Signet Jewelers Limited · NYSE:SIG
Signet Jewelers — Q2 FY2015 Earnings Presentation
22 slides from Signet Jewelers's earnings presentation, Aug 28, 2014
Slide 1: Fiscal 2015 Second Quarter Results
Fiscal 2015 Second Quarter Results Thursday, August 28, 2014 Regionals 1
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: Second Quarter Fiscal 2015 Financial Results
Second Quarter Fiscal 2015 Financial Results Same store sales up 4.8%; organic same store sales up 6.3%. Led by the Sterling Jewelers and UK divisions. Operating income $83.5 million, down 20.9% Organic operating income $124.1 million, up 17.6% Diluted earnings per share (“EPS”) $0.72, down
Slide 4: Signet Sales Performance
Signet Sales Performance Total sales Change in same store Second Quarter Fiscal 2015 (in millions) sales¹ Change in total sales Kay $496.5 8.1% 11.0% Jared² $264.7 4.9% 11.1% Regional brands $49.2 1.9% (11.7)% Sterling Jewelers (division & operating segment) $810.4 6.7% 9.4% Zales Jewelers $158.3 (1
Slide 5: Outlet Strategy Update
Outlet Strategy Update Outlet portfolio now fully converted and performing well Remaining acquired outlets now converted to Jared Vault Merchandise mix transition Favorable comparisons to Q2 FY14 with partially converted stores Regionals 5
Slide 6: Strategic Diamond Sourcing Initiative
Strategic Diamond Sourcing Initiative Represents ~10% of value related to diamond procurement. Should be >20% over long term. Helps ensure stores are supplied a proper quantity and quality of cuts they need. Expanding relationships with primary rough producers. Becoming a centralized center
Slide 7: 1 Great Company 3 Strong Divisions 8 Incredible Store Brands
1 Great Company 3 Strong Divisions 8 Incredible Store Brands Mike Barnes CEO Mark Light Michele Santana President and COO CFO Ed Hrabak Seb Hobbs George Murray Sterling Jewelers UK Division Zale Division Division Managing Director President President Regionals Regionals 7
Slide 8: Zale Accomplishments
Zale Accomplishments Acquisition Closed May 29, 2014 Integration teams delivering. 3-year synergy guidance increased from $100M to $150M-$175M Positive leadership change New store operations conference Centralized diamond sourcing Testing cross-merchandising / selling Media efficiency an
Slide 9: Signet Q2 Performance Drivers
Signet Q2 Performance Drivers Delivering an excellent ® ® guest experience Innovative and successful merchandising initiatives Effective marketing investment Continued multi-channel growth Regionals 9
Slide 10: Prepared for Second Half: Exciting New Merchandise
Prepared for Second Half: Exciting New Merchandise Regionals 10
Slide 11: Prepared for Second Half: Other Business Catalysts
Prepared for Second Half: Other Business Catalysts New concepts Next generation Kay store Jared Vault Pandora shop-in-shops E-commerce initiatives Efficient marketing to capture shoppers early through new media initiatives Regionals 11
Slide 12: Second Quarter Fiscal 2015 Sales Performance
Second Quarter Fiscal 2015 Sales Performance Sterling Zale UK Other¹ Total Sales Q2 2015 $m 810.4 247.5 162.9 5.1 1,225.9 Sales Q2 2014 $m 741.1 — 139.1 — 880.2 Change in sales % % % % % Change in same store sales² 6.7 (0.9) 4.4 — 4.8 Non-same store sales, net³ 2.7 — 1.2 NM 32.1 Change in total sale
Slide 13: Income Statement Highlights
Second Quarter Fiscal 2015 Income Statement Highlights Non-GAAP Reconciliation for the second quarter ended August 2, 2014 Q2 FY2014 Signet Signet Signet Organic Zale Accounting Severance Transaction Capital Structure Consolidated, Consolidated, Results Operations Adjustments Costs Costs & Financing
Slide 14: Operating Income
Second Quarter Fiscal 2015 Operating Income Operating Income Q2 FY2015 Q2 FY2014 % of % of Division Division $m Sales $m Sales Sterling Jewelers Division 129.9 16.0% 111.9 15.1% Zale Division1 (9.8) (4.0%) - - UK Division 1.1 0.7% (0.8) (0.6%) Other2 (37.7) - (5.6) - Signet $83.5 6.8% $105.5 12.0% 1
Slide 15: Income Statement Highlights, Organic
Second Quarter Fiscal 2015 Income Statement Highlights, Organic % of Organic Sales Operating income Q2 2014 $105.5m Organic gross margin $340.0m 34.8% Organic selling, general & admin. ($269.6)m (27.6)% Other operating income $53.7m 5.5% Organic operating income Q2 2015 $124.1m 12.7% Organic net int
Slide 16: Inventory Q2 Fiscal 2015
Inventory Q2 Fiscal 2015 Ending inventory was $2,345.3 million, up $927.6 million or 65.4% compared to Q2 Fiscal 2014. The increase was primarily due to: Zale division inventory of $841.3 million An increase in Sterling inventory of $61.2 million due primarily to bridal and fashion brand exten
Slide 17: Credit Metrics
Credit Metrics Second Quarter Fiscal 2015 Fiscal 2014 Accounts receivable, net $1,316.0m $1,152.1m Sterling credit participation 62.2% 59.1% Sterling average monthly collection rate 11.7% 11.9% Year to Date Fiscal 2015 Fiscal 2014 Sterling credit participation 60.0% 57.1% Sterling average monthly co
Slide 18: Credit Statistics
Credit Statistics Second Quarter Fiscal 2015 Fiscal 2014 Net bad debt ($41.8)m ($36.6)m As a % of Sterling sales 5.2% 4.9% Other operating income, net $53.7m $46.3m As a % of Sterling sales 6.6% 6.2% Net Impact $11.9m $9.7m Year to Date Fiscal 2015 Fiscal 2014 Net bad debt ($64.1)m ($57.8)m As a % o
Slide 19: Other Balance Sheet Highlights
Other Balance Sheet Highlights Total debt $1.4B versus $0.0, due to financing of Zale acquisition 2.6% weighted average interest cost of debt $600M asset-backed securitization, $400M term loan, and $400M senior notes at 4.7% Strategically: maintain investment grade; be disciplined yet flexib
Slide 20: Financial Guidance
Financial Guidance Third Quarter Fiscal 2015 Same store sales 2.0% to 4.0% EPS ($0.11) to ($0.01) Purchase accounting adjustments ($0.14) to ($0.12) Transaction costs ($0.09) to ($0.07) Adjusted EPS (Organic EPS plus EPS attributable to Zale operations) $0.12 to $0.18 Adjusted EPS are expected to be
Slide 21: Non-GAAP Reconciliation
Non-GAAP Reconciliation Non-GAAP Reconciliation for the second quarter ended August 2, 2014 Signet Signet Organic Zale Accounting Severance Transaction Capital Structure Consolidated, Results Operations Adjustments Costs Costs & Financing As Reported Sales 978.4 256.8 (9.3) - - - 1,225.9 Cost of sal
Slide 22: Fiscal 2015 Second Quarter Results
Fiscal 2015 Second Quarter Results Thursday, August 28, 2014 Regionals 22