SIGNET JEWELERS LTD
For the period ended Aug 3, 2024. Filed Sep 12, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Aug 3, 2024 · Filed Sep 12, 2024
SIG$117.26-3.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-05-04; filed 2024-06-13.
0000832988-24-000135
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-08-03; filed 2024-09-12.
0000832988-24-000192
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 149 previous paragraphs and 155 current paragraphs.
58 unchanged; 56 reworded; 33 added; 32 removed; 3 previous and 8 current paragraphs rearranged.
Tables are not compared: 13 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (33)
Current report
Overall performance - Second quarter Fiscal 2025
Current report
Company’s average merchandise transaction values (“ATV”) increased by 1.6% in the North America reportable segment and decreased by 13.4% in the International reportable segment. The ATV increased in North America because of Signet’s strategic product assortment, particularly in fashion, while holding nearly flat ATV in bridal despite the competitive pricing pressure noted above. Same store sales in the International reportable segment were up 1.7% in the second quarter; however, overall reported sales and ATV were down year over year due to unfavorable impact of the previously disclosed divestiture of the prestige watch business in the fourth quarter of Fiscal 2024, which carried products at high price points.
Current report
Second quarter sales
Current report
Signet's total sales decreased 7.6% year over year to $1.49 billion in the 13 weeks ended August 3, 2024. Same store sales decreased 3.4%, compared to a decrease of 12.0% in the prior year quarter. These decreases were the result of competitive pricing pressure, a slower than expected engagement recovery, timing of the 53rd week in Fiscal 2024 shifting some Mother’s Day sales into first quarter, the impacts of store closures, and the continued macroeconomic impacts on consumer spending. These decreases were partially offset by higher ATV in the second quarter in the North America segment led by growth in fashion.
Current report
Year to date sales
Current report
Signet’s total sales decreased 8.5% to $3.00 billion compared to $3.28 billion in the prior year. Signet’s same store sales decreased 6.2%, compared to a decrease of 13.0% in the prior year. As further described above, these declines were driven primarily by competitive pricing pressure, a slower than expected engagement recovery, and continued pressure on consumer discretionary spending.
Current report
eCommerce sales year to date were $670.2 million, down $75.9 million or 10.2%, compared to $746.1 million in the prior year. eCommerce sales accounted for 22.3% of year to date sales, down from 22.7% of total sales in the prior year. Brick and mortar same store sales decreased 5.3% from the prior period. The decrease in eCommerce sales as of percentage of sales is primarily driven by the decline in the bridal category, including the unfavorable impact from continued operational issues in the digital banners.
Current report
North America sales
Current report
The North America reportable segment’s total sales were $2.82 billion compared to $3.06 billion in the prior year, down 8.0%. This decrease was primarily driven by the impact of heightened inflationary pressure on consumers’ discretionary spending and the decline in the bridal category, driven by lower engagements. Same store sales decreased 6.6% compared to a decrease of 13.3% in the prior year. North America’s ATV remained relatively flat when compared with the prior year, while the number of transactions decreased 8.3%.
Current report
International sales
Current report
The International reportable segment’s total sales decreased 16.1% to $163.7 million compared to $195.0 million in the prior year, primarily due to the impact of the divestiture of the prestige watch business in the fourth quarter of Fiscal 2024 and the impact of store closures. Total sales at constant exchange rates decreased 17.6%. The number of transactions decreased 4.7% and ATV decreased 14.4% over prior year. The decline in ATV was driven by the divestiture of the prestige watch business, which carried products at high price points.
Current report
Asset impairments, net
Current report
Other operating expense, net
Current report
In the second quarter of Fiscal 2025, other operating expense was $2.6 million, compared to $5.6 million in the prior year quarter. In the first half of Fiscal 2025, other operating expensewas$7.4 million compared to $3.7 million in the prior year comparable period. The 13 and 26 weeks ended August 3, 2024 primarily included restructuring charges of $1.2 million and $5.8 million, respectively, and foreign exchange losses of $0.5 million and $1.2 million, respectively. The 13 and 26 weeks ended July 29, 2023 primarily included restructuring charges of $4.2 million and foreign exchange rate losses of $1.2 million and $1.8 million, respectively, partially offset by a credit to income of $3.0 million related to an adjustment of a prior litigation accrual. See Note 17, Note 18 and Note 20 for additional information.
Current report
Operating (loss) income
Current report
Signet’s operating (loss) income by reportable segment for the year to date period is as follows:
Current report
(1) Operating (loss) income during the 13 and 26 weeks ended August 3, 2024 includes $166.2 million and $168.2 million, respectively, of asset impairment charges primarily related to goodwill and indefinite-lived intangible assets; $0.9 million and $1.1 million, respectively, of integration-related expenses, primarily severance and retention, incurred for the integration of Blue Nile; and $0.2 million and $0.8 million, respectively, of restructuring charges.
Current report
See Note 12, Note 18 and Note 20 for additional information.
Current report
(2)Restructuring charges were incurred primarily as a result of the Company’s rationalization of its store footprint and reorganization of certain centralized functions. Refer to Note 18 for additional information.
Current report
(2)Restructuring charges were incurred primarily as a result of the Company’s rationalization of its store footprint and reorganization of certain centralized functions. Refer to Note 18 for additional information.
Current report
(4) Fiscal 2025 includes severance and retention expenses related to the integration of Blue Nile; Fiscal 2024 includes expenses related to the integration of Blue Nile, primarily severance and retention, exit and disposal costs and system decommissioning costs.
Current report
(2)Restructuring charges were incurred primarily as a result of the Company’s rationalization of its store footprint and reorganization of certain centralized functions. Refer to Note 18 for additional information.
Current report
(4) Fiscal 2025 includes severance and retention expenses related to the integration of Blue Nile; Fiscal 2024 includes expenses related to the integration of Blue Nile, primarily severance and retention, exit and disposal costs and system decommissioning costs.
Current report
The Company has made significant progress over the past few years in line with its strategic priority to ensure a strong cash and overall liquidity position, including fully outsourcing credit and eliminating the UK Pension Scheme. Additionally over that period, the Company has repaid all outstanding debt, culminating in the full repayment of the Senior Notes at maturity in the second quarter of Fiscal 2025 using cash on hand. In addition, the Company has recently completed the extension of the ABL to August 2029 at substantially the same terms, as further described in Note 15. The ABL aggregate commitment has been reduced to $1.2 billion to better align with our reduced inventory base over the past few years, as well as provide cost savings on unused commitment fees.
Current report
•Net loss was $46.4 million compared to net income of $172.5 million in the prior year period, a decrease of $218.9 million. This decrease was primarily the result of non-cash asset impairment charges of $168.6 million taken during Fiscal 2025, as well as lower sales and gross profit compared to prior year. Refer to Note 12 for additional information.
Current report
•Cash used by inventory was $41.4 million compared to a source of $65.0 million in the prior year period driven by replenishment of inventories to healthier in-stock levels in the current year.
Current report
The Company had no outstanding debt as of August 3, 2024. As further described in Note 15, the Company fully repaid the Senior Notes upon maturity in the second quarter of Fiscal 2025 using cash on hand. At July 29, 2023, Signet had $147.7 million of outstanding debt, consisting entirely of the Senior Notes.
Current report
Goodwill and intangibles
Current report
In a business combination, the Company estimates and records the fair value of all assets acquired and liabilities assumed, including identifiable intangible assets and liabilities. The fair value of these intangible assets and liabilities is estimated based on management’s assessment, including selection of appropriate valuation techniques, inputs and assumptions in the determination of fair value. Significant estimates in valuing intangible assets and liabilities acquired include, but are not limited to, future expected cash flows associated with the acquired asset or liability, expected life and discount rates. The excess purchase price over the estimated fair values of the assets acquired and liabilities assumed is recognized as goodwill. Goodwill is recorded by the Company’s reporting units based on the acquisitions made by each.
