Signet Jewelers Limited · NYSE:SIG
Signet Jewelers — Q1 2011 Earnings Presentation
20 slides from Signet Jewelers's earnings presentation, May 27, 2010
Slide 1: Fiscal 2011 Q1 Results
Fiscal 2011 Q1 Results May 27, 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 as well as on assumptions
Slide 3: Continued Progress in Executing Two Year Strategy
Continued Progress in Executing Two Year Strategy Ö Leverage competitive advantages to gain profitable market share Ö Reduce business risk Ö aim to improve operating margin through greater store productivity Ö maintain financial strength & flexibility Ö Focus on profit & cash flow maximization Ö Wel
Slide 4: Improved Sales Trend Continues in Q1
Improved Sales Trend Continues in Q1 13 weeks to May 1, 2010 US UK Signet % % % Same store sales 7.2 (0.2) 5.8 Change in store space (0.4) (1.5) (0.6) Constant exchange rate 6.8 (1.7) 5.2 Exchange impact - 5.5 1.0 As reported 6.8 3.8 6.2 4
Slide 5: Further Profit Growth
Further Profit Growth Q1 fiscal 2010 2009 2009 CER $m $m $m Sales 810.0 770.2 762.6 Operating income 85.5 52.2 52.4 Net interest expense (8.7) (11.0) (11.0) Income before income taxes 76.8 41.2 41.4 Income taxes (24.8) (15.0) (15.1) Net income 52.0 26.2 26.3 Basic earnings per share $0.61 $0.31 $0.3
Slide 6: Movement in Operating Margin
Movement in Operating Margin Change in US UK Group Operating margin Q1 fiscal 2010 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 of store occupancy 1.7% 0.5% 1.6% Gross margin movement 3.8% (0.5)% 3.1% Selling, general & administrative exp
Slide 7: Good Progress Against Financial Objectives
Good Progress Against Financial Objectives Ö Gross merchandise margin Ö YTD: US up 90 bpts: UK down 100 bpts Ö Full year objective • US: now expected to be broadly similar to fiscal 2010 • UK: somewhat below last year Ö Controllable costs(1) broadly flat at CER Ö US: broadly flat for fiscal 2011 Ö U
Slide 8: Free Cash Flow & Net Debt
Free Cash Flow & Net Debt Q1 Fiscal 2011 Q1 Fiscal 2010 $m $m Adjusted net income† 84.7 63.1 Change in operating assets* 101.7 143.5 Investing activities* (5.2) (6.3) Investment in new US stores (3.3) (10.7) Free cash flow 177.9 189.6 Facility amendment fees (1.0) (8.4) Issue of shares 0.8 - Foreign
Slide 9: US Jewelry
US Jewelry “Further growth from a proven strategy” 9
Slide 10: Continued Strong Performance
Continued Strong Performance Total sales Same Change in ASP store sales sales Kay $386.8m 4.2% 4.0% $322 Regional Brands $76.9m 2.7% (6.4)% $339 Jared $203.4m 15.8% 19.0% $741(1) US division $667.1m 7.2% 6.8% $380(1) Movement Gross merchandise margin up 90 bpts Operating income $91.1m up 61.5% Opera
Slide 11: Drivers of Performance
Drivers of Performance Ö Improving economic environment, but still uncertain outlook Ö Strengthened competitive position Ö supporting highly motivated sales staff Ö using expertise & scale in diamond sourcing Ö increasing share of voice on national television Ö Many competitors under financial press
Slide 12: 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 debt 9.0 Average monthly as % 3.0 collection of total rate % sales 6.0 2.0 1.0 3.0 0.0 0.0 Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 12
Slide 13: Management of Receivables
Management of Receivables Ö Performance driven by macro-economic factors, sales and better execution Ö Credit offer unchanged while many competitors constrained Ö Maintain credit risk profile Ö Full year TILA impact still expected to be $15 million - $20 million 13
Slide 14: 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 uncertain outlook Ö Market share opportunity Ö estimated that ~12% of doors exited specialty market in 2008 & 2009 combined Ö competitor set much reduced in middle
Slide 15: Differentiated Product Increasing Opportunity to Drive Share
Differentiated Product Increasing Opportunity to Drive Share Ö Differentiated product combines our competitive advantages reinforcing their impact Ö merchandising Ö marketing Ö store operations Ö balance sheet Ö Opportunities to gain market share from Ö specialty sector competitors Ö non-specialty j
Slide 16: Initiatives in Differentiated Product
Initiatives in Differentiated Product Ö Continue to expand established ranges Ö Le Vian Ö Open Hearts by Jane Seymour Ö Love’s Embrace Ö 3 new fashion programs currently being tested Ö Developing initiatives in bridal category, which accounts for 45% - 50% of US sales Ö Further programs under develo
Slide 17: UK Jewelry
UK Jewelry “Making existing space work harder” 17
Slide 18: Underlying Performance Broadly Stable
Underlying Performance Broadly Stable Total Same store Total ASP sales sales change H.Samuel £48.7m (2.1)% (3.1)% £54 Ernest Jones £44.7m 1.8% 1.4% £253(1) UK division £93.4m (0.2)% (1.7)% £89(1) Reported $142.9m 3.8% Gross merchandise margin down 100 bpts Operating loss $(1.4)m up from $(1.3)m Oper
Slide 19: Drivers of Performance
Drivers of Performance Ö Challenging economic environment Ö Strengthened competitive position Ö recognized as one of UK’s top employers Ö further growth of charm bracelet category Ö developing differentiated ranges Ö more target support of key brands Ö Continuing to focus store portfolio on major ce
Slide 20: US & UK - Balance of Fiscal 2011
US & UK - Balance of Fiscal 2011 Ö Uncertain economic outlook, particularly in UK Ö keep tight control of costs Ö maintain flexibility to respond to changing conditions – good or bad Ö Continue to be focused on excellence in execution Ö Use financial strength to reinforce sustainable competitive adv