Signet Jewelers Limited · NYSE:SIG
Signet Jewelers — Q2 FY2016 Earnings Presentation
17 slides from Signet Jewelers's earnings presentation, Aug 27, 2015
Slide 1: Fiscal 2016 Second Quarter Results
Fiscal 2016 Second Quarter Results Thursday, August 27, 2015
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: Q2 Fiscal 2016 Headlines
Q2 Fiscal 2016 Headlines • Financial results • Same store sales +4.2% • Earnings per share (EPS), $0.78 • Adjusted EPS1, $1.28, up 19.6% • Strategic results • Consistent leader in US jewelry industry • Integration successes with increasing confidence in synergy targets 1-Non-GAAP measure. See slide
Slide 4: Consistently the Industry Leader in Growing Industry
Consistently the Industry Leader in Growing Industry 3 YR 5 YR 10 YR 2014 CAGR CAGR CAGR Signet $5.7B 15.2% 11.9% 6.7% Total Jewelry & Watch Market $74.7B 2.5% 4.4% 2.8% Total Retail Market $5,208.4B 4.2% 5.1% 3.1% $7,000 Signet (in mil.) $1,200 $6,000 $5,736.3 $1,000 $5,000 $4,209.2 $3,983.4 $800 $
Slide 5: Drivers
Q2 Fiscal 2016 Drivers Strong results across many functional areas • Diamond jewelry merchandise led growth • Cross functional teamwork improved profitability • Marketing campaigns encouraging • Store operations: Team member execution metrics up
Slide 6: Second Half Fiscal 2016 Drivers
Second Half Fiscal 2016 Drivers • Exciting new merchandise initiatives • Miracle Links • ALEX AND ANI introduction • Chosen Diamond • Vera Wang Love full rollout • New beads collection • Marketing initiatives • Application of customer segmentation learnings • New Zale creative campaign “Diamond Kind
Slide 7: Signet Well-Positioned
Signet Well-Positioned
Slide 8: Q2 Fiscal 2016 Sales Performance
Q2 Fiscal 2016 Sales Performance Change in Total sales Exchange same store at constant translation Change in Total sales First Quarter Fiscal 2016 sales1 exchange rate2 impact2 total sales (in millions) Kay 4.1% 6.6% — 6.6% $530.0 Jared 2.7% 7.8% — 7.8% $285.4 Regional brands (1.8)% (11.3)% — (11.3)
Slide 9: Non-GAAP Reconciliation
Non-GAAP Reconciliation (in millions of $ except per share data) Adjustments Purchase Adjusted Signet Accounting Transaction Costs Signet Sales 1,417.8 (7.2) — 1,410.6 Cost of goods sold (917.7) (2.1) — (919.8) Gross margin 500.1 (9.3) — 490.8 SGA (413.4) 4.2 (43.6) (452.8) Other operating income, n
Slide 10: Q2 Fiscal 2016 Operating Income (Loss)
Q2 Fiscal 2016 Operating Income (Loss) Q2 FY2016 Q2 FY2015 $m % of Division Sales $m % of Division Sales Sterling Jewelers division $157.8 18.4% $129.9 16.0% Zale division¹ ($2.1) (0.5)% ($9.8) (4.0)% UK Jewelry division $3.2 2.0% $1.1 0.7% Other² ($58.1) NM ($37.7) NM Signet $100.8 7.2% $83.5 6.8%
Slide 11: Q2 Fiscal 2016 Adjusted Signet Detail
Q2 Fiscal 2016 Adjusted Signet Detail¹ Adjusted Signet excluding Zale² Zale operations Adjusted Signet $m % $m % $m % Sales 1,021.3 100.0% 396.5 100.0% 1,417.8 100.0% Cost of goods sold (657.0) (64.3)% (260.7) (65.8)% (917.7) (64.7)% Gross margin 364.3 35.7% 135.8 34.2% 500.1 35.3% SGA (280.8) (27.5
Slide 12: Q2 Fiscal 2016 Adjusted Income Statement Highlights
Q2 Fiscal 2016 Adjusted Income Statement Highlights¹ $m % of Adjusted Sales Adjusted operating income Q2 2015 $125.8 10.2% Adjusted gross margin $500.1 35.3% Adjusted selling, general & admin. $413.4 29.2% Other operating income $62.8 4.4% Adjusted operating income Q2 2016 $149.5 10.5% Adjusted earn
Slide 13: Q2 Fiscal 2016 Inventory
Q2 Fiscal 2016 Inventory • Ending inventory $2,414.2 million, up $68.9 million or 2.9%, driven by: • New stores • Strategic diamond sourcing initiative and bridal business • Increase partially offset by streamlined Zale inventory
Slide 14: Credit Metrics
Credit Metrics Year-to-Date Fiscal 2016 Fiscal 2015 Accounts receivable, net (in millions) $1,493.2 $1,316.0 Sterling credit participation 61.6% 60.0% Sterling average monthly collection rate 12.0% 12.4% Second Quarter Net bad debt (in millions) ($49.5) ($41.8) Other operating income (in millions) $
Slide 15: Zales 3rd Party Credit
Zales 3rd Party Credit • Alliance Data Systems transition deferred three months • All financial and operating benefits remain • Estimated $22M in merchant cost savings over 12 months • Signet’s in-house credit team to test “2nd look provider status” pre-holiday season
Slide 16: Financial Guidance
Financial Guidance Third Quarter Fiscal 2016 Same store sales 3% to 4% EPS $0.23 to $0.25 Adjusted EPS $0.36 to $0.40 Fiscal 2016 Effective tax rate 28% to 29% Capital expenditures $275M to $325M Net selling square footage growth 2% to 3%
Slide 17: Y ZALES
Y ZALES ‘SAMUEL PE©PLES JEWELLER ERNEST JONES ———=—_—— CANADA'S 1 DIAMOND STORE LOVE & LIFE I JAR Of Jewelry Pago da SIGNET JEW ELER S