Current report
Goodwill and other indefinite-lived intangible assets, such as indefinite-lived trade names, are evaluated for impairment annually as of the end of the fourth reporting period. Additionally, if events or conditions were to indicate the carrying value of a reporting unit or an indefinite-lived intangible asset may be greater than its fair value, the Company would evaluate the reporting unit or asset for impairment at that time. Impairment testing compares the carrying amount of the reporting unit or other intangible assets with its fair value. When the carrying amount of the reporting unit or other intangible assets exceeds its fair value, an impairment charge is recorded.
Current report
The impairment test for goodwill involves estimating the fair value of the reporting unit through either estimated discounted future cash flows, market-based methodologies, or a combination of both. The impairment test for other indefinite-lived intangible assets involves estimating the fair value of the asset, which is typically performed using the relief from royalty method for indefinite-lived trade names.
Current report
Due to various impacts of the current market conditions on key inputs and assumptions, such as rising interest rates and the macroeconomic impact on consumers’ discretionary spending, the Company determined that quantitative impairment assessments were required for the Diamonds Direct and Digital Banners reporting units as well as the Blue Nile and Diamonds Direct trade names as of the annual impairment testing date during the second quarter of Fiscal 2025.
Current report
As part of the quantitative assessments, management reevaluated its long-term cash flow projections, primarily related to sales growth in the Digital Banners and Diamonds Direct. Both banners have a higher bridal mix compared to the rest of Signet, and thus the slower than expected engagement recovery and continued pressure on consumer discretionary spending have had a disproportionate impact on these businesses as compared to the other Signet banners. In addition, to a lesser degree, the Digital Banners sales have been impacted by market declines in lab created diamond pricing over the past year. Management also determined an increase in discount rates was required to reflect the current interest rate environment at the valuation date, as well as to reflect additional forecast risk related to the Digital Banners due to the previously discussed challenges related to the integration of Blue Nile. Therefore, these higher discount rates, in conjunction with the revised cash flow projections, resulted in lower than previously projected discounted cash flows for the reporting units and trade names which negatively affected the valuations compared to previous valuations. Based on the results of the quantitative impairment assessments, the Company determined that no impairment was required for the Diamonds Direct reporting unit, as its estimated fair value exceeded its carrying value by 11%. However, during the second quarter of Fiscal 2025, the Company recognized pre-tax impairment charges related to the Diamonds Direct trade name, the Digital Banners reporting unit, and the Blue Nile trade name of $7.0 million, $123.0 million and $36.0 million, respectively, as their respective carrying values exceeded their fair values.
Removed paragraphs (32)
Previous report
Overall performance - First quarter Fiscal 2025
Previous report
America as a result of Signet’s strategic product assortment and the improvements noted above in engagement trends, particularly at core price points, which nearly offset continued softness in the highest price points, including at the digital banners due to challenges noted above. Sales and ATV in the International reportable segment were negatively impacted by the previously disclosed divestiture of the prestige watch business in the fourth quarter of Fiscal 2024 which carried product at the highest price points.
Previous report
First quarter sales
Previous report
Signet's total sales decreased 9.4% year over year to $1.51 billion in the 13 weeks ended May 4, 2024, while total sales at constant exchange rates decreased 9.6%. Same store sales decreased 8.9%, compared to a decrease of 13.9% in the prior year quarter. Continued challenges in the macroeconomic environment on consumers’ discretionary spending resulted in a decreased number of transactions, primarily from the anticipated decline in the bridal category, driven by lower engagements from the COVID-19 disruption to dating. ATV’s were also down in the first quarter primarily due to competitive pricing pressure, particularly at higher price points.
Previous report
Other operating (expense) income, net
Previous report
In the first quarter of Fiscal 2025, other operating expense was $7.2 million compared to other operating income of $0.1 million in the prior year quarter. The first quarter of Fiscal 2025 primarily included restructuring and impairment charges of $7.0 million. See Note 17 and Note 18 for additional information.
Previous report
Operating income
Previous report
(1) Operating income during the 13 weeks ended May 4, 2024 includes $0.6 million of restructuring charges and $2.0 million of asset impairment charges primarily related to planned store closures.
Previous report
(1)Restructuring and asset impairment charges were incurred primarily as a result of the Company’s rationalization of store footprint and reorganization of certain centralized functions. Refer to Note 18 for additional information.
Previous report
(1)Restructuring and asset impairment charges were incurred primarily as a result of the Company’s rationalization of store footprint and reorganization of certain centralized functions. Refer to Note 18 for additional information.
Previous report
(1)Restructuring and asset impairment charges were incurred primarily as a result of the Company’s rationalization of store footprint and reorganization of certain centralized functions. Refer to Note 18 for additional information.
Previous report
The Company has made significant progress over the past few years in line with its strategic priority to ensure a strong cash and overall liquidity position, including fully outsourcing credit, significantly reducing its outstanding debt, and eliminating the UK Pension Scheme. In addition, in Fiscal 2022, the Company renegotiated its $1.5 billion ABL Facility, as further described in Note 15, to extend the maturity until 2026 and allow overall greater financial flexibility to grow the business and provide an additional option to address the calendar year 2024 debt and Preferred Shares maturities, if necessary (see further below).
Previous report
•Net income was $52.1 million compared to net income of $97.4 million in the prior year period, a decrease of $45.3 million. This decrease was primarily related to lower sales and gross profit compared to prior year. This decrease was driven by the continued macroeconomic challenges on consumers’ discretionary spending resulting in a decreased number of transactions, particularly in the bridal category, driven by lower engagements.
Previous report
•Cash used by inventory was $48.9 million compared to cash used of $29.8 million in the prior year period. Inventory balances during the current year remain relatively flat compared to prior year-end balances.
Previous report
At May 4, 2024 and April 29, 2023, Signet had $147.8 million and $147.7 million, respectively, of outstanding debt, consisting entirely of the Senior Notes. The Senior Notes are due in June 2024 and the redemption is expected to be funded with cash on hand.
Previous report
While there have been no material changes to the critical accounting policies and estimates disclosed in Signet’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024 filed with the SEC on March 21, 2024, the Company continues to monitor the risk of impairment related to the Blue Nile trade name and the Diamonds Direct reporting unit and trade name. Based on the results of the most recent quantitative impairment assessments, the carrying value of the Blue Nile trade name of $96 million approximated its estimated fair value, and for the Diamonds Direct reporting unit, as well as its related trade name, the estimated fair values exceeded their carrying values by approximately 13% and 6%, respectively. No impairment of these intangible assets was thus noted in Fiscal 2024. During the 13 weeks ended May 4, 2024, the Company completed its quarterly triggering event assessment and determined that no triggering events had occurred in the first quarter of Fiscal 2025 requiring an interim impairment assessment for all reporting units with goodwill and indefinite-lived intangible assets.
Previous report
SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
Previous report
The Company and certain of its subsidiaries, which are listed on Exhibit 22.1 to this Quarterly Report on Form 10-Q, have guaranteed obligations under the Senior Notes.
Previous report
The Senior Notes were issued by Signet UK Finance plc (the “Issuer”). The Senior Notes rank senior to the Preferred Shares and common shares. The Senior Notes are effectively subordinated to our existing and future secured indebtedness to the extent of the assets securing that indebtedness. The Senior Notes are fully and unconditionally guaranteed on a joint and several basis by the Company, as the parent entity (the “Parent”) of the Issuer, and certain of its subsidiary guarantors (each, a “Guarantor” and collectively, the “Guarantors”).
