Signet Jewelers Limited · NYSE:SIG
Signet Jewelers — ICR XChange 2010
17 slides from Signet Jewelers's conference presentation, Jan 13, 2010
Slide 1: Competitive Advantages Reinforcing Sector Leadership
“Competitive Advantages Reinforcing Sector Leadership” January 2010
Slide 2: Safe Harbor Statement
Safe Harbor Statement (Private Securities Litigation Reform Act of 1995) This presentation include 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 as well as on assumptions m
Slide 3: Why Invest in Signet?
Why Invest in Signet? Ö Market leadership in US & UK Ö Gaining profitable market share in sector undergoing accelerated rationalization Ö Strong balance sheet and cash flow Ö Strengthening significant competitive advantages Ö Effective strategy in tough environment Ö Well positioned for economic rec
Slide 4: World's Largest Specialty Jeweler
World’s Largest Specialty Jeweler Group sales ~$3,300 million – 78% US / 22% UK Kay Jewelers - #1 mid market brand H.Samuel - #1 in UK Sales: about $1,500m Stores: 920 in 50 states Sales: about £250m Stores: 345 Jared - #1 Off-Mall “Category Killer” Ernest Jones - #1 UK upper middle market Sales: ab
Slide 5: Market Leader in UK & US
Market Leader in UK & US Ö £5.5bn total UK jewelry market in 2008 Ö market leader with ~10% share Ö store base bigger than next 5 specialty chains combined Ö sustainable competitive advantages Ö ability to transfer US best practice where appropriate Ö consistently achieved superior operating metrics
Slide 6: Gaining Share in US Market
Gaining Share in US Market Estimated US Specialty Jewelry(1) Market Share 2004 2005 2006 2007 2008 Signet US(2) 7.5% 8.2% 8.9% 9.0% 9.0% Zale Corp. US(2) 7.8% 7.8% 7.4% 6.5% 5.8% Tiffany US(2) 3.9% 4.3% 4.5% 4.9% 5.2% Chains ranked 4-10(3) 7.3% 8.0% 8.7% 8.8% 8.5% Other specialty jewelers 73.5% 71.7
Slide 7: Rationalization by Top US Brands
Rationalization by Top US Brands Mid market brands Sales $m No. of stores Calendar 2008 2007 2004 2008 2007 2004 Kay(a) 1,439 1,490 1,174 926 894 832 Zales(ab) Gordons(ab) 1,554(c) { 1,089 329 1,071 314 784 261 789 282 757 287 Jared(a) 726 756 415 171 154 135 Fred Meyer(de) 410 465 475 386 400 436 H
Slide 8: Accelerated Consolidation in US
Accelerated Consolidation in US Ö Until 2008 about a net 400 specialty jewelry firms closed each year Ö Calendar 2008 Ö estimated closure of 1,800 doors* Ö ~(5)% sales capacity* Ö Calendar 2009 Ö further accelerated consolidation Ö projection for 750 to 1,500 closures* Ö Calendar 2010 Ö likely to re
Slide 9: Effective Strategy in Tough Market
Effective Strategy in Tough Market Ö Enhance position as strongest middle market specialty retail jeweler and gain share Ö capitalize on sustainable competitive advantages Ö benefit from competitors withdrawing capacity Ö Maximize profit & free cash flow Ö Use strong balance sheet as competitive adv
Slide 10: Strengths Driving Share Gains
Strengths Driving Share Gains Ö Excellence in customer service Ö staff training, development and incentivization programs Ö Significant brand equity and awareness Ö consistent high level of customer satisfaction Ö national TV advertising Ö High quality real estate Ö strict operational and financial
Slide 11: Developed Differentiated Ranges
Developed Differentiated Ranges 11
Slide 12: Fiscal 2010 Performance
Fiscal 2010 Performance 9 weeks to January 2, 2010 49 weeks to January 2, 2010 Sales – at Same Sales – at Same constant rates store constant rates store sales Sales US 7.0% 7.6% 0.6% (0.1)% UK (0.7)% (0.8)% 0.2% (2.2)% 5.1% 5.6% 0.5% (0.6)% Ö Income before income tax expected to be between $222.5 mi
Slide 13: Signet US Leading Performance
Signet US Leading Performance Operating EBIT/Total Sales 2008 Performance Margin Assets(a) Change Signet US(b) 6.8% 7.5% (6.3)% Zale Corp(c) (6.1)% (9.2)% (15.1)% Typical US Chain Jeweler(d) 2.7% 1.3% (13.2)% 2009 Performance Signet US forecast(e) ~8.5% ~10.0% 0.3% (a) Total assets excludes goodwill
Slide 14: Signet UK Leading Performance
Signet UK Leading Performance Operating EBIT/Total Margin Assets(a) 2008 Performance Signet UK(b) 8.8% 17.3% Typical UK Chain Jeweler(c) 3.2% 4.0% 2009 Performance Signet UK forecast(d) ~7.5% 13.8% (a) Total assets excludes goodwill (b) To y.e. January 31, 2009 excluding goodwill impairment (c) Base
Slide 15: Continued Improvement in Cash Flow & Net Debt
Continued Improvement in Cash Flow & Net Debt Forecast Fiscal 10 Fiscal 09 $m $m Adjusted net income† 260-270 259.8 Decrease / (increase) in operating assets* Over 215 (28.7) Investing activities* ~(35) (74.3) Investment in new US stores ~(30) (105.6) Dividends - (123.8) Issue of shares 1 - Foreign
Slide 16: Outlook for Fiscal 2011
Outlook for Fiscal 2011 Ö Economic environment Ö better than 12 months ago, but still challenging, particularly in the UK Ö Operating strategy largely unchanged Ö focus on reinforcing competitive advantages Ö tight control of gross merchandise margin, costs and inventory Ö disciplined approach to in
Slide 17: Competitive Advantages Reinforcing Sector Leadership
Competitive Advantages Reinforcing Sector Leadership Ö Gaining profitable market share in sector undergoing accelerated rationalization Ö Effective strategy in tough environment Ö Strong balance sheet and cash flow Ö Strengthening significant competitive advantages Ö Well positioned for recovery 17