Signet Jewelers Limited · NYSE:SIG
Signet Jewelers — Q4 FY2016 Earnings Presentation
20 slides from Signet Jewelers's earnings presentation, Mar 24, 2016
Slide 1: Fiscal 2016 Fourth Quarter Results
Fiscal 2016 Fourth Quarter Results Thursday, March 24, 2016
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: Q4 Fiscal 2016 – Financial Highlights
Q4 Fiscal 2016 – Financial Highlights • Total sales growth 5.1% -- materially faster than U.S. jewelry industry growth1 • Same store sales growth 4.9% -- among fastest growth in U.S. retail • Top line growth and excellent expense management led to: • Operating margin expansion: Operating margin, +18
Slide 4: Q4 Fiscal 2016 – Sales Driver Highlights
Q4 Fiscal 2016 – Sales Driver Highlights • Select diamond fashion jewelry and bridal • Ever Us, Earrings, Bracelets • Vera Wang Love, Neil Lane, Tolkowsky, Perfect Fit • Targeted marketing campaigns • Store banner leaders: Kay Jewelers, Zales, Piercing Pagoda, Ernest Jones • Store operations enhance
Slide 5: Since Q4 Fiscal 2016 End
Since Q4 Fiscal 2016 End • Continued momentum in business reflected in quarterly and annual financial guidance • Pre-announced strong Q4 and new $750 million stock repurchase plan • Repurchased SIG shares due to significant disconnect between stock price weakness and business strength • Increased in
Slide 6: Three-Year Net Synergies from Zale Acquisition
Three-Year Net Synergies from Zale Acquisition • February 1, 2015 - January 31, 2018 net synergy target increased: Cumulative Net • New: $225 million - $250 million Synergies Old: $150 million - $175 million 100% • Delivered $60 million in Fiscal 2016 80% • Majority of remaining synergies to be 60%
Slide 7: Fiscal 2016 Accomplishments – 1 of 2
Fiscal 2016 Accomplishments – 1 of 2 • Furthered 1-team mindset / Manage by functional area vs division • $6.55 billion in sales • SIG added to S&P 500 • Cross-selling brands • Ever Us: Innovation and leveraging position as #1 jewelry retailer • The Wrist: bracelets; select watches
Slide 8: Fiscal 2016 Accomplishments – 2 of 2
Fiscal 2016 Accomplishments – 2 of 2 • Repair: In-sourced, more centers • Successfully deployed learnings from customer segmentation study • Gross margin synergies: product sourcing, discount controls, indirect material • Brand development and line extensions • New store concepts • Omni-channel adva
Slide 9: Q4 Fiscal 2016 Sales Performance
Q4 Fiscal 2016 Sales Performance Change in Total sales Exchange same store at constant translation Change in Total sales sales1 exchange rate2 impact3 total sales (in millions) Kay 7.4% 9.1% 0.0% 9.1% $ 940.8 Jared 1.4% 5.3% 0.0% 5.3% $ 439.5 Regional brands -1.8% -7.6% 0.0% -7.6% $ 72.2 Sterling Je
Slide 10: Non-GAAP Reconciliation
Non-GAAP Reconciliation (in millions of $ except per share data) Adjustments Adjusted Signet Purchase Accounting Transaction Costs Signet Sales 2,397.8 (5.2) - 2,392.6 Cost of goods sold (1,377.1) 0.5 - (1,376.6) Gross margin 1,020.7 (4.7) - 1,016.0 SGA (666.0) (1.5) (19.1) (686.6) Other operating i
Slide 11: Q4 Fiscal 2016 Adjusted Income Statement Highlights
Q4 Fiscal 2016 Adjusted Income Statement Highlights¹ In millions % of Adjusted Sales Adjusted operating income Q4 2015 $361.7 15.8% Adjusted gross margin $1,020.7 42.6% Adjusted selling, general & admin. ($666.0) (27.8)% Other operating income $63.7 2.6% Adjusted operating income Q4 2016 $418.4 17.4
Slide 12: Fiscal 2016 Inventory
Fiscal 2016 Inventory • Ending inventory $2.45 billion, up $15 million or 0.6% with annual sales growth of 14.2% • Sound inventory management across the board: bridal and fashion; country-by-country; high ticket and low ticket products • Material improvement with Zale • Ever Us contribution • Invent
Slide 13: In-House Credit
In-House Credit • Signet has provided in-house credit to its customers for nearly 30 years • In-house credit provides Signet a number of competitive advantages: • Enables and facilitates incremental profitable sales and customer loyalty • Supports sales volume through greater number of purchases, hi
Slide 14: In-House Credit
In-House Credit 1. Designed to collect outstanding credit balance as quickly as possible, minimizing risk and enabling customer to make additional jewelry purchases using their credit facility. Weighted average minimum monthly payment requires approximately 9% of outstanding balances – a greater pro
Slide 15: Sterling Division Credit Metrics
Sterling Division Credit Metrics (in millions except percentages) Fiscal 2016 Fiscal 2015 Accounts receivable (A/R), net $1,756.4 $1,567.6 Credit participation 61.5% 60.5% Average monthly collection rate 11.5% 11.9% Allowance as % of ending A/R 7.0% 6.8% Net bad debt ($190.5) ($160.0) Interest incom
Slide 16: Capital Allocation and Stock Repurchase
Capital Allocation and Stock Repurchase • Maintain strong balance sheet that provides flexibility • Invest in business; support execution of strategic priorities • Ensure adequate liquidity • Return excess cash to shareholders • Maintain investment grade rating • Adjusted debt / adjusted EBITDAR at
Slide 17: Financial Guidance
Financial Guidance First Quarter Fiscal 2017 Same store sales 3% to 4% EPS $1.80 to $1.87 Adjusted EPS $1.90 to $1.95 Share repurchases ~$125 million Fiscal 2017 Same store sales 3.0% to 4.5% EPS $7.88 to $8.23 Adjusted EPS $8.25 to $8.55 Effective tax rate ~28% Capital expenditures $315 million to
Slide 18: ke) KAY ZALES
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Slide 19: Appendix
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Slide 20: Receivables Aging Rules
Receivables Aging Rules Under the recency method, an account that is current will begin to age as a past due account when less than 75% of the scheduled payment is received. Past due accounts will continue to age unless a “qualifying payment” is received. If a “qualifying payment” is received, the a