Previous report
The Senior Notes are structurally subordinated to all existing and future debt and other liabilities, including trade payables, of our subsidiaries that do not guarantee the Senior Notes (the “Non-Guarantors”). The Non-Guarantors will have no obligation, contingent or otherwise, to pay amounts due under the Senior Notes or to make funds available to pay those amounts. Certain Non-Guarantors may be limited in their ability to remit funds to us by means of dividends, advances or loans due to required foreign government and/or currency exchange board approvals or limitations in credit agreements or other debt instruments of those subsidiaries.
Previous report
The Guarantors jointly and severally, irrevocably and unconditionally guarantee on a senior unsecured basis the performance and full and punctual payment when due of all obligations of Issuer, as defined in the Indenture, in accordance with the Senior Notes and the related Indentures, as supplemented, whether for payment of principal of or interest on the Senior Notes when due and any and all costs and expenses incurred by the trustee or any holder of the Senior Notes in enforcing any rights under the guarantees (collectively, the “Guarantees”). The Guarantees and Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions.
Previous report
Although the Guarantees provide the holders of Senior Notes with a direct unsecured claim against the assets of the Guarantors, under US federal bankruptcy law and comparable provisions of US state fraudulent transfer laws, in certain circumstances a court could cancel a Guarantee and order the return of any payments made thereunder to the Guarantors or to a fund for the benefit of its creditors.
Previous report
A court might take these actions if it found, among other things, that when the Guarantors incurred the debt evidenced by their Guarantee (i) they received less than reasonably equivalent value or fair consideration for the incurrence of the debt and (ii) any one of the following conditions was satisfied:
Previous report
•the Guarantor entity was insolvent or rendered insolvent by reason of the incurrence;
Previous report
•the Guarantor entity was engaged in a business or transaction for which its remaining assets constituted unreasonably small capital; or
Previous report
•the Guarantor entity intended to incur or believed (or reasonably should have believed) that it would incur, debts beyond its ability to pay as those debts matured.
Previous report
In applying the above factors, a court would likely find that a Guarantor did not receive fair consideration or reasonably equivalent value for its Guarantee, except to the extent that it benefited directly or indirectly from the issuance of the Senior Notes. The determination of whether a Guarantor was or was not rendered insolvent when it entered into its Guarantee will vary depending on the law of the jurisdiction being applied. Generally, an entity would be considered insolvent if the sum of its debts (including contingent or unliquidated debts) is greater than all of its assets at a fair valuation or if the present fair salable value of its assets is less than the amount that will be required to pay its probable liability on its existing debts, including contingent or unliquidated debts, as they mature.
Previous report
If a court canceled a Guarantee, the holders of the Senior Notes would no longer have a claim against that Guarantor or its assets.
Previous report
Each Guarantee is limited, by its terms, to an amount not to exceed the maximum amount that can be guaranteed by the applicable Guarantor without rendering the Guarantee, as it relates to that Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.
Previous report
Each Guarantor is a consolidated subsidiary of Parent at the date of each balance sheet presented. The following tables present summarized financial information for Parent, Issuer, and the Guarantors on a combined basis after elimination of (i) intercompany transactions and balances among Parent, Issuer, and the Guarantors and (ii) equity in earnings from and investments in any Non-Guarantor.
Previous report
(1) Amounts included in asset and liability subtotals above.
Previous report
(2) Includes net expense from intercompany transactions with Non-Guarantors of $25.9 million for the 13 weeks ended May 4, 2024 and net income of $311.6 million for the year ended February 3, 2024. Intercompany transactions primarily include intercompany dividends and interest.
Reworded paragraphs (56)
Previous wording
This management's discussion and analysis provides comparisons of material changes in the condensed consolidated financial statements for the 13 weeks ended May 4, 2024 and April 29, 2023.
Current wording
This management's discussion and analysis provides comparisons of material changes in the condensed consolidated financial statements for the 13 and 26 weeks ended August 3, 2024 and July 29, 2023.
Previous wording
This Quarterly Report on Form 10-Q contains statements which are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements arebased upon management's beliefs and expectations as well as on assumptions made by and data currently available to management, appear in a number of places throughout this document and include statements regarding, among other things, results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. The use of the words "expects," "intends," "anticipates," "estimates," "predicts," "believes," "should," "potential," "may," "preliminary," "forecast," "objective," "plan," or "target," and other similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties which could cause the actual results to not be realized, including, but not limited to: difficulty or delay in executing or integrating an acquisition, including Diamonds Direct and Blue Nile; executing other major business or strategic initiatives, such as expansion of the services business or realizing the benefits of our restructuring plans; the impact of the Israel-Hamas conflict on our operations; the negative impacts that public health crisis, disease outbreak, epidemic or pandemic has had, and could have in the future, on our business, financial condition, profitability and cash flows, including without limitation risks relating to shifts in consumer spending away from the jewelry category, trends toward more experiential purchases such as travel, disruptions in the dating cycle caused by the COVID-19 pandemic and the pace at which such impacts on engagements are expected to recover, and the impacts of the expiration of government stimulus on overall consumer spending (including the recent expiration of student loan relief); general economic or market conditions, including impacts of inflation or other pricing environment factors on our commodity costs (including diamonds) or other operating costs; a prolonged slowdown in the growth of the jewelry market or a recession in the overall economy; financial market risks; a decline in consumer discretionary spending or deterioration in consumer financial position; disruptions in our supply chain; our ability to attract and retain labor; our ability to optimize our transformation strategies; changes to regulations relating to customer credit; disruption in the availability of credit for customers and customer inability to meet credit payment obligations, which has occurred and may continue to deteriorate; our ability to achieve the benefits related to the outsourcing of the credit portfolio, including due to technology disruptions and/or disruptions arising from changes to or termination of the relevant outsourcing agreements, as well as a potential increase in credit co…
Excerpt shortened here; the source contains the full paragraph.
Current wording
This Quarterly Report on Form 10-Q contains statements which are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements arebased upon management's beliefs and expectations as well as on assumptions made by and data currently available to management, appear in a number of places throughout this document and include statements regarding, among other things, results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. The use of the words "expects," "intends," "anticipates," "estimates," "predicts," "believes," "should," "potential," "may," "preliminary," "forecast," "objective," "plan," or "target," and other similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties which could cause the actual results to not be realized, including, but not limited to: difficulty or delay in executing or integrating an acquisition, including Diamonds Direct and Blue Nile; executing other major business or strategic initiatives, such as expansion of the services business or realizing the benefits of our restructuring plans; the impact of the Israel-Hamas conflict on the operations of our quality control and technology centers in Israel; the negative impacts that public health crisis, disease outbreak, epidemic or pandemic has had, and could have in the future, on our business, financial condition, profitability and cash flows, including without limitation risks relating to shifts in consumer spending away from the jewelry category, trends toward more experiential purchases such as travel, disruptions in the dating cycle caused by the COVID-19 pandemic and the pace at which such impacts on engagements are expected to recover, and the Company’s ability to capture market share of the bridal category upon the recovery of engagements; general economic or market conditions, including impacts of inflation or other pricing environment factors on our commodity costs (including diamonds) or other operating costs; a prolonged slowdown in the growth of the jewelry market or a recession in the overall economy; financial market risks; a decline in consumer discretionary spending or deterioration in consumer financial position; disruptions in our supply chain; our ability to attract and retain labor; our ability to optimize our transformation strategies; changes to regulations relating to customer credit; disruption in the availability of credit for customers and customer inability to meet credit payment obligations, which has occurred and may continue to deteriorate; our ability to achieve the benefits related to the outsourcing of the credit portfolio, including due to technology disruptions and/or disruptions arising from changes to or termination of the relevant outsourcing agreements, as well as a potential in…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
Signet Jewelers Limited (“Signet” or the “Company”) is the world’s largest retailer of diamond jewelry. Signet is incorporated in Bermuda. The Company operated 2,676 retail locations as of May 4, 2024, which when combined with the Company’s digital capabilities under its Connected Commerce strategy, provides customers the opportunity to use both online and in-store experiences as part of their shopping journey. Signet manages its business by geography, a description of which follows:
Current wording
Signet Jewelers Limited (“Signet” or the “Company”) is the world’s largest retailer of diamond jewelry. Signet is incorporated in Bermuda. The Company operated 2,668 retail locations as of August 3, 2024, which when combined with the Company’s digital capabilities under its Connected Commerce strategy, provides customers the opportunity to use both online and in-store experiences as part of their shopping journey. Signet manages its business by geography, a description of which follows:
Previous wording
•The North America reportable segment operates nine banners, with the majority operating through both online and brick and mortar retail operations. The segment had 2,314 locations in the US and 91 locations in Canada as of May 4, 2024.
