 46.0 44.2 43.8 12.9 13.6 39.6 41.2 11.8 10.5 11.0 11.4 (3) 34.0 33.7 8.8 26.0 (3) 7.7 24.8 20.1 01 002 003 004 005 006 007 008 009 010 20 01 02 03 04 05 06 07 08 09 10 2 2 2 2 2 2 2 2 2 20 20 20 20 20 20 20 20 20 2
Slide 49: Long Term Industry Growth
Long Term Industry Growth 6000 5000 .r. 5. 0% c.a.g 4000 £m 3000 2000 1000 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 UK Jewelry and Watch Market Source: UK Office of National Statistics 49
Slide 50: Sustainable Competitive Advantages
Sustainable Competitive Advantages Ö Leading staff training & development recognized by National Association of Goldsmiths Ö Scale, direct sourcing supply chain capability & merchandising expertise Ö 14 million name database for customer relationship marketing Ö Shopping trend to regional malls favo
Slide 51: UK Sales & Merchandise Margin
UK Sales & Merchandise Margin Ö Sales initiatives in fiscal 2011 Ö maintain focus on training & customer service Ö test & develop new ranges, including differentiated ranges Ö continue development of customer relationship marketing Ö Gross merchandise margin outlook Ö gold cost increases Ö impact of
Slide 52: UK Cost Initiatives
UK Cost Initiatives Ö Moderate underlying inflationary pressures Ö Opportunities Ö improved store staff scheduling Ö reduced property costs Ö focus on major centers, close 15 stores Ö Cost base targeted to be slightly lower in pounds sterling 52
Slide 53: Planned Increase in UK Capital Expenditure
Planned Increase in UK Capital Expenditure Fiscal Fiscal Fiscal £ million 2011 plan 2010 2009 Stores ~8.5 6.7 18.4 Non-store ~5.0 1.2 3.4 Total ~13.5 7.9 21.8 Ö Store expenditure up £2 million Ö 23 store refurbishments planned Ö ~40 more store redecorations budgeted Ö Increased investment in MIS 53
Slide 54: Attractive Business
Attractive Business Ö Clear market leader in scale and operational execution Ö ROCE 20.1% in fiscal 2010 Ö Strong free cash flow Ö Limited forex exposure Ö 1 cent move impacts operating income by ~$0.2m/0.07% Ö High operational leverage with potential to return to historic operating margins 54
Slide 55: Signet's Strengths
Signet’s Strengths Ö Sector leader in US & UK Ö Sustainable competitive advantages Ö Proven record of outperforming competitors Ö Structural adjustment within sector accelerating Ö Financial dynamics changing Ö gaining market share through existing stores Ö reduced investment in new stores Ö focus o
Slide 56: Regulation G
Regulation G JEWELERS
Slide 57: Fiscal 2010 Sales
Fiscal 2010 Sales Signet has historically used constant exchange rates to compare period-to-period changes in certain financial data. This is referred to as ‘at constant exchange rates’ throughout this presentation and constitutes a “non GAAP financial measure”. Management considers this to be a use
Slide 58: Fiscal 2010 Results
Fiscal 2010 Results Signet has historically used constant exchange rates to compare period-to-period changes in certain financial data. This is referred to as ‘at constant exchange rates’ throughout this presentation and constitutes a “non GAAP financial measure”. Management considers this to be a u
Slide 59: Net Debt
Net Debt Net debt is a “non GAAP financial measure”. Management considers it to be a useful additional measure for analyzing and explaining changes and trends in Signet’s financial position. It is calculated as set out below: January January 30, 2010 31, 2009 $m $m Long-term debt (280.0) (380.0) Loa
Slide 60: Free Cash Flow
Free Cash Flow Free cash flow is a “non GAAP financial measure” defined as the net cash provided by operating activities less net cash flows used in investing activities. Management considers that this is helpful in understanding how the business generating cash from its operating and investing acti
Slide 61: Q1 Fiscal 2011 Sales
Q1 Fiscal 2011 Sales Signet has historically used constant exchange rates to compare period-to-period changes in certain financial data. This is referred to as ‘at constant exchange rates’ throughout this presentation and constitutes a “non GAAP financial measure”. Management considers this to be a
