Signet Jewelers Limited · NYSE:SIG
Signet Jewelers — Non-Deal Roadshow (January 2012)
38 slides from Signet Jewelers's roadshow presentation, January 2012
Slide 1: Competitive Advantages Reinforcing Sector Leadership
“Competitive Advantages Reinforcing Sector Leadership” January 2012
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: Leading Specialty Retail Jeweler
Leading Specialty Retail Jeweler Sustainable competitive strengths customer experience supply chain comprehensive marketing program in-house customer finance in US Superior operating model & strong balance sheet Growth opportunities & major initiatives branded merchandise sales enhancing technology
Slide 4: Largest US & UK Specialty Jeweler
Largest US & UK Specialty Jeweler Sales over $3,700 million – about 80% US / 20% UK Kay Jewelers - #1 US mid market brand H.Samuel - #1 in UK Sales: about $1,800m Stores: 922 in 50 states Sales: about £240m Stores: 338 Jared - #1 US Off-Mall “Category Killer” ” Ernest Jones - #1 UK upper middle mark
Slide 5: Contrast Between US & UK
Contrast Between US & UK 7% Merchandise Mix 7% 8% 28% 10% 30% US UK 75% 12% 23% Diamonds Gold & silver Diamonds Gold & Silver Other jewelry Watches Other jewelry Watches Gifts & other 5
Slide 6: Fiscal 2012 Expectations; Shareholder Distribution
Fiscal 2012 Expectations Income before income taxes $494 - $501 million, up 64% - 67% up 42% - 44% excluding non-recurring item1 Diluted earnings per share $3.67 - $3.72, up 58% - 60% up 38% - 40% excluding non-recurring item 1 Free cash flow2 $230 – $240 million Shareholder Distribution Fourth quar
Slide 7: Sales Performance
Sales Performance To December 31, 2011 9 weeks 48 weeks US UK Total US UK Total Change in: % % % % % % Same store sales 9.2 1.8 7.8 11.6 0.8 9.4 Store space — (0.8) (0.2) (0.6) (1.0) (0.7) Total sales at constant 9.2 1.0 7.6 11.0 (0.2) 8.7 exchange rates1 Exchange translation — (0.1) (0.1) — 3.9 0.9
Slide 8: US Performance
US Performance Change from comparable Holiday Season Year to Date prior year period Fiscal 2012 Fiscal 2012 Same store sales, % Kay 9.8 12.2 Jared 10.0 12.8 Regional brands 3.1 4.4 US division 9.2 11.6 8
Slide 9: UK Performance
UK Performance Change from comparable Holiday Season Year to Date prior year period Fiscal 2012 Fiscal 2012 Same store sales, % H.Samuel 1.4 1.8 Ernest Jones 2.3 (0.3) UK division 1.8 0.8 9
Slide 10: Performance vs Financial Objectives
Performance vs Financial Objectives Improve gross margin ratio expected to increase 200 to 210 basis points Selling, general & administrative costs broadly stable as percentage of sales well controlled while increasing advertising support, for the year expected to be down 25 to 30 basis points Capit
Slide 11: Superior Customer Experience
Superior Customer Experience Best-in-class customer service Focus on training & development of sales associates Development of sales enhancing technology in-store & digital 11
Slide 12: Sales Enhancing Technology
Sales Enhancing Technology Originally developed for Jared Extended to websites Now being expanded to Kay & UK division 12
Slide 13: Comprehensive Marketing Program
Comprehensive Marketing Program About $180 million US marketing budget supports store concepts & merchandise brands Television combined with CRM, catalogs, print and digital media 13
Slide 14: Investing in Digital Media
Investing in Digital Media 14
Slide 15: Advantages of Branded Differentiated and Exclusive Merchandise
Advantages of Branded Differentiated and Exclusive Merchandise Creates a unique store destination Powerful selling proposition for sales associates Drive awareness & purchase intent as part of national brand advertising Leverages strategic supply chain strengths Improved merchandise margin & less ex
Slide 16: Brands Driving Fashion Sales
Brands Driving Fashion Sales Creates a unique store destination Powerful selling proposition for sales associates Supported by national television advertising 16
Slide 17: Brands Driving Bridal Sales
Brands Driving Bridal Sales Leo Diamond®: recognized as the most successful branded diamond program Neil Lane Bridal®: rolled out to all stores over last 18 months Bridal contributing to growth in ASP 17
Slide 18: Merchandising & Supply Chain
Merchandising & Supply Chain Superior merchandising team & systems ability to ‘test before invest’ Leading direct sourcing capabilities Record of merchandising innovation 18
Slide 19: Credit – Key Facilitator of US Sales
Credit – Key Facilitator of US Sales Specialized lending particularly important in bridal sector bridal purchaser characteristics are distinct Focus on selling jewelry not credit 50% – 55% of US business transacted using in-house credit rapid repayment period, typically under a year average outstand
Slide 20: Long Term US Space Growth
Long Term US Space Growth Potential Kay store base of about 1,350 about 850 regional malls about 500 off-mall locations Potential Jared store base of about 300 20
