Signet Jewelers Limited · NYSE:SIG
Signet Jewelers — Q3 2017 Earnings Presentation
17 slides from Signet Jewelers's earnings presentation, Nov 22, 2016
Slide 1: Third Quarter Fiscal 2017 Results
Third Quarter Fiscal 2017 Results Tuesday, November 22, 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. Third quarter financials exceeded our expectations. 2. Solid expense and inventory management helps drive strong free cash generation. 3. Fourth quarter guidance formally initiated …consistent with earlier implication. 4. Zale division wins: higher sales, lower inventory, on-plan i
Slide 4: Third Quarter Sales Highlights
Third Quarter Sales Highlights • Diamond fashion jewelry: Ever Us; bracelets and earrings. • Select bridal: Led by Vera Wang and Neil Lane. • Omni-channel: Clientelling, affiliate marketing, third-party product selection, responsive design, display improvements, personalization. • Other geographies
Slide 5: Zale Integration Activity On Track
Zale Integration Activity On Track Synergy examples that will help deliver 3-year cumulative synergies of $225M - $250M • In-sourcing repair • Organization design changes • Discount controls • 2nd look credit • Cross-selling brands • Digital marketing optimization • Centralized diamond procurement •
Slide 6: Holiday Season Business Drivers
Holiday Season Business Drivers • Ever Us line extensions • Vera Wang Love fashion jewelry • Bracelet and earring categories • Jared: Pandora initiatives; Chosen diamond • Targeted marketing: new TV creative; Kay Jewelers 100th anniversary events
Slide 7: In-House Credit Strategic Review Update
In-House Credit Strategic Review Update • Retain and optimize portfolio. Increase leverage against it while expanding credit reporting and disclosure. Or, • Monetize portfolio. Utilize partner to continue doing business with customers. Preserve economics and free-up working capital for Signet. • Mov
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 (2.9)% (1.4)% -% (1.4)% $456.5 Jared (4.6)% (2.5)% -% (2.5)% $226.6 Regional brands (10.5)% (22.8)% -% (22.8)% $29.4 Sterling Jewelers
Slide 9: Non-GAAP Reconciliation
Non-GAAP Reconciliation (in millions of $ except per share data) Adjustments Purchase Signet Accounting Integration Costs Adjusted Signet Sales 1,186.2 (3.0) - 1,189.2 Cost of sales (836.2) 0.5 - (836.7) Gross margin 350.0 (2.5) - 352.5 SG&A (386.5) (1.3) (7.9) (377.3) Other operating income, net 68
Slide 10: Adjusted Highlights
Adjusted Highlights 3Q Fiscal 2017 3Q Fiscal 2016 Difference Adjusted gross margin 29.6% 30.6% (100) bps Adjusted SG&A 31.7% 31.7% 0 bps Other operating income1 5.8% 5.0% 80 bps Adjusted operating income 3.7% 3.9% (20) bps Adjusted earnings per share $0.30 $0.33 ($0.03) 1 Other operating income is a
Slide 11: Adjusted SG&A Expense Deeper Dive
Adjusted SG&A Expense Deeper Dive Third quarter year-over-year changes 390 • Continued focus on operating expenses 385 Adj. SG&A (in mils. of $) in lower sales 380 environment 375 • Synergy expense savings included 370 365 360 355 Q3 FY16 Stores payroll Corp payroll Advertising I/T & other Q3 FY17 N
Slide 12: Inventory
Inventory • Inventory of $2.6 billion decreased 2.8% over prior year • Inventory change 30 bps favorable to total sales change • Sound inventory management particularly Zale • F/X benefit
Slide 13: Sterling Division Credit Metrics
Sterling Division Credit Metrics (in millions except percentages) Q3 2017 Q3 2016 Difference Credit sales $476 $487 ($11) In-house credit participation 66.8% 66.4% 40 bps Average monthly payment collection rate 10.6% 11.1% (50) bps Accounts receivable $1,546 $1,437 $109 Interest income from in-house
Slide 14: Sterling Division Allowance Metrics
Sterling Division Allowance Metrics 3Q Fiscal 2017 2Q Fiscal 2017 3Q Fiscal 2016 2Q Fiscal 2016 Total valuation allowance as % of 50 bps 50 bps gross receivables 7.9% difference 7.4% 7.8% difference 7.3% Non-performing receivables1 as % 50 bps 60 bps of gross receivables 4.9% difference 4.4% 4.9% di
Slide 15: Capital Considerations
Capital Considerations • Share Buyback. YTD repurchased 9.9M shares for $842M partly to offset dilution from preferred offering inclusive of $525M ASR program. Remaining authorization $511M. • Cash & Borrowings. Cash from operations less capital expenditures was $165.3 million year-to-date, up $247.
Slide 16: Financial Guidance
Financial Guidance Fourth Quarter Fiscal 2017 Same store sales (4.0%) to (2.0%) EPS $3.91 to $4.13 Adjusted EPS $4.00 to $4.20 Weighted average common shares Approximately 76 million Fiscal 2017 Same store sales (2.5%) to (1.0%) EPS $7.03 to $7.25 Adjusted EPS $7.38 to $7.58 Effective tax rate 25% t
Slide 17: Signet Jewelers Ltd.
Signet Jewelers Ltd.