Signet Jewelers Limited · NYSE:SIG
Signet Jewelers — Q4 FY2017 Earnings Presentation
20 slides from Signet Jewelers's earnings presentation, Mar 9, 2017
Slide 1: Fourth Quarter & Fiscal 2017 Results
Fourth Quarter & Fiscal 2017 Results Thursday, March 9, 2017
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: Remarks by Signet Jewelers Chairman, Todd Stitzer
Remarks by Signet Jewelers Chairman, Todd Stitzer Slide intentionally blank
Slide 4: Key Take-Aways
Key Take-Aways 1. Fourth quarter financials in-line with our revised expectations. 2. Solid expense and working capital management helped drive $400M of free cash flow*. 3. Achieved annual goal of synergies protecting profitability and cash in challenging year. 4. Several business initiatives to sup
Slide 5: Fourth Quarter Fiscal 2017 Sales Drivers
Fourth Quarter Fiscal 2017 Sales Drivers Favorable: Unfavorable: • Categories. Diamond fashion jewelry, bracelets, • Retail. Highly promotional environment. Signet did earrings. not engage in discounted selling as much leading to share-of-wallet loss among consumers. • Collections. Ever Us, Vera Wan
Slide 6: Fiscal 2017 Accomplishments
Fiscal 2017 Accomplishments • Select merchandise and selling channel wins • Good expense management • Strong cash generation and inventory management • Material stock repurchases • Insider net-buying • Increased dividend for 6th year in a row • Strategic equity investment • Delivered on synergies: f
Slide 7: Zale Profitability Increasing Driven by Synergies
Zale Profitability Increasing Driven by Synergies Integration Activities Led to 110 Basis Point Increase in Zale Division Operating Margin • In-sourcing repair • Organization design changes • Discount controls • 2nd look credit • Cross-selling brands • Digital marketing optimization • Centralized di
Slide 8: Annual Jewelry and Watch Growth
Annual Jewelry and Watch Growth 15% 10% 5% Compound Annual Growth Rate, 3.8% 0% -5% -10% Source: US Bureau of Economic Analysis, March 1, 2017
Slide 9: Opportunities for Fiscal 2018
Opportunities for Fiscal 2018 Merchandise lines, selling channels, capital allocation, real estate prioritization… 1. Omni-channel development. Immediately improving 3. I/T modernization providing backbone for future success websites. and efficiency: HR, finance, e-comm, distribution o E-commerce te
Slide 10: Fourth Quarter Sales
Fourth Quarter Sales Same Non-same Total sales % at Exchange Store store sales constant translation Total sales Total sales Sales %1 %, net2 exchange rate impact % % (in millions $) Kay -5.0 2.3 -2.7 -2.7 915.2 Jared -3.2 1.2 -2.0 -2.0 430.6 Regional brands -16.4 -11.2 -27.6 -27.6 52.3 Sterling Jewe
Slide 11: Fourth Quarter Non-GAAP Reconciliation
Fourth Quarter Non-GAAP Reconciliation (in millions of $ except per share data) Adjustments Purchase Fourth Quarter Signet Accounting Integration Costs Adjusted Signet Sales 2,269.9 (2.6) - 2,272.5 Cost of sales (1,324.4) 0.9 - (1,325.3) Gross margin 945.5 (1.7) - 947.2 SG&A (615.3) (1.6) (9.9) (603
Slide 12: Adjusted Highlights – Percentage of Adjusted Sales
Adjusted Highlights – Percentage of Adjusted Sales 4Q Fiscal 2017 4Q Fiscal 2016 Difference Adjusted gross margin 41.7% 42.6% (90) bps Adjusted SG&A 26.6% 27.8% (120) bps Other operating income1 3.0% 2.6% 40 bps Adjusted operating income 18.1% 17.4% 70 bps Adjusted earnings per share $4.03 $3.63 $0.
Slide 13: Adjusted SG&A Expense Deeper Dive
Adjusted SG&A Expense Deeper Dive Fourth quarter year-over-year changes 700 • Continued focus on operating expenses Adj. SG&A (in mils. of $) in lower sales 650 environment • Synergy expense 600 savings included 550 500 Q4 FY16 Stores payroll Corp payroll Advertising Other Q4 FY17 Non-GAAP measure.
Slide 14: Signet Synergies Achieved Through Acquisition of Zale
Signet Synergies Achieved Through Acquisition of Zale Signet Synergies (mil of $) 200 • Cumulative synergies of $180M through two full Year 2: $120M years of integration. 150 • Synergies protected profit and cash generation in challenging year 100 • General business slowdown in FY17 combined with I/
Slide 15: Inventory
Inventory • Inventory of $2.45 billion flat to prior year • Sound inventory management particularly Zale • F/X benefit • Slower total sales offset benefits
Slide 16: Sterling Division Credit Metrics
Sterling Division Credit Metrics (in millions except percentages) FY 2017 FY 2016 Difference Credit sales $2,438 $2,451 ($13) In-house credit participation 62.0% 61.5% 50 bps Accounts receivable $1,952 $1,856 $96 Average monthly payment collection rate 11.0% 11.5% (50) bps Interest income from in-ho
Slide 17: Sterling Division Allowance Metrics
Sterling Division Allowance Metrics 4Q Fiscal 3Q Fiscal 4Q Fiscal 3Q Fiscal FY 2017 FY 2017 FY 2016 FY 2016 Total valuation allowance as % of 80 bps 80 bps gross receivables 7.1% difference 7.9% 7.0% difference 7.8% Non-performing receivables1 as % 80 bps 90 bps of gross receivables 4.1% difference
Slide 18: Fiscal 2017 Capital
Fiscal 2017 Capital • Capital Allocation. Tenets of strategy remain unchanged: strong balance sheet that provides flexibility; maintain investment grade; adjusted leverage ratio goal <3.5x; distribute 70%-80% of free cash flow in form of dividends and buybacks. • Free Cash Flow*. Cash from operation
Slide 19: Financial Guidance
Financial Guidance Fiscal 2018 Same store sales Down low-to-mid single-digit % EPS $7.00 to $7.40 Effective tax rate 24% to 25% Weighted average common shares 74 million to 75 million Capital expenditures $260 million to $275 million Net square footage change -1% to 0% • Gross margin expected to lev
Slide 20: Signet Jewelers Ltd.
Signet Jewelers Ltd.