Slide 62: Q1 Fiscal 2011 Results
Q1 Fiscal 2011 Results Signet has historically used constant exchange rates to compare period-to-period changes in certain financial data. This is referred to as ‘at constant exchange rates’ throughout this presentation and constitutes a “non GAAP financial measure”. Management considers this to be
Slide 63: Appendix
Appendix JEWELERS
Slide 64: Financial Performance
Financial Performance Page Sales Growth 2 Operating Margin Movement 2 Q1 cash flow 3 Financial ratios 3 Borrowing structure 4 5 year SSS performance 4 Financial performance 5 Financial performance 5 Capex, depreciation and amortization 6 64
Slide 65: Q1 Sales Growth
Q1 Sales Growth US UK Signet % % % Same store sales 7.2 (0.2) 5.8 Change in net store space (0.4) (1.5) (0.6) At constant exchange rates 6.8 (1.7) 5.2 Exchange translation - 5.5 1.0 Total sales growth 6.8 3.8 6.2 65
Slide 66: Q1 Operating Margin Movement
Q1 Operating Margin Movement US UK Signet % % % Q1 fiscal 2010 margin 9.0 (0.9) 6.9(1) Gross merchandise margin 0.9 (1.0) 0.5 Net bad debt 1.2 - 1.0 Leverage, primarily store 1.7 0.5 1.6 occupancy Gross margin 3.8 (0.5) 3.1 SG&A expenses 1.4 0.2 1.0 Other operating income (0.5) 0.2 (0.4) Q1 fiscal 2
Slide 67: Q1 Cash Flow
Q1 Cash Flow Fiscal 2011 2010 Net income adjusted for non-cash items(1) 84.7 63.1 Changes in operating assets and liabilities 99.5 134.9 Net cash provided by operating activities 184.2 198.0 Net cash flows used in investing activities (6.3) (8.4) Free cash flow(1) 177.9 189.6 Facility fees (1.0) (8.
Slide 68: Significantly Strengthened Balance Sheet
Significantly Strengthened Balance Sheet Fiscal 2010 Fiscal 2009 Free cash flow(1) $471.9m $51.1m Decrease/(increase) in net $462.8m $(96.1)m debt(1) Fixed charge cover 2.04x 1.93x Interest cover 8.1x 7.9x(2) Net debt/shareholder equity 0.4% 29.2% ROCE 11.4% 9.6%(3) (1) Non-GAAP see Company announce
Slide 69: Changes In Borrowing Structure
Changes In Borrowing Structure Ö $50.9 million prepayment at par to note holders Ö $229.1 million remains outstanding Ö Revolving credit facility reduced to $300 million from $370 million Ö Maintain considerable financial flexibility Ö Reduce expected financing costs during fiscal 2011 69
Slide 70: 5 Year Comp. Performance
5 Year Comp. Performance Signet Comp. Sales 4.8 2.4 -0.7 -8.2 -0.4 Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2007 2008 2009 2010 US Comp. Sales UK Comp. Sales 7.1 2.0 -3.3 -2.4 6.2 -1.7 0.2 -9.7 Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2007 2008 2009 2010 Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2007 20
Slide 71: Group Financial Performance
Group Financial Performance Sales $m Operating Margin % 3,559.2 3,665.3 3,154.1 3,344.3 3,290.7 11.7 11.4 9.8 8.4 6.9 (1) Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2007* 2008 2009 2010 2006 2007* 2008 2009 2010 Income Before Tax, $m Basic earnings per share, $ 387.3
Slide 72: Group Financial Performance
Group Financial Performance ROCE(1) % Net Debt(2), $m 22.3 22.4 470.7 17.3 374.6 11.4 233.2 9.6 174.5 7.9 Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2007* 2008 2009 2010 2006 2007* 2008 2009 2010 Dividend per share(3), $ 1.43 1.45 1.45 1.19 Fiscal Fiscal Fiscal Fiscal
Slide 73: Capital Expenditure, Depreciation & Amortisation
Capital Expenditure, Depreciation & Amortisation Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2007 2008 2009 2010 $m $m $m $m $m Capital expenditure US 88.4 101.1 111.1 76.7 31.1 UK 48.2 23.3 29.3 38.2 12.5 Total 136.6 124.4 140.4 114.9 43.6 Depreciation and amortisation US 51.3 61.3 72.1 84.0 78.4 UK 31
Slide 74: US Jewelry Division
US Jewelry Division Page Summary Financials 7 Merchandise Mix 7 Diamond Supply Chain 8 Average Retail Price of Merchandise Sold 8 Average Sales Per Store 9 Growth in US Stores 9 In-house Credit Requirements 10 Receivables Profile 10 74