Current wording
•The North America reportable segment operates nine banners, with the majority operating through both online and brick and mortar retail operations. The segment had 2,310 locations in the US and 91 locations in Canada as of August 3, 2024.
Previous wording
•The International reportable segment had 271 locations in the UK, Republic of Ireland and Channel Islands as of May 4, 2024, and maintains an online retail presence for its principal banners, H. Samuel and Ernest Jones.
Current wording
•The International reportable segment had 267 locations in the UK, Republic of Ireland and Channel Islands as of August 3, 2024, and maintains an online retail presence for its principal banners, H. Samuel and Ernest Jones.
Previous wording
Certain Company activities are managed in the “Other” segment for financial reporting purposes, primarily the Company’s diamond sourcing operation and its diamond polishing factory in Botswana. See Note 4 of Item 1 for additional information regarding the Company’s reportable segments, and see Item 1 of Signet’s Fiscal 2024 Annual Report on Form 10-K for further background and description of the Company’s business.
Current wording
Certain Company activities are managed in the “Other” reportable segment for financial reporting purposes, primarily the Company’s diamond sourcing operation and its diamond polishing factory in Botswana. See Note 4 of Item 1 for additional information regarding the Company’s reportable segments, and see Item 1 of Signet’s Fiscal 2024 Annual Report on Form 10-K for further background and description of the Company’s business.
Previous wording
The Company continues to execute the initiatives under its Inspiring Brilliance strategy, which is focused on the achievement of sustainable industry-leading growth toward its previously announced mid-term goals of growing revenue to $9 to $10 billion, with an annual double digit adjusted operating margin (see Non-GAAP Measures section for further information). The Inspiring Brilliance strategy focuses on sustainable enhancements to the differentiation of Signet’s banners, including the expansion of its accessible luxury portfolio, its connected commerce and digital capabilities and its initiatives to accelerate services and optimize its real estate footprint. As described in the Purpose and Strategy section within Item 1 of Signet’s Fiscal 2024 Annual Report on Form 10-K filed with the SEC on March 21, 2024, through its Inspiring Brilliance strategy, the Company is focused on leveraging the core strengths that it has developed since the beginning of the transformation six years ago. Signet aims to be the innovation and market share leader of the jewelry category with opportunity for additional market share expansion and profitable growth as the Company leverages its flexible operating model, strong cash flows and core strengths while investing to widen its competitive advantages.
Current wording
The Company continues to execute the initiatives under its Inspiring Brilliance strategy, which is focused on the achievement of sustainable industry-leading growth toward its previously announced mid-term goals of growing revenue to $9 to $10 billion, with an annual double digit adjusted operating margin (see Non-GAAP Measures section for further information). The Inspiring Brilliance strategy focuses on sustainable enhancements to the differentiation of Signet’s banners, including the expansion of its accessible luxury portfolio, its connected commerce and digital capabilities and its initiatives to accelerate services and optimize its real estate footprint. As described in the Purpose and Strategy section within Item 1 of Signet’s Fiscal 2024 Annual Report on Form 10-K filed with the SEC on March 21, 2024, through its Inspiring Brilliance strategy, the Company is focused on leveraging the core strengths that it has developed since the beginning of its transformation six years ago. Signet aims to be the innovation and market share leader of the jewelry category with opportunity for additional market share expansion and profitable growth as the Company leverages its flexible operating model, strong cash flows, scale and core strengths while investing to widen its competitive advantages.
Previous wording
Signet’s sales decreased by 9.4% during the first quarter of Fiscal 2025 compared to the same period in Fiscal 2024. Sales were down compared to the same period in the prior year due to the impact of the challenging macroeconomic environment on consumer spending, the impact of heightened discount activity from the competition, as well as the overall decline in engagements compared to prior year, as anticipated. The first quarter was also unfavorably impacted by the continued integration challenges at the digital banners which began in the second half of Fiscal 2024. Despite these challenges, the Company saw positive factors driven by new fashion assortment, sequential improvements in engagement trends, and continued strong performance in services. During the first quarter of Fiscal 2025, the Company’s average merchandise transaction values (“ATV”) decreased by 1.6% in the North America reportable segment and decreased by 15.3% in the International reportable segment. The ATVs remained relatively stable in North
Current wording
Signet’s sales decreased by 7.6% during the second quarter of Fiscal 2025 compared to the same period in Fiscal 2024. During the second quarter, the Company saw positive factors in sales driven by new fashion assortments, sequential improvements in engagement trends and overall same store sales and continued strong performance in services. However, these favorable impacts were more than offset by competitive pricing pressure, store closures and the UK watch divestiture, timing of the 53rd week from Fiscal 2024 which shifted some early Mother’s Day shopping into the first quarter, a slower than expected engagement recovery and continued macroeconomic impacts on consumer spending. The second quarter was also unfavorably impacted by the continued integration challenges at the digital banners which began in the second half of Fiscal 2024. During the second quarter of Fiscal 2025, the
Previous wording
Refer to the “Results of Operations” section below for further information on performance during the first quarter of Fiscal 2025.
Current wording
Refer to the “Results of Operations” section below for further information on performance during the second quarter of Fiscal 2025.
Previous wording
Jewelry industry revenues softened over the past two years in light of the challenging macroeconomic environment from interest rates and inflation, headwinds in engagements and shifts in consumer discretionary spending. However, despite these challenges, beginning in Fiscal 2025, the Company expects same store sales between -4.5% and +0.5% with sequential improvement throughout the year, led by the expected engagement recovery which is seeing traction as expected, including late in first quarter and into May. Management’s data continues to point to multi-year engagement recovery, and Signet believes the US remains on track for engagements to increase 5% to 10% for Fiscal 2025. We believe that the Company can leverage its data and strengths to execute targeted marketing at the right time to win the recovery, as well as leverage its competitive advantages such as scale, consumer insights, growing product newness, enhancing in-store and online customer experiences and the continued expansion of our service offerings. As previously disclosed, the Company also expects the integration issues at our digital banners to persist in the short term, with a negative impact of 1.5% to 2.0% on sales in Fiscal 2025. While overall inflation has moderated, the Company anticipates that discretionary spending in categories such as jewelry will continue to be adversely impacted by high prices on necessities such as gas and groceries and could further impact sales in Fiscal 2025 across all categories. The Company is also monitoring the impact of higher discounting on sales and gross margins for the remainder of the year, as the heightened competitive environment and consumer pressures on pricing are expected to continue.
Current wording
The Company anticipates same store sales between -4.5% and +0.5% for full year Fiscal 2025, with sequential improvements expected to continue throughout the year, led by the engagement recovery and strength in fashion assortments and services. Although the engagement recovery has been somewhat slower than we expected, management’s data continues to point to multi-year engagement recovery back to pre-pandemic levels. We believe that the Company can leverage its data and strengths to execute targeted marketing at the right time to capture a significant share of the recovery, as well as leverage its competitive advantages such as scale, consumer insights, growing product newness, enhancing in-store and online customer experiences and the expansion of its service offerings. In our digital banners, although still expected to be a slight drag on full year same store sales, the Company anticipates modest sequential improvement in the back half of the year. While overall inflation has moderated, the Company anticipates that spending in discretionary categories may continue to be adversely impacted by high prices on consumer necessities and could further impact sales in Fiscal 2025 across all categories. The Company also continues to monitor the impact of a highly promotional competitive environment and the potential impacts on sales and gross margins for the remainder of the year.
