Signet Jewelers Limited · NYSE:SIG
Signet Jewelers — William Blair Emerging Growth Stock Conference 2010
26 slides from Signet Jewelers's conference presentation, October 2010
Slide 1: Competitive Advantages Reinforcing Sector Leadership
“Competitive Advantages Reinforcing Sector Leadership” October 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 and expectations as well a
Slide 3: World's Largest Specialty Jeweler
World’s Largest Specialty Jeweler Group sales $3,290.7 million – 78% US/22% UK Kay Jewelers - #1 mid market brand H.Samuel - #1 in UK Sales: $1,508.2 m Stores: 923 in 50 states Sales: £247.8m Stores: 347 Jared - #1 Off-Mall “Category Killer” Ernest Jones - #1 UK upper middle market Sales: $722.5m St
Slide 4: Broadly Maintain Successful Strategy in Fiscal 2011
Broadly Maintain Successful Strategy in Fiscal 2011 Ö Enhance position as strongest middle market specialty retail jeweler Ö take advantage of capacity reduction Ö many firms less able to compete Ö focus on sustainable competitive advantages Ö Reduce business risk Ö aim to improve store productivity
Slide 5: Free Cash Flow Target Fiscal 2011
(1) Free Cash Flow Target Fiscal 2011 Ö Fiscal 2011 free cash flow(1) Ö original target of between $150 million and $200 million Ö now increased to $225 million to $275 million • better than planned net income in year to date • tight management of working capital Ö Capital expenditure planned to be
Slide 6: Signet's Historic Returns
Signet’s Historic Returns(1) Operating Margin (%) ROCE(2)(%) 12.7 12.9 13.2 26.2 11.3 12.1 11.7 11.4 25.8 24.9 26.1 23.4 22.3 22.4 9.8 8.4 17.3 (3) 6.9 (3) 11.4 9.6 1 2 3 4 5 6 7 8 9 0 2 00 2 00 2 00 2 00 2 00 2 00 2 00 2 00 2 00 2 01 04 10 03 02 01 06 07 08 05 09 20 20 20 20 20 20 20 20 20 20 Fisca
Slide 7: Fiscal 2011 YTD Highlights
Fiscal 2011 YTD Highlights Ö Same store sales up 5.2% Ö total sales $1,532.8 million Ö Operating income up 50.3% to $148.8 million Ö Operating margin up 300 bpts to 9.7% Ö Diluted earnings per share up 69.8% to $1.07 Ö Positive free cash flow(1) of $240.2 million Ö Net cash(1) at July 31, 2010 of $2
Slide 8: US Division
US Division Ö Market leader, nearly twice size of nearest competitor Ö Consistent record of gaining share in a rationalizing specialty sector Ö 9% market share in 2009 versus 5% in 1999 Ö Many competitors under operating and financial pressure Ö Signet continuing to grow market share & reinforce sus
Slide 9: 2009 US Specialty Jewelry Market
2009 US Specialty Jewelry Market Ö Total specialty jewelry sales of $28.3bn(1) Ö Kay/Jared(2) share 9.1% Ö Bridal category estimated to be ~$13bn Ö engagement, bridal & anniversary Ö Kay/Jared(2) share ~9-10% Ö initiatives aimed to increase market share (1) Source: US Census Bureau (2) Includes regi
Slide 10: Rationalization of Top US Brands
Rationalization of Top US Brands Mid market brands Sales $m No. of stores Calendar 2004 2008 2009 2004 2008 2009 Kay(1) 1,174 1,439 1,508 832 926 923 Zales(1,2) 1,071 { 1,363 1,110 757 784 693 Gordons(1,2) 314 287 261 202 Jared(1) 415 726 723 135 154 178 Fred Meyer(3,4) 475 410 375 436 386 376 Helzb
Slide 11: US Competitive Advantages
US Competitive Advantages Ö Excellence in customer service Ö quality of people, staff training and incentivization programs Ö Superior merchandising Ö leading middle market supply chain expertise and merchandising systems Ö successfully development of differentiated ranges Ö National television adve
Slide 12: Differentiated Ranges
12 Differentiated Ranges EMP¥AaC You will always be surrounded by the strength of my love. Chocolatior Aquamarine and CHOCOLATE DIAMONDS* SIGNET JEWELERS
Slide 13: US YTD Fiscal 2011 Performance
US YTD Fiscal 2011 Performance Sales Same Change in store sales sales YTD Fiscal 2011 Kay $712.2m 3.5% 3.0% Regionals $141.6m 2.0% (7.0)% Jared $394.1m 14.9% 18.2% US Division $1,247.9m 6.6% 6.0% Operating margin 12.4%, up 330 bpts Operating income $154.4 million, up 44.6% 13
Slide 14: Improvement in Receivables Year To Date