Slide 75: US Summary Financials
US Summary Financials Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2007 2008 2009 2010 Sales - $m 2,308.8 2,652.1 2,705.7 2,536.1 2,557.5 Comp. store sales growth 7.1% 6.2% (1.7)% (9.7)% 0.2% Total sales growth 12.1% 14.9% 2.0% (6.3)% 0.8% Operating (2) income - $m 295.9 318.9 265.2 171.6 235.8 Operating
Slide 76: US Merchandise Mix
US Merchandise Mix Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2007 2008 2009 2010 % % % % % Diamonds & diamond 72 74 75 75 76 jewelry Gold & silver 8 7 7 7 8 jewelry Other jewelry 13 12 11 11 9 Watches 7 7 7 7 7 Total 100 100 100 100 100 Excluding repairs, warranties and other miscellaneous sales 76
Slide 77: US Diamond Supply Chain
US Diamond Supply Chain ~75% of US merchandise mix Rough Polished Manufactured Retailers Mines T T r r a Cutters & a Sightholders d polishers d Manufacturers Wholesalers e e r r s s Contract Manufacture Complete Signet 77
Slide 78: Average Retail Price of Merchandise Sold ($)
Average Retail Price of Merchandise Sold ($) Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2007 2008 2009 2010 Kay 305 317 327 331 307 Regionals 324 332 343 346 329 Jared 697 719 747 769* 713* * Excluding charm bracelet category 78
Slide 79: Average Sales Per Store
Average Sales Per Store Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2007* 2008 2009 2010 Kay ($’000) 1,665 1,815 1,710 1,536 1,582 Regionals ($’000) 1,514 1,517 1,344 1,160 1,163 Jared ($’000) 5,453 5,676 5,341 4,491 4,046 Includes only stores operated for the full financial year * 53 week year 79
Slide 80: Growth in US Stores
Growth in US Stores Kay & Jared* Total Space Cumulative Regionals increase space increase Jan 2000 799 28 827 +10% +10% Jan 2001 956 43 999 +26% +39% Jan 2002 970 55 1,025 +6% +47% Jan 2003 983 67 1,050 +6% +56% Jan 2004 1,024 79 1,103 +7% +67% Jan 2005 1,063 93 1,156 +8% +80% Jan 2006 1,111 110 1,2
Slide 81: In-house Credit Requirement
In-house Credit Requirement Ö High bridal participation ~45-50% Ö Characteristics of bridal customer Ö young Ö limited, if any, credit history Ö high level of financial commitments as setting up home, or Ö older customer making anniversary purchase Ö Young consumer not typical bank credit customer Ö
Slide 82: US Receivables Profile
US Receivables Profile Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2007 2008 2009 2010 Average outstanding $841 $957 $997 $1,028 $1,016 balance Average monthly 14.5% 14.6% 13.9% 13.1% 12.5% collection rate Credit sales as % of 51.6% 51.7% 52.6% 53.2% 53.5% sales Net bad debt as % of 5.8% 5.3% 6.5% 9.2%
Slide 83: US Jewelry Market
US Jewelry Market Page US Jewelry Sector 11 Performance 11 US Jewelry Market 12 Fewer Specialty Jewelry Firms 12 Sales Per Store 13 83
Slide 84: US Jewelry Sector Performance
US Jewelry Sector Performance 14% 10% Growth p.a. 6% 2% -2% -6% -10% 2000(a) 2001(a) 2002 2003 2004 2005 2006 2007 2008 2009 Furniture & Household excl. Electricals Electricals & Electronics Clothing Jewelry & Watches Signet US (a) Excludes Marks & Morgan acquisition Source: US Department of Commerc
Slide 85: US Jewelry Market
US Jewelry Market 2004 2007 2008 2009 US Market size $57bn $62bn $60bn $59bn Chain Jewelers ($100m+ sales) 12% 17% 15% 14% Independent Jewelers 37% 32% 32% 32% Total specialty 49% 49% 47% 46% Chain Department Stores est. 12% 11% 10% 10% Mass Merchants est. 10% 11% 11% 11% TV Home Shopping est. 4% 4%
Slide 86: Fewer Specialty Jewelry Firms
Fewer Specialty Jewelry Firms 35,000 ~(1.6)% pa 30,000 Num ber of firm s 25,000 20,000 15,000 2009 10,000 ~(2)% 5,000 0 87 89 91 93 95 97 99 01 03 05 07 09 19 19 19 19 19 19 19 20 20 20 20 20 Source: Jewelers Board of Trade 86
Slide 87: Sales Per Store
Sales Per Store 2008/09 sales per store $'000 1,489 1,116 1,061 Kay/ Zales/ Regionals(1) Gordons(2) Industry(3) (1) y.e. January 30, 2010 (2) y.e. July 31, 2009 – Source: 10-K (3) y.e. December 31, 2008 – Source: Jewelers of America – Cost of Doing Business Survey 87