Previous wording
Despite the current headwinds, the Company expects to continue strategic investments that differentiate Signet from its competitors, in particular investments in its banner value propositions, its services business, the newness of its product offerings, personalization of marketing, and its digital and data analytics capabilities. Furthermore, the Company will maintain its diligent and effective efforts to drive cost savings and leverage its flexible operating model, scale and fleet optimization. As part of its efforts to focus on its strategic business in the UK, the Company completed the divestiture of the Company’s UK prestige watch business during the fourth quarter of Fiscal 2024 and closed 16 stores, primarily at the Ernest Jones banner, in the UK in the first quarter of Fiscal 2025. These actions, as well as further streamlining overhead in the UK support center, are aimed at improving profitability in this segment, with margins in line with the rest of the business within the next three years.
Current wording
The Company will continue strategic investments that differentiate Signet from its competitors, in particular investments in its banner value propositions, its services business, the newness of its product offerings, personalization of marketing, and its digital and data analytics capabilities. Furthermore, the Company will maintain its diligent and effective efforts to drive cost savings and leverage its flexible operating model, scale and fleet optimization. As part of its efforts to focus on its strategic business in the UK, the Company completed the divestiture of the Company’s UK prestige watch business during the fourth quarter of Fiscal 2024 and closed 20 stores to date in Fiscal 2025, primarily at the Ernest Jones banner. These actions, as well as further streamlining overhead in the UK support center, are aimed at improving profitability in this segment, with margins in line with the rest of the business within the next three years.
Previous wording
The Company continues to monitor the impacts of certain macroeconomic factors on its business, such as inflation and the Russia-Ukraine and Israel-Hamas conflicts. Signet operates quality control and technology centers in Israel, and to date, these operations have not been materially impacted by the geopolitical conflict in the Middle East. While the Company currently does not expect disruptions to its operations in Israel to have a material impact on the Company’s results of operations, the Company will continue to closely monitor this conflict and any impacts on its business, as well as its team members in Israel. Uncertainties exist that could impact the Company’s results of operations or cash flows in the future, such as competitive pricing pressure, including on lab-created diamonds, continued inflationary impacts to the Company (including, but not limited to, materials, labor, fulfillment and advertising costs) or adverse shifts in consumer discretionary spending, deterioration of consumer credit, supply chain disruptions to the Company’s business, the Company’s ability to recruit and retain qualified team members, or organized retail crime and its impact to mall traffic. See “Forward-Looking Statements” above as well as the “Risk Factors” included in Item 1A of Signet’s Fiscal 2024 Annual Report on Form 10-K.
Current wording
The Company continues to monitor the impacts of certain macroeconomic factors on its business, such as inflation and the Russia-Ukraine and Israel-Hamas conflicts. Signet operates quality control and technology centers in Israel, and to date, these operations have not been materially impacted by the geopolitical conflict in the Middle East. While the Company currently does not expect disruptions to its operations in Israel to have a material impact on the Company’s results of operations, the Company will continue to closely monitor this conflict and any impacts on its business, as well as its team members in Israel. Uncertainties exist that could impact the Company’s results of operations or cash flows in the future, such as competitive pricing pressure, including on lab-created diamonds, continued inflationary impacts to the Company (including, but not limited to, materials, labor, fulfillment and advertising costs) or adverse shifts in consumer discretionary spending, slower than anticipated recovery of engagements, deterioration of consumer credit, supply chain disruptions to the Company’s business, the Company’s ability to recruit and retain qualified team members, or organized retail crime and its impact to mall traffic. See “Forward-Looking Statements” above as well as the “Risk Factors” included in Item 1A of Signet’s Fiscal 2024 Annual Report on Form 10-K.
Previous wording
Comparison of First Quarter Fiscal 2025 to First Quarter Fiscal 2024
Current wording
Comparison of Second Quarter Fiscal 2025 to Second Quarter Fiscal 2024
Previous wording
eCommerce sales in the first quarter of Fiscal 2025 were $337.9 million, down $42.7 million or 11.2%, compared to $380.6 million in the prior year first quarter, primarily driven by the decline in the bridal category, including the unfavorable impact from continued operational issues in the digital banners. eCommerce sales accounted for 22.4% of first quarter sales, down from 22.8% of total sales in the prior year first quarter. Brick and mortar same store sales decreased 7.6% from the prior year first quarter.
Current wording
eCommerce sales in the second quarter of Fiscal 2025 were $332.3 million, down $33.2 million or 9.1%, compared to $365.5 million in the prior year second quarter, driven by the decline in the bridal category, including the impact of the continued operational issues in the digital banners. eCommerce sales accounted for 22.3% of second quarter sales, down from 22.7% of total sales in the prior year second quarter. Brick and mortar same store sales decreased 2.9% from the prior year second quarter.
Previous wording
The breakdown of the first quarter sales performance by reportable segment is set out in the table below:
Current wording
The breakdown of the second quarter sales performance by reportable segment is set out in the table below:
Previous wording
ATV is an operating metric defined as net merchandise sales divided by the total number of customer transactions. The ATV is measured each period based on the reported sales for the corresponding period presented. Beginning in the second quarter of Fiscal 2024, the Company changed its presentation of ATV to be calculated based on total reported net merchandise sales, compared to a same store sales base used in prior periods, as this metric is more representative of the comparison of reported sales period over period. The prior period amounts presented below, and throughout this discussion and analysis, have been restated to be presented comparatively.
Current wording
ATV is an operating metric defined as net merchandise sales divided by the total number of customer transactions. The ATV is measured each period based on the reported sales for the corresponding period presented.
Previous wording
The North America reportable segment’s total sales were $1.42 billion compared to $1.56 billion in the prior year quarter, or a decrease of 9.0%. This decrease was primarily due to continued challenges in the macroeconomic environment on consumers’ discretionary spending, and the anticipated decline in the bridal category, driven by lower engagements and operational challenges at the digital banners. ATV’s in North America were also down slightly in the first quarter primarily due to competitive pricing pressure, particularly at higher price points, partially offset by the Company’s strategic product assortment and merchandise at core price points. Same store sales decreased 9.2% compared to a decrease of 14.2% in the prior year quarter primarily due to the decline in the number of transactions by 7.9% year over year.
Current wording
The North America reportable segment’s total sales were $1.40 billion compared to $1.50 billion in the prior year quarter, or a decrease of 6.9%. This decrease was the result of competitive pricing pressure, a slower than expected engagement recovery, timing of the 53rd week in Fiscal 2024 shifting some Mother’s Day sales into first quarter, and the continued macroeconomic impacts on consumer spending. These decreases were partially offset by higher ATV in the second quarter and by the Company’s strategic product assortment which drove growth in fashion during the quarter. Same store sales decreased 3.7% compared to a decrease of 12.2% in the prior year quarter primarily due to the decline in the number of transactions by 8.8% year over year, offset by the higher ATV noted above.
Previous wording
The International reportable segment’s total sales decreased 17.0% to $77.2 million compared to $93.0 million in the prior year, primarily due to the divestiture of the prestige watch business in the fourth quarter of Fiscal 2024, as well as the impact of store closures. Total sales at constant exchange rates decreased 19.5%. The number of transactions decreased 5.9% and ATV decreased 15.3% year over year. These decreases were partially offset by a strengthening of the British Pound experienced during the quarter, offsetting 2.5% of these declines.