Improvement in Receivables Year To Date 7.0 15.0 6.0 5.0 12.0 US net bad debt 4.0 Average 9.0 monthly as % of total 3.0 collection rate % US sales 6.0 2.0 3.0 1.0 0.0 0.0 Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 14
Slide 15: US Receivables Performance
15 as % debt of US sales US net bad Fi sc a Fi l 1 0.0 1.0 2.0 3.0 4.0 5.0 6.0 sc 99 Fi al 1 7 sc 99 a Fi l 1 8 sc 99 a Fi l 2 9 sc 00 Fi al 2 0 sc 00 a Fi l 2 1 sc 00 a Fi l 2 2 sc 00 a Fi l 2 3 sc 00 Fi al 2 4 sc 00 a Fi l 2 5 sc 00 a Fi l 2 6 sc 00 Fi al 2 7 sc 00 a Fi l 2 8 sc 00 al 9 20 10 0.0
Slide 16: US Historic Returns
US Historic Returns(1) (1) Operating Margin/Bad Debt (%) ROCE (%) 12.4 12.8 12.8 12.0 21.3 22.2 22.1 9.8 9.2 21.2 6.8 (3) 15.1 11.1 8.1(2) -2.7 -2.8 -3.0 -2.8 -3.4 -4.9 -5.6 06 07 05 04 09 10 08 04 05 06 07 08 09 10 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Fiscal 2004-2007 average: Fiscal 2004-2007
Slide 17: UK Division
UK Division Ö Market leader, ~1.7 times size of nearest competitor Ö No. 1 & 2 specialty jewelry websites in UK Ö High historic operating margins and return on capital Ö Good cash flow generation Ö Tightly managing costs and merchandising margin in a tough environment 17
Slide 18: UK Sustainable Competitive Advantages
UK Sustainable Competitive Advantages Ö Leading staff training & development recognized by National Association of Goldsmiths Ö Scale, direct sourcing supply chain capability & merchandising expertise Ö 14 million name database for customer relationship marketing Ö Shopping trend to regional malls f
Slide 19: UK Fiscal 2011 YTD Performance
UK Fiscal 2011 YTD Performance YTD Fiscal 2011 Sales million Same Change Reported store in sales at sales sales CER1 H.Samuel $148.0 (1.6)% (2.8)% (4.7)% Ernest Jones $136.9 1.0% 0.8% (1.2)% UK division $284.9 (0.4)% (1.8)% (3.8)% Operating income $3.3m; up $3.6m 1 Change in sales at constant exchan
Slide 20: UK Historic Returns
UK Historic Returns(1) (1) Operating Margin (%) ROCE (%) 15.1 15.3 46.0 44.2 11.0 11.4 34.0 10.5 (2) 33.7 8.8 (2) 7.7 26.0 24.8 20.1 04 05 06 07 08 09 10 20 20 20 20 20 20 20 2004 2005 2006 2007 2008 2009 2010 Fiscal 2004-2007 average: Fiscal 2004-2007 average: 37.6% Operating Margin: 13.0% Ö Primar
Slide 21: Signet's Strengths
Signet’s Strengths Ö Market leader in sector undergoing rationalization Ö many competitors under operating and financial pressure Ö Record of gaining market share Ö quality of sales people / customer service / in-store experience Ö ability to leverage supply chain leadership Ö development of differe
Slide 22: Regulation G
Regulation G JEWELERS
Slide 23: Fiscal 2011 Sales
Fiscal 2011 Sales Signet has historically used constant exchange rates to compare period-to-period changes in certain financial data. This is referred to as ‘at constant exchange rates’ throughout this presentation and constitutes a “non GAAP financial measure”. Management considers this to be a use
Slide 24: Q2 Fiscal 2011 Results
Q2 Fiscal 2011 Results Signet has historically used constant exchange rates to compare period-to-period changes in certain financial data. This is referred to as ‘at constant exchange rates’ throughout this presentation and constitutes a “non GAAP financial measure”. Management considers this to be
Slide 25: Net Cash or Net Debt
Net Cash or Net Debt Net debt is a “non GAAP financial measure”. Management considers it to be a useful additional measure for analyzing and explaining changes and trends in Signet’s financial position. It is calculated as set out below: July 31, January August 1, 2010 30, 2010 2009 $million $millio
Slide 26: Free Cash Flow
Free Cash Flow Free cash flow is a “non GAAP financial measure” defined as the net cash provided by operating activities less net cash flows used in investing activities. Management considers that this is helpful in understanding how the business generating cash from its operating and investing acti
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