Signet Jewelers Limited · NYSE:SIG
Signet Jewelers — Q1 2017 Earnings Presentation
16 slides from Signet Jewelers's earnings presentation, May 26, 2016
Slide 1: First Quarter Fiscal 2017 Results
First Quarter Fiscal 2017 Results Thursday, May 26, 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: Key Take-Aways
Key Take-Aways 1. Record first quarter EPS • Operating income, net income, EPS were all up over 20%; and in-line with expectations • Solid expense management and credit portfolio performance • Compares favorably with retail industry’s first quarter results 2. Solid first quarter sales. Though below
Slide 4: Financial Highlights
Financial Highlights • Good top line growth • Expansion of operating margin – including SG&A leverage • Meaningful stock repurchase • Record EPS. Double-digit increases. • Sound cash position and balance sheet
Slide 5: Sales Highlights
Sales Highlights •Ever Us: Solid Q1 results; promising line extensions in test. •Bracelets and earrings: Bolo, bangles, stackables; studs, climbers, diamond fashion. •Select branded bridal: Led by Vera Wang Love, Neil Lane; Vera fashion collection test just underway.
Slide 6: Consistently the Leader in Growing Industry
Consistently the Leader in Growing Industry Latest 3 YR 5 YR 10 YR Annual CAGR CAGR CAGR Signet Sales & Operating Profit Signet $6.6B 18.0% 13.8% 7.6% (in mils of $) Total Jewelry & Watch Market $75.6B 1.5% 3.9% 2.4% 7,000 1,200 Total Retail Market $5,211.5B 4.3% 5.1% 3.1% • Total sales growth of Si
Slide 7: Investment Merits of Signet
Investment Merits of Signet • Leading market position • Promising store growth prospects near term and post-synergies (long term). Industry is consolidating. • High quality financial results (e.g. P&L flow-through, A/R) which compare favorably to retail peers. • Confidence in delivering on FY17 earn
Slide 8: Sales Performance
Sales Performance Total sales Change in at constant exchange Total sales Exchange translation same store sales1 rate2 impact Change in total sales (in millions) Kay 4.7% 6.4% 0.0% 6.4% $ 634.5 Jared - 1.7% 1.6% 0.0% 1.6% $ 300.2 Regional brands -3.6% -12.3% 0.0% -12.3% $ 45.7 Sterling Jewelers divis
Slide 9: Non-GAAP Reconciliation (in millions of $ except per share data)
Non-GAAP Reconciliation (in millions of $ except per share data) Adjustments Purchase Signet Accounting Integration Costs Adjusted Signet Sales 1,578.9 (4.2) - 1,583.1 Cost of sales (978.5) 0.2 - (978.7) Gross margin 600.4 (4.0) - 604.4 SG&A (462.7) (1.3) (5.3) (456.1) Other operating income, net 74
Slide 10: Adjusted Income Statement Highlights
Adjusted Income Statement Highlights 150 basis points of adjusted operating margin expansion 1Q Fiscal 2017 1Q Fiscal 2016 Difference Adjusted gross margin 38.2% 37.8% 40 bps Adjusted SG&A (28.8%) (29.3%) 50 bps Other operating income 4.7% 4.1% 60 bps Adjusted operating income Q1 2017 14.1% 12.6% 15
Slide 11: Inventory
Inventory • Inventory of $2.51 billion increased 1.0%. • Total sales increased 3.2%. • Sound inventory management especially: • Zale • Branded bridal • Clean inventory well-positioned for quarters ahead
Slide 12: Sterling Division Credit Metrics
Sterling Division Credit Metrics (in millions except percentages) Q1 2017 Q1 2016 Difference Accounts receivable (A/R), net $1,654.3 $1,489.4 $164.9 Credit participation 61.7% 60.7% 100 bps Average monthly payment collection rate 12.3% 12.6% -30 bps Interest income from in-house finance program $72.
Slide 13: Sterling Division Allowance Metrics
Sterling Division Allowance Metrics 1Q Fiscal 2017 Fiscal YE 2016 1Q Fiscal 2016 Fiscal YE 2015 Total valuation allowance as % of 40 bps 30 bps gross receivables 6.6% better 7.0% 6.5% better 6.8% Non-performing receivables1 as % 40 bps 30 bps of gross receivables 3.6% better 4.0% 3.5% better 3.8% •
Slide 14: Capital Allocation
Capital Allocation • Maintain strong balance sheet that provides flexibility. Extended $600M asset-backed securitization one year (May 2018). • Invest in business; support execution of strategic priorities • Return excess cash to shareholders; ensure adequate liquidity • Maintain investment grade ra
Slide 15: Financial Guidance
Financial Guidance Second Quarter Fiscal 2017 Cumulative Net Synergies Same store sales 1% to 2% Fiscal 2017 (Fiscal 2016 plus Fiscal 2017) $158 million to $175 million EPS $1.39 to $1.46 Fiscal 2018 (Fiscal 2016 plus Fiscal 2017 $225 million to $250 million Adjusted EPS $1.49 to $1.54 plus Fiscal 2
Slide 16: Signet Jewelers, Ltd.
Signet Jewelers, Ltd.