Signet Jewelers Limited · NYSE:SIG
Signet Jewelers — Q2 2010 Earnings Presentation
21 slides from Signet Jewelers's earnings presentation, Sep 9, 2009
Slide 1: Fiscal 2010 Q2 Results
Fiscal 2010 Q2 Results September 9, 2009 1
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: Further Progress in Executing Strategy
Further Progress in Executing Strategy Ö Maximize profit and cash flow Ö Strengthen balance sheet Ö Reduce business risk Ö Focus on competitive advantages Ö Increase market share in consolidating sector Ö Take best advantage of eventual upturn 3 3
Slide 4: Q2 Sales Broadly Maintain Trend of Q1 Post Valentine's Day
Q2 Sales Broadly Maintain Trend of Q1 Post Valentine’s Day Quarter 2 Year to Date US UK Group US UK Group % % % % % % Same store sales (5.5) (4.3) (5.3) (4.0) (4.2) (4.0) Space impact 1.5 3.9 2.1 1.6 3.1 1.8 Constant exchange rate (4.0) (0.4) (3.2) (2.4) (1.1) (2.2) Exchange impact - (17.7) (4.4) -
Slide 5: Another Profitable Quarter
Another Profitable Quarter Quarter 2 Year to Date 2010 2009 2009 2010 2009 2009 $m CER GAAP $m CER GAAP $m $m $m $m Sales 710.8 734.6 768.9 1,473.4 1,505.9 1,591.4 Operating income 46.6 37.9 37.5 99.0 84.1 83.4 Interest expense (8.1) (6.9) (6.9) (19.1) (13.2) (12.7) Income before tax 38.5 30.9 30.6
Slide 6: Movement in Operating Margin
Movement in Operating Margin Quarter 2 Year to Date US UK Group US UK Group Operating margin 8.7% 1.2% 6.2% 8.0% 1.5% 5.9% fiscal 2009* Gross merchandise margin 0.1% 0.7% 0.4% 0.6% 0.5% 0.6% Operational leverage/ 0.4% (1.3)% 0.1% 0.6% (2.1)% 0.3% (deleverage) Impact of new space (0.1)% - (0.1)% (0.1
Slide 7: Good Progress Against Financial Objectives
Good Progress Against Financial Objectives Ö Gross merchandise margin Ö YTD: US up 60 bpts: UK up 50 bpts Ö Objective • US: at least at last year’s level • UK: somewhat below last year Ö Slightly ahead of US cost reduction program Ö $49.5 million achieved YTD Ö $100 million full year objective* Ö UK
Slide 8: Good Progress Against Financial Objectives
Good Progress Against Financial Objectives Ö Capital expenditure Ö YTD $17.5 million (YTD fiscal 2009: $65.7 million) Ö full year $55 million (fiscal 2009: $114.9 million) Ö 20% IRR criteria maintained Ö Inventory Ö successfully realigned Ö full year objective $100 million reduction increased to $12
Slide 9: Continued Improvement in Free Cash Flow & Net Debt
Continued Improvement in Free Cash Flow & Net Debt YTD 10 YTD 09 $m $m Adjusted net income† 113.0 97.8 Change in operating assets* 184.6 47.5 Investing activities* (16.1) (37.8) Investment in new US stores (13.2) (56.6) Dividends - (107.4) Foreign exchange impact 2.0 (2.2) Change in net debt 270.2 (
Slide 10: US Jewelry
US Jewelry “Further growth from a proven strategy” 10 10
Slide 11: US Operating Results
US Operating Results Quarter 2 Year to Date Change Change Total sales $552.5m (4.0)% $1,177.4m (2.4)% Same store sales (5.5)% - (4.0)% - Operating income $50.4mb 0.4% $106.8mb 10.2% Operating margin 9.1% +40bpts 9.1% +110bpts a excluding new product launch b Includes benefit of change in vacation po
Slide 12: Outperformance of Sector
Outperformance of Sector Q1 Fiscal 10 Q2 Fiscal 10 Same Store Gross Same Store Gross Sales Margin Sales Margin Signet US (2.6)% +90 bpts a (5.5)% +10 bpts a Zales (inc Canada) (20.0)% +260 bpts n/a n/a Finlay specialty (19.6)% n/a n/a n/a jewelryb Blue Nile (US) c (12.1)% +140 bptsd (4.4)% +100 bpts
Slide 13: Drivers of Outperformance
Drivers of Outperformance Ö Ability to continue to support business due to balance sheet strength Ö Internal initiatives Ö focus on training and service Ö supply chain initiatives Ö development of differentiated ranges Ö targeted promotional activity Ö redeploy advertising expense to national televi
Slide 14: Benefit from Sector Consolidation
Benefit from Sector Consolidation Ö Above historical levels Ö 2008 Ö estimated closure of 1,800 doors* Ö c.(5)% sales capacity* Ö 2009 Ö further consolidation Ö projection for c.1,000 closures* Ö Many of those that remain are weakened * Source Jewelry Industry Research Institute 14 14
Slide 15: In-house Receivables a Competitive Advantage
In-house Receivables a Competitive Advantage Ö Credit offer unchanged in a constrained market Ö Revised scorecard implemented Ö Continue to improve execution using specialist consultants as appropriate Ö First half credit metrics Ö participation up 20 bpts Ö approval rate up 130 bpts Ö net bad debt
Slide 16: Focus on Strongest Brands
Focus on Strongest Brands Kay Regionals Jared Total Net square footage As at January 31, 2009 926 304 171 1,401 4% Opened 8(a) 1 3 12 Closed (4) (13)(a) - (17) As at August 1, 2009 930 292 174 1,396 Planned openings - - 4 4 Planned closures (14) (46) - (60) Expected January 30, 2010 916 246 178 1,34
Slide 17: UK Jewelry
UK Jewelry “Making existing space work harder” 17 17
Slide 18: UK Operating Results
UK Operating Results Quarter 2 Year to Date Change* Change* Total sales $158.3m (0.4)% $296.0 (1.1)% Same store sales (4.3)% - (4.2)% - Operating income $1.0 (47.3)% $(0.3)m n/a Operating margin 0.6% -60 bpts (0.1)% -160 bpts * At constant exchange rates 18 18
Slide 19: Drivers of Performance
Drivers of Performance Ö Sector consolidation Ö Focus on training and service Ö Merchandising initiatives Ö over 25% of holiday sales on new tested product Ö increase in targeted promotions Ö TV advertising Ö Development of CRM 19 19
Slide 20: Targeted Store Investment
Targeted Store Investment Ö H.Samuel Ö customer orientated stores substantially completed Ö Ernest Jones Ö focus on most productive stores Ö 16 refits during fiscal 2010 Ö UK capital expenditure c. $15 million (fiscal 2009: $38 million) 20 20
Slide 21: Signet's Superior Trading Stance
Signet’s Superior Trading Stance Ö Strong management team Ö Capitalize on competitive strengths Ö Drive market share gains through existing stores Ö Respond rapidly to any change in consumer behavior Ö Utilize strong balance sheet to support trading 21 21