Slide 88: Jared
Jared Page Jared Locations 14 Jared Development 14 Growing Off-mall Presence 15 88
Slide 89: Jared Locations
Jared Locations Existing stores Opened in fiscal 2010 89
Slide 90: Jared Development
Jared Development Ö 1994: 3 test stores opened Ö 1996 revised format opened in Denver Ö 1997: 3 further test stores opened Ö 1998: 8 stores opened Ö 1999 to 2004: 12-15 stores opened p.a. Ö 2005: 18 stores opened Ö 2006: 25 stores opened Ö 2007: 19 stores opened Ö 2008: 17 stores opened Ö 2009: 7 st
Slide 91: Growing Off-mall Presence
Growing Off-mall Presence % of Space Growth % of Total Space 44% 40% 27% 29% 32% 59% 62% 33% 36% 36% 66% 76% 1% 2% 4% 6% 7% 8% 34% 12% 38% 11% 15% 72% 69% 64% 61% 57% 56% 12% 29% 26% 23% 22% 18% 12% 5 6 7 8 * * 5 6 7 8 9 0 2 00 2 00 2 00 2 00 0 09 0 10 00 00 00 00 00 01 al al al al l2 l2 2 2 2 2 2 2
Slide 92: Real Estate
Real Estate Page Typical Mall Layout 16 In-Line v. Corner Location 16 Typical Power Strip 17 Typical Lifestyle Centre 17 92
Slide 93: Typical Mall Layout
Typical Mall Layout No. 1 Department Food entrance store court Dept Dept store store Best locations Good locations Department OK locations store Poor locations 93
Slide 94: In-Line v. Corner Location
In-Line v. Corner Location Mall Mall Mall Display cases 94
Slide 95: Typical Power Strip
Typical Power Strip od ng Us ble s & Sp c k s Be & th Kay y Go orti Bu a s R No rne dB Di nd ys st MAJOR ROAD Ba yo Be Be To Kay * * nt nt D a a RE ur ur nk st a st a JA Ba Re Re MAJOR ROAD Specialty retailers * Note: Kay and Jared are unlikely to be sited in the same power strip mall 95
Slide 96: Typical Lifestyle Centre
Typical Lifestyle Centre m tro ma s ne rd Ci No Pedestrian area MAJOR ROAD Kay & rnes ble No Ba Pedestrian Pedestrian area area MAJOR ROAD Specialty Restaurants Health & Beauty retailers 96
Slide 97: UK Jewelry
UK Jewelry Page Summary Financials 18 Comp. Store Sales Growth 19 Store Count 19 Customer Oriented Format 20 Average Sales per Store 20 Average Retail Price 21 Retail Market Map 21 97
Slide 98: UK Summary Financials
UK Summary Financials Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2007 2008 2009 2010 Sales - £m 469.6 482.5 479.8 461.8 461.2 Comp. store sales growth (8.2)% 1.2% 2.0% (3.3)% (2.4)% Total sales growth (7.3)% 2.7% (0.6)% (3.8)% (0.1)% Operating income - £m 49.3 53.2 54.7 40.9(2) 35.5 Operating 10.5% 11.
Slide 99: Comp. Store Sales Growth
Comp. Store Sales Growth H.Samuel Ernest Jones 1.3 2.9 0.7 1.7 -2.6 -1.7 -4.0 -3.2 -7.5 -8.7 Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 99
Slide 100: UK Store Count
UK Store Count Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2007 2008 2009 2010 H.Samuel 386 375 359 352 347 Ernest Jones 207 206 204 206 205 Total 593 581 563 558 552 100
Slide 101: Customer Oriented Format
Customer Oriented Format 7% 9% 15% 18% % of store numbers 22% 37% 41% 45% 46% 47% 29% 28% 22% 19% 16% 27% 22% 18% 17% 15% Fiscal Fiscal Fiscal Fiscal Forecast 2007 2008 2009 2010 fiscal 2011 HS Traditional EJ Traditional HS Customer oriented EJ Customer oriented 101
Slide 102: UK Average Sales per Store
UK Average Sales per Store Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2007* 2008 2009 2010 H.Samuel (£’000) 681 695 722 718 712 Ernest Jones (£’000) 1,065 1,079 1,105 1,047 1,027 Average sales per store excluding VAT. Includes only stores operated for the full financial year * 53 week year 102
Slide 103: Average Retail Price of Merchandise Sold (£)
Average Retail Price of Merchandise Sold (£) Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2007 2008 2009 2010 H.Samuel 38 42 44 48 52 Ernest Jones 148 163 180 202 228* *Excluding charm bracelet category 103
Slide 104: UK Retail Market Map
UK Retail Market Map (ex. independents) £250 Leslie Davies Goldsmiths Ernest Jones HIGH Beaverbrooks H Samuel Estimated Average Transaction Value Argos Warren James LOW F. Hinds Half Price Supermarkets Jewellers £0 FEW MANY RANGE OF PRODUCTS 104