Slide 21: US Real Estate Driven by Kay and Jared
US Real Estate Driven by Kay and Jared Kay Kay/ Change Change Kay off- Jared in Regional in mall1 mall Jared2 total space2 brands Total space2 Jan 2009 7953 131 171 1,097 7% 3043 1,401 4% Jan 2010 794 129 178 1,101 2% 260 1,361 (1)% Jan 2011 780 128 180 1,088 0% 229 1,317 (2)% Opened 9 11 3 23 - 23
Slide 22: UK Business Drivers
UK Business Drivers Customer experience Merchandising initiatives Marketing 22
Slide 23: Outlook for Fiscal 2013
Outlook for Fiscal 2013 Focus on further strengthening competitive position to drive sales & store productivity enhancing customer experience investment in marketing merchandising initiatives Increased capital expenditure continued investment in store refurbishments increased store openings IT and s
Slide 24: Additional Information
SIGNEI Additional Information
Slide 25: Signet's Operating Margin
Signet’s Operating Margin 11.4% 11.0% 10.8% 9.4% 8.1% 6.5% Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal 2006 2008 2007 2010 2009 2011 (2.2)% (2.1)% (2.5)% (3.7)% (3.3)% (4.4)% Operating Margin Net Bad Debt Primary drivers of operating margin store productivity US net bad debt to US sales ratio Fiscal 2
Slide 26: US Receivables Performance
US Receivables Performance 6.0 15.0 5.0 12.0 4.0 9.0 US net bad 3.0 Average debt 6.0 monthly as % 2.0 Fiscal 1998 - 2008 net bad debt below 3.5% collection of total US Fiscal 2012 forecast to be below 3.5% 3.0 rate % sales 1.0 0.0 0.0 al 98 9 al 00 1 al 02 3 al 04 5 al 06 7 al 08 9 al 10 11 sc 99 sc
Slide 27: US Average Sales Per Store
US Average Sales Per Store Fiscal Fiscal Fiscal Fiscal Fiscal 2007* 2008 2009 2010 2011 Kay ($’000) 1,798 1,695 1,525 1,570 1,713 Regional brands ($’000) 1,504 1,333 1,151 1,155 1,238 Jared ($’000) 5,649 5,317 4,473 4,029 4,638 Includes only stores operated for the full fiscal year * 53 week year 27
Slide 28: UK Average Sales Per Store
UK Average Sales Per Store Fiscal Fiscal Fiscal Fiscal Fiscal 2007* 2008 2009 2010 2011 H.Samuel (£’000) 695 722 718 712 705 Ernest Jones (£’000) 1,079 1,105 1,047 1,027 1,041 Includes only stores operated for the full fiscal year * 53 week year 28
Slide 29: US Jewelry & Watch Market in 2010
US Jewelry & Watch Market in 2010 Total US jewelry & watch market up 5.7% to $61.5 billion1 6% below peak of $65.3 billion in 2007 US specialty jewelry market up 3.8% to $26.7 billion2 14% below peak of $31.0 billion in 2007 About 22,800 specialty jewelry stores3 a net decline of about 1,000 stores
Slide 30: US Long Term Industry Growth
US Long Term Industry Growth US Jewelry and Watch Market1 ~40% of world diamond sales2 70 60 50 40 30 20 10 0 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 • Specialty sales • Non-specialty sales 1. US Department of Commerce & Census Bureau, August 2011 2.
Slide 31: US Jewelry Sector Performance
US Jewelry Sector Performance 14% 10% Growth p.a. 6% 2% -2% -6% -10% 2001(a) 2002 2003 2004 2005 2006 2007 2008 2009 2010 Furniture & Household excl. Electricals Electricals & Electronics Clothing Jewelry & Watches Signet US (a) Excludes Marks & Morgan acquisition Source: US Bureau of Economic Analy
Slide 32: Growth in US Market Share
Growth in US Market Share1 2000 2005 2008 2009 2010 Signet 5.8% 8.0% 8.6% 9.9% 10.3% Zale2 7.3% 7.6% 5.5% 5.4% 5.2% Tiffany 4.1% 5.0% 5.2% 5.2% 5.6% Blue Nile 0.2% 0.7% 0.9% 1.0% 1.1% Finlay2 nil nil 1.0% Liquidated - Friedman 1.5% 1.2% Liquidated - - Whitehall 1.4% 1.0% Liquidated - - 1. Share of U
Slide 33: Rationalization of Top US Brands
Rationalization of Top US Brands Mid market brands Sales $m No. of stores Status Calendar 2004 2010 2004 2010 Kay 1,1741 1,5931 832 908 Profitable Zales2 1,0711 { 9631 757 675 { Loss making Gordons2 3141 287 192 Jared1 4152 8481 135 180 Profitable Fred Meyer3 4754 3504 436 361 Part of Kroger Helzber
Slide 34: Fewer US Specialty Jewelry Stores
Fewer US Specialty Jewelry Stores 30,000 25,000 Number of stores 20,000 15,000 10,000 5,000 0 01 02 03 04 05 06 07 08 09 10 20 20 20 20 20 20 20 20 20 20 Source: US Bureau of Labor Statistics, August 2011. 34
Slide 35: UK Retail Market Map
UK Retail Market Map (ex. independents) £250 Leslie Davies Goldsmiths Ernest Jones HIGH Beaverbrooks H Samuel Estimated Fraser Hart Average Transaction Value Warren Argos James LOW F. Hinds £0 FEW MANY RANGE OF PRODUCTS 35
Slide 36: Regulation G Disclosures
Regulation G Disclosures JEWELERS
Slide 37: Fiscal 2011 Adjusted Earnings
Fiscal 2011 Adjusted Earnings Adjusted earnings in a non-GAAP measure and excludes the Make Whole Payment, a significant, unusual and non-recurring item. Signet considers this to be a useful measure for analysing its results. The impact of the re-calculation of net financial items, income before inc
Slide 38: 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 it is helpful in understanding how the business is generating cash from its operating and investing act