Current wording
The International reportable segment’s total sales decreased 15.2% to $86.5 million compared to $102.0 million in the prior year quarter, primarily due to the divestiture of the prestige watch business in the fourth quarter of Fiscal 2024, as well as the impact of store closures. Total sales at constant exchange rates decreased 15.8%. The number of transactions decreased 3.6% and ATV decreased 13.4% year over year.
Previous wording
In the first quarter of Fiscal 2025, gross margin was $572.4 million or 37.9% of sales compared to $632.0 million or 37.9% of sales in the prior year comparable period. Gross margin as a percentage of sales remained overall flat compared to prior first quarter. The deleveraging of fixed costs on lower sales volume was offset by higher merchandise margin, including at the digital banners, led by growth in services, product newness and expansion of lab created diamonds.
Current wording
In the second quarter of Fiscal 2025, gross margin was $566.3 million or 38.0% of sales compared to $610.8 million or 37.9% of sales in the prior year comparable period. In the first half of Fiscal 2025, gross margin was $1.1 billion or 37.9% of sales compared to $1.2 billion or 37.9% of sales in the prior year comparable period. The Company maintained relatively flat gross margins for both the 13 and 26 weeks ended August 3, 2024 reflecting a more than 100 basis points improvement in merchandise margins, led by growth in services, product newness and higher fashion penetration, which nearly offset the deleveraging of fixed costs on lower sales volume.
Previous wording
In the first quarter of Fiscal 2025, SG&A was $515.4 million or 34.1% of sales compared to $530.4 million or 31.8% of sales in the prior year quarter. The increase in SG&A as a percentage of sales compared to the prior year quarter was primarily driven by higher advertising expense related to Mother’s Day timing and deleverage on fixed costs, partially offset by cost savings initiatives.
Current wording
In the second quarter of Fiscal 2025, SG&A was $498.4 million or 33.4% of sales compared to $511.2 million or 31.7% of sales in the prior year quarter. In the first half of Fiscal 2025, SG&A was$1.01 billion or 33.8% of sales compared to $1.04 billion or 31.7% of sales in the prior year comparable period. The increase in SG&A as a percentage of sales for both the 13 and 26 weeks ended August 3, 2024 was driven by higher advertising expense and deleverage of fixed costs, primarily the fixed portion of labor.
Previous wording
See Note 18 and Note 20 for additional information.
Current wording
For the 13 and 26 weeks ended August 3, 2024, the Company recorded non-cash, pre-tax impairment charges of $166.2 million and $168.6 million, respectively, compared to charges of $3.8 million and $5.6 million in the 13 and 26 weeks ended July 29, 2023, respectively. In the first half of Fiscal 2025, $166.0 million of the charges related to impairment of goodwill and indefinite-lived trade names for Diamonds Direct and the Digital Banners, and $2.6 million related to the impairment of long-lived assets. In the first half of 2024, all charges were related to the impairment of long-lived assets. See Note 12 and Note 18 for additional information.
Previous wording
For the first quarter of Fiscal 2025, operating income was $49.8 million or 3.3% of sales, compared to $101.7 million or 6.1% of sales in the prior year quarter. The decrease in operating income was primarily driven by the impact of lower sales volume and higher advertising expense noted above, partially offset by improved merchandise margins and cost savings initiatives.
Current wording
For the second quarter of Fiscal 2025, operating loss was $100.9 million or (6.8)% of sales, compared to operating income of $90.2 million or 5.6% of sales in the prior year quarter. In the first half of Fiscal 2025, operating loss was $51.1 million or (1.7)% of sales compared to $191.9 million or 5.8% of sales in the prior year comparable period. The decrease in operating income both the 13 and 26 weeks ended August 3, 2024 was primarily driven by the impact of goodwill and indefinite-lived intangible impairment charges, lower sales volume and higher advertising expense noted above, partially offset by improved merchandise margins and cost savings initiatives.
Previous wording
Signet’s operating income (loss) by reportable segment for the first quarter is as follows:
Current wording
Signet’s operating (loss) income by reportable segment for the second quarter is as follows:
Previous wording
Operating income during the 13 weeks ended April 29, 2023 includes $7.8 million of integration-related expenses, primarily severance and retention, and exit and disposal costs incurred for the integration of Blue Nile and a $3.0 million credit to income related to the adjustment of a prior litigation accrual.
Current wording
Operating income during the 13 and 26 weeks ended July 29, 2023 includes $4.8 million and $12.6 million, respectively, of acquisition and integration-related expenses, primarily severance and retention, and exit and disposal costs, and system decommissioning costs incurred for the integration of Blue Nile; $3.8 million and $5.6 million, respectively, of net asset impairment charges; and $4.2 million of restructuring charges. Operating income during the 26 weeks ended July 29, 2023 includes a $3.0 million credit to income related to the adjustment of a prior litigation accrual.
Previous wording
(2)Operating loss during the 13 weeks ended May 4, 2024 includes $4.0 million of restructuring charges; $0.4 million of net asset impairment charges primarily related to planned store closures; and $1.3 million of net losses from the previously announced divestiture of the UK prestige watch business.
Current wording
(2)Operating loss during the 13 and 26 weeks ended August 3, 2024 includes $1.0 million and $5.0 million, respectively, of restructuring charges and $1.2 million and $2.5 million, respectively, of net losses from the previously announced divestiture of the UK prestige watch business. Operating loss during the 26 weeks ended August 3, 2024 includes $0.4 million of net asset impairment charges primarily related to planned store closures.
Previous wording
For the 13 weeks ended May 4, 2024, net interest income was $8.6 million compared to net interest income of $5.6 million in the 13 weeks ended April 29, 2023. The increase in interest income recognized in the 13 weeks ended May 4, 2024 is the result of interest earned on higher excess cash balances compared to the prior year quarter.
Current wording
For the 13 and 26 weeks ended August 3, 2024, net interest income was $2.4 million and $11.0 million, respectively, compared to net interest income of $1.8 million and $7.4 million in the 13 and 26 weeks ended July 29, 2023, respectively. The increase in net interest income recognized in the 13 weeks ended August 3, 2024 compared to the prior year comparable period was the result of lower interest expense incurred as a result of the repayment of the Senior Notes in the second quarter. The increase in net interest income recognized in the 26 weeks ended August 3, 2024 compared to the prior year comparable period was due to higher invested cash balances compared to the prior year period, higher interest rates and lower interest expense incurred as a result of the repayment of the Senior Notes as previously noted.
Previous wording
In the first quarter of Fiscal 2025, income tax expense was $6.5 million, with an effective tax rate (“ETR”) of 11.1%, compared to income tax expense of $9.5 million, with an ETR of 8.9%, in the prior year comparable period. The ETR for the first quarter of Fiscal 2025 was lower than the US federal income tax rate, primarily due to the favorable impact of foreign rate differences and benefits from global reinsurance arrangements as well as the discrete tax benefits recognized in the 13 weeks ended May 4, 2024. The discrete tax benefits to date during Fiscal 2025 primarily relate to the excess tax benefit for share-based compensation which vested during the quarter of $4.7 million.
Current wording
In the second quarter of Fiscal 2025, income tax expense was $1.6 million, with an effective tax rate (“ETR”) of (1.7)%, compared to income tax expense of $17.2 million, with an ETR of 18.6%, in the prior year comparable period. The ETR for the second quarter of Fiscal 2025 was primarily impacted by the discrete impairment charges of$166 million, of which $123 million relates to non-deductible goodwill. The Fiscal 2024 ETR was lower than the US federal income tax rate, primarily due to the favorable impacts of foreign rate differences and benefits from global reinsurance arrangements.
Previous wording
Net cash is a non-GAAP measure defined as the total of cash and cash equivalents less debt. Management considers this metric to be helpful in understanding the total indebtedness of the Company after consideration of cash balances on-hand.
