Signet Jewelers Limited · NYSE:SIG
Signet Jewelers — Q3 2011 Earnings Presentation
25 slides from Signet Jewelers's earnings presentation, Nov 23, 2010
Slide 1: Fiscal 2011 Q3 Results
Fiscal 2011 Q3 Results November 23, 2010
Slide 2: Forward Looking Statements & Other Disclosure Matters
Forward Looking Statements & Other Disclosure Matters Forward-Looking Statements - 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
Slide 3: Third Quarter Highlights
Third Quarter Highlights Ö Third quarter results Ö same store sales up 7.2%, US division up 9.7% Ö 390 bpts improvement in operating margin Ö return to third quarter profitability Ö Free cash flow1 now anticipated to be at upper end of $225 million to $275 million target range before prepayment of p
Slide 4: Sales Performance
Sales Performance Q3 Year to Date US UK Total US UK Total Sales Fiscal 2011 $m 497.0 144.8 641.8 1,737.2 429.7 2,166.9 Sales Fiscal 2010 $m 457.0 154.4 611.4 1,626.4 450.4 2,076.8 Change in sales % % % % % % Same store sales 9.7 (0.6) 7.2 7.5 (0.5) 5.8 Space impact (0.9) (2.0) (1.2) (0.7) (1.6) (0.9
Slide 5: Third Quarter & YTD Results
Third Quarter & YTD Results Q3 Year to Date 2011 2010 2011 2010 $m $m $m $m Sales 641.8 611.4 2,166.9 2,076.8 Operating income/(loss), net 18.5 (5.9) 162.0 87.3 Net interest expense (6.5) (7.4) (21.2) (26.5) Income/(loss) before income 12.0 (13.3) 140.8 60.8 taxes Income taxes (6.0) 4.6 (45.8) (19.2
Slide 6: Performance Reconciliation
Performance Reconciliation Q3 Year to Date % of % of sales sales Income before tax Fiscal 2010 $(13.3)m (2.2)% $60.8m 2.9% Gross margin movement $30.6m 3.5% $90.2m 2.9% Selling, general & admin. expense movement $(4.2)m 0.9% $(9.8)m 0.8% Other operating income $(2.0)m (0.5)% $(5.7)m (0.4)% movement
Slide 7: Free Cash Flow & Net Debt
Free Cash Flow & Net Debt YTD Fiscal YTD Fiscal 2011 2010 $m $m Net Income 95.0 41.6 Adjustments to reconcile to cash flow by operations 94.5 95.0 Net income adjusted for non-cash items1,2 189.5 136.6 Change in operating assets & liabilities 7.4 212.5 Net cash flows used in investing activities (39.
Slide 8: Financing Structure
Financing Structure Ö Amendments to Revolving Credit Facility Ö facility now fixed at $300 million Ö removes restrictions on capital expenditure and shareholder distributions Ö Prepayment of Private Placement Note Ö interest expense saving of $101.7 million Ö ‘make whole’ payment of ~$47 million Ö n
Slide 9: US Jewelry
US Jewelry “Further growth from a proven strategy” 9
Slide 10: US Sales Performance
US Sales Performance Sales Same store Change in Change in sales sales ASP1 Q3 Fiscal 2011 Kay $276.3m 8.6% 7.4% 6.6% Regionals $56.3m 2.6% (5.0)% 4.6% Jared $164.4m 14.3% 16.9% 6.9% US division $497.0m 9.7% 8.8% 8.0% YTD Fiscal 2011 Kay $984.1m 4.9% 4.3% 5.9% Regionals $197.0m 2.2% (6.6)% 0.9% Jared
Slide 11: US Operating Income
US Operating Income Q3 Fiscal 2011 YTD Fiscal 2011 Sales $497.0m 8.8% $1,737.2m 6.8% Operating income, net $25.7m up $23.7m $174.8m 69.7% Operating margin 5.2% up 480 bpts 10.1% up 380 bpts 11
Slide 12: US Drivers of Performance
US Drivers of Performance Ö Competitive strengths Ö highly motivated and trained sales staff Ö supply chain and merchandising Ö advertising support Ö high quality real estate Ö in-house customer financing Ö Many competitors remain under financial pressure and/or operationally constrained Ö Operation
Slide 13: Improvement in Receivables During Q3
Improvement in Receivables During Q3 9.0 15.0 8.0 7.0 12.0 US net bad 6.0 Average debt 5.0 9.0 monthly as % collection of total 4.0 rate % US sales 6.0 3.0 2.0 3.0 1.0 0.0 0.0 Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 13
Slide 14: Improvement in Receivables Year To Date
Improvement in Receivables Year To Date 7.0 15.0 6.0 5.0 12.0 US net bad debt 4.0 Average 9.0 monthly as % of total 3.0 collection rate % US sales 6.0 2.0 3.0 1.0 0.0 0.0 Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 14
Slide 15: Fiscal 2011 US Outlook
Fiscal 2011 US Outlook Ö Well prepared for Holiday season Ö enhanced competitive position within sector Ö Fiscal 2011 US gross merchandise margin expected to be at least at last year’s level Ö Costs expected to be above plan Ö sales related expenses Ö Q4 advertising expenditure Ö TILA impact in Fisc
Slide 16: UK Jewelry
UK Jewelry “Making existing space work harder” 16
Slide 17: UK Performance
UK Performance Q3 Fiscal 2011 YTD Fiscal 2011 Sales Same Change ASP Sales Same Change ASP million store in sales at million store in sales at sales at CER2 sales at CER2 CER1 CER1 H.Samuel $76.0 (1.6)% (2.8)% 8.3% $224.0 (1.6)% (2.8)% 10.0% Ernest Jones $68.8 0.4% 0.4% 7.8% $205.7 0.8% 0.7% 9.6% UK
Slide 18: UK Drivers of Performance
UK Drivers of Performance Ö Challenging economic environment Ö Price increases largely offset continued pressure on gross merchandise margin Ö customer responsive to ‘value’ Ö Strengthened competitive position Ö focus on customer service and staff training Ö merchandising initiatives Ö marketing sup
Slide 19: UK Outlook
UK Outlook Ö Challenging outlook Ö Merchandising initiatives Ö Gross merchandise margin expectation continues to be somewhat below Fiscal 2010 Ö Increased CRM program and TV advertising for H.Samuel Ö Pound sterling operating costs remain tightly controlled 19
Slide 20: Signet's Strengths
Signet’s Strengths Ö Market leader in sector undergoing rationalization Ö many competitors under operating and financial pressure Ö Record of gaining market share Ö quality of sales people / customer service / in-store experience Ö ability to leverage supply chain leadership Ö development of differe
Slide 21: Appendix
Appendix JEWELERS
Slide 22: Exchange Translation Impact on Sales
Exchange Translation Impact on 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 conside
Slide 23: Exchange Translation Impact on Operating Income
Exchange Translation Impact on Operating Income 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”. Managem
Slide 24: Net Cash or Net Debt
Net Cash or 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: October 30, January October 31, 2010 30, 2010 2009 $million $m
Slide 25: 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