Current wording
Net cash is a non-GAAP measure defined as the total of cash and cash equivalents less debt. Management considers this metric to be helpful to understand the total indebtedness of the Company after consideration of cash balances on-hand.
Previous wording
Free cash flow is a non-GAAP measure defined as the net cash used in operating activities less purchases of property, plant and equipment. Management considers this metric to be helpful in understanding how the business is generating cash from its operating and investing activities that can be used to meet the financing needs of the business. Free cash flow is an indicator frequently used by management in evaluating its overall liquidity needs and determining appropriate capital allocation strategies. Free cash flow does not represent the residual cash flow available for discretionary purposes.
Current wording
Free cash flow is a non-GAAP measure defined as the net cash provided by (used in) operating activities less purchases of property, plant and equipment. Management considers this metric to be helpful in understanding how the business is generating cash from its operating and investing activities that can be used to meet the financing needs of the business. Free cash flow is an indicator frequently used by management to evaluate its overall liquidity needs and determine appropriate capital allocation strategies. Free cash flow does not represent the residual cash flow available for discretionary purposes.
Previous wording
EBITDA is a non-GAAP measure defined as earnings before interest, income taxes, depreciation and amortization. EBITDA is an important indicator of operating performance as it excludes the effects of financing and investing activities by eliminating the effects of interest, income taxes, depreciation and amortization costs. Adjusted EBITDA is a non-GAAP measure, defined as earnings before interest, income taxes, depreciation and amortization, share-based compensation expense, non-operating expense, net and certain non-GAAP accounting adjustments. Reviewed in conjunction with net income and operating income, management believes that EBITDA and adjusted EBITDA help in enhancing investors’ ability to evaluate and analyze trends regarding Signet’s business and performance based on its current operations. EBITDA and adjusted EBITDA are also inputs into the Company’s leverage ratios, which are non-GAAP measures disclosed periodically in investor materials and other Company filings with the SEC, including annually in the Company’s Form 10-K.
Current wording
EBITDA is a non-GAAP measure defined as earnings before interest, income taxes, depreciation and amortization. EBITDA is an important indicator of operating performance as it excludes the effects of financing and investing activities by eliminating the effects of interest, income taxes, depreciation and amortization costs. Adjusted EBITDA is a non-GAAP measure, defined as earnings before interest, income taxes, depreciation and amortization, share-based compensation expense, non-operating expense, net and certain non-GAAP accounting adjustments. Reviewed in conjunction with net income and operating income, management believes that EBITDA and adjusted EBITDA helps enhance management’s and investors’ ability to evaluate and analyze trends regarding Signet’s business and performance based on its current operations. EBITDA and adjusted EBITDA are also inputs into the Company’s leverage ratios, which are non-GAAP measures disclosed periodically in investor materials and other Company filings with the SEC, including annually in the Company’s Form 10-K.
Previous wording
(3) Fiscal 2025 includes severance and retention expenses related to the integration of Blue Nile; Fiscal 2024 includes expenses related to the integration of Blue Nile, primarily severance and retention, and exit and disposal costs.
Current wording
(4) Fiscal 2025 includes severance and retention expenses related to the integration of Blue Nile; Fiscal 2024 includes expenses related to the integration of Blue Nile, primarily severance and retention, exit and disposal costs and system decommissioning costs.
Previous wording
(5) As described in Note 5, the Company recorded a deemed dividend to net income attributable to common shareholders of $85.1 million, which represents the excess of the conversion value of the Preferred Shares over their carrying value, and includes $1.5 million of related expenses.
Current wording
(6) As described in Note 5, the Company recorded a deemed dividend to net (loss) income attributable to common shareholders of $85.1 million in the first quarter of Fiscal 2025, which represents the excess of the conversion value of the Preferred Shares over their carrying value upon redemption, and includes $1.5 million of related expenses.
Previous wording
(6) First quarter of Fiscal 2025 adjusted diluted EPS was calculated using 48.0 million diluted weighted average common shares outstanding. The additional dilutive shares were excluded from the calculation of GAAP diluted EPS as their effect was antidilutive. Refer to Note 7 for additional information.
Current wording
(7) Adjusted diluted EPS for the 13 and 26 weeks ended August 3, 2024 was calculated using 44.9 million and 47.9 million diluted weighted average common shares outstanding, respectively. The additional dilutive shares were excluded from the calculation of GAAP diluted EPS as their effect was antidilutive. Refer to Note 7 for additional information.
Previous wording
The Company’s primary sources of liquidity are cash on hand, cash provided by operations and availability under its senior secured asset-based revolving credit facility (the “ABL Revolving Facility”). As of May 4, 2024, the Company had $729.3 million of cash and cash equivalents, $147.8 million of outstanding debt related to the Senior Notes due in June 2024, and no outstanding borrowings on the ABL Revolving Facility. The available borrowing capacity on the ABL Revolving Facility was $1.1 billion as of May 4, 2024.
Current wording
The Company’s primary sources of liquidity are cash on hand, cash provided by operations and availability under its senior secured asset-based revolving credit facility (the “ABL”). As of August 3, 2024, the Company had $403.1 million of cash and cash equivalents and no outstanding borrowings on the ABL. The available borrowing capacity on the ABL was $1.2 billion as of August 3, 2024.
Previous wording
Since the Company’s transformation strategies began in Fiscal 2019, the Company has delivered substantially against its strategic priorities to establish the Company as the OmniChannel jewelry category leader and position its business for sustainable long-term growth. The investments and new capabilities built during the past few years laid the foundation for the Company’s accelerated growth, including prioritizing investments in digital technology and data analytics, and enhancing and optimizing a connected commerce shopping journey for customers. In addition, these investments have been fueled by cost reductions and structural improvements that have generated annual cost savings of more than $800 million since the Company’s transformation began, with additional savings of up to $180 million in new cost savings initiatives for Fiscal 2025. The Company’s cash discipline has led to more efficient working capital, through both the extension of payment days with the Company’s vendor base, as well as through improvement in productivity, overall health and newness of the Company’s inventory. During Fiscal 2024, the Company invested $125.5 million for capital expenditures. Capital expenditures of up to $180 million are planned for Fiscal 2025, reflecting investments in 20 to 30 new stores, up to 300 renovations, and additional digital and technology advancements.
Current wording
Since the Company’s transformation strategies began in Fiscal 2019, the Company has delivered substantially against its strategic priorities to establish the Company as the OmniChannel jewelry category leader and position its business for sustainable long-term growth. The investments and new capabilities built during the past few years laid the foundation for the Company’s accelerated growth, including prioritizing investments in digital technology and data analytics, and enhancing and optimizing a connected commerce shopping journey for customers. In addition, these investments have been fueled by cost reductions and structural improvements that have generated annual cost savings of more than $800 million since the Company’s transformation began, with additional cost savings of up to $200 million in new initiatives for Fiscal 2025. The Company’s cash discipline has led to more efficient working capital, through both the extension of payment days with the Company’s vendor base, as well as through improvement in productivity and the overall health and newness of the Company’s inventory. The Company also invested $125.5 million for capital expenditures in Fiscal 2024 and has planned for capital expenditures of up to $180 million in Fiscal 2025, reflecting primarily investments in new stores and renovations, as well as additional digital and technology advancements.
Previous wording
The Company has also made various strategic acquisitions in line with its Inspiring Brilliance growth strategy over the past three years, investing nearly $900 million for the acquisitions of Diamonds Direct in Fiscal 2022, Blue Nile in Fiscal 2023 and SJR in Fiscal 2024. The acquisitions of Diamonds Direct and Blue Nile have accelerated the Company’s growth in accessible luxury and bridal by allowing Signet to reach into new markets and new customers, through Diamonds Direct’s continued store expansion and through Blue Nile’s broadening of Signet's digital leadership across the jewelry category. In addition, the acquisition of certain assets of SJR in the second quarter of Fiscal 2024, as well as the transition of the former Blue Nile Seattle fulfillment center to a new enterprise-wide repair facility, is expected to expand the Company’s services capacity and capabilities.
Current wording
The Company has also made various strategic acquisitions in line with its Inspiring Brilliance growth strategy over the past three years, investing nearly $900 million for the acquisitions of Diamonds Direct in Fiscal 2022, Blue Nile in Fiscal 2023 and SJR in Fiscal 2024. The acquisitions of Diamonds Direct and Blue Nile have accelerated the Company’s growth in accessible luxury and bridal by allowing Signet to reach into new markets and new customers, through Diamonds Direct’s continued store expansion and through Blue Nile’s broadening of Signet's digital leadership across the jewelry category. In addition, the acquisition of certain assets of SJR in the second quarter of Fiscal 2024, as well as the transition of the former Blue Nile Seattle fulfillment center to a new enterprise-wide repair facility has expanded the Company’s services capacity and capabilities.
Previous wording
On April 1, 2024, in accordance with the terms of the amended Certificate of Designation for the Preferred Shares and upon notice from the Preferred Holders, the Company redeemed half of the Preferred Shares in cash for $414.1 million, including accrued and unpaid dividends. This early redemption of the Preferred Shares highlighted the ability and effectiveness of the Company’s flexible operating model to generate significant free cash flow, which has driven the Company’s strong liquidity over the past few years. In addition, subsequent to quarter-end, the Preferred Holders provided notice to the Company of their intent to convert an additional 100,000 Preferred Shares, which were settled in cash by the Company in May 2024 for $129.0 million. Refer to Note 5 for additional information.
Current wording
On April 1, 2024, in accordance with the terms of the amended Certificate of Designation for the Preferred Shares and upon notice from the Preferred Holders, the Company redeemed half of the Preferred Shares in cash for $414.1 million, including accrued and unpaid dividends. In May 2024, the Preferred Holders elected to convert an additional 100,000 Preferred Shares, which were settled in cash by the Company for $129.0 million. The early redemptions of the Preferred Shares from cash on hand highlight the effectiveness of the Company’s flexible operating model, which has generated significant free cash flow over the past few years. Refer to Note 5 for additional information.
Previous wording
The Company remains committed to its goal to return cash to shareholders, which includes being a dividend growth company. For the third year in a row, Signet has increased its quarterly common dividend from $0.23 per share in Fiscal 2024 to $0.29 per share beginning in Fiscal 2025. The Company also remains focused on share repurchases under its 2017 Program. In March 2024, the Board approved a further $200 million increase to the multi-year authorization under the 2017 Program. The Company repurchased $7.4 million of common shares during the 13 weeks ended May 4, 2024 with $853.6 million of shares authorized for repurchase remaining as of May 4, 2024. See Note 6 for additional information related to the common share repurchases.
Current wording
The Company remains committed to its goal to return cash to shareholders, which includes being a dividend growth company. For the third year in a row, Signet has increased its quarterly common dividend from $0.23 per share in Fiscal 2024 to $0.29 per share beginning in Fiscal 2025. The Company also remains focused on share repurchases under its 2017 Program. In March 2024, the Board approved a further $200 million increase to the multi-year authorization under the 2017 Program. The Company repurchased $47.2 million of common shares during the 26 weeks ended August 3, 2024 with $813.8 million of shares authorized for repurchase remaining as of August 3, 2024. See Note 6 for additional information related to the common share repurchases.
Previous wording
The Company believes that cash on hand, cash flows from operations and available borrowings under the ABL Revolving Facility will be sufficient to meet its ongoing business requirements for at least the 12 months following the date of this report, including funding working capital needs, projected investments in the business (including capital expenditures), debt service and maturities, including the remaining outstanding Preferred Shares, and returns to shareholders through dividends and common share repurchases.
Current wording
The Company believes that cash on hand, cash flows from operations and available borrowings under the ABL will be sufficient to meet its ongoing business requirements for at least the 12 months following the date of this report, including funding working capital needs, projected investments in the business (including capital expenditures), conversions or redemptions of the remaining outstanding Preferred Shares, and returns to shareholders through dividends and common share repurchases.
Previous wording
Net cash used in operating activities was $158.2 million during the 13 weeks ended May 4, 2024 compared to $381.8 million in the prior year comparable period. The change in operating cash flows compared to prior year was primarily driven by the payment of litigation settlements in the prior year noted below. The significant movements in operating cash flows are further described below:
Current wording
Net cash used in operating activities was $114.4 million during the 26 weeks ended August 3, 2024 compared to $253.3 million in the prior year comparable period. The change in operating cash flows compared to prior year was primarily driven by the payment of litigation settlements in the prior year noted below, partially offset by the impact of lower sales on cash flows year over year. The significant movements in operating cash flows are further described below:
Showing the first 40 of 56 pairs. Open the source sections for the rest.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
The breakdown of the year to date sales performance by reportable segment is set out in the table below:
Current report — wording carried from elsewhere
(1) The 53rd week in Fiscal 2024 has resulted in a shift as the current fiscal year began a week later than the previous fiscal year. As such, same store sales for Fiscal 2025 have been calculated by aligning the sales weeks of the current year to date period to the equivalent sales weeks in the prior fiscal year. Total reported sales continue to be calculated based on the reported fiscal periods.
Current report — wording carried from elsewhere
(2)The Company provides the period-over-period change in total sales excluding the impact of foreign currency fluctuations, which is a non-GAAP measure, to provide transparency to performance and enhance investors’ understanding of underlying business trends. The effect from foreign currency, calculated on a constant currency basis, is determined by applying current year average exchange rates to prior year sales in local currency.
Current report — wording carried from elsewhere
(3) Includes sales from Signet’s diamond sourcing operation.
Current report — wording carried from elsewhere
(1)Net merchandise sales within the North America reportable segment include all merchandise product sales, net of discounts and returns. In addition, excluded from net merchandise sales are sales tax in the US, repairs, extended service plans, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to the change in reported sales.
Current report — wording carried from elsewhere
(2)Net merchandise sales within the International reportable segment include all merchandise product sales, including VAT, net of discounts and returns. In addition, excluded from net merchandise sales are repairs, warranty, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to the change in reported sales.
Current report — wording carried from elsewhere
(3) International reportable segment amounts are denominated in British pounds.
Current report — wording carried from elsewhere
In the year to date period of Fiscal 2025, income tax expense was$8.1 million, with an ETR of (21.1)%, compared to income tax expense of $26.7 million, with an ETR of 13.4% in the prior year comparable period. The ETR for the 26 weeks ended August 3, 2024 was lower than the US federal income tax rate, primarily due to the favorable impact of foreign rate differences and benefits from global reinsurance arrangements, as well as discrete tax impacts during Fiscal 2025, including the non-deductible impairment charges described above and the excess tax benefit for share-based compensation which vested during the year of $5.0 million. The year to date ETR in the prior year comparable period was lower than the US federal income tax rate primarily due to the discrete tax benefits related to thereclassification of the remaining pension settlement loss out of AOCI of $4.1 million and the excess tax benefit for share-based compensation which vested during the year of $7.7 million.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
The ETR for the first quarter of Fiscal 2024 was lower than the US federal income tax rate primarily as a result of the favorable impact of foreign rate differences and benefits from global reinsurance arrangements, as well as the discrete tax benefits related to the reclassification of the remaining pension settlement loss out of AOCI of $4.1 million and the excess tax benefit for share-based compensation which vested during the quarter of $7.6 million.
Previous report — wording carried elsewhere
(3) Fiscal 2025 includes severance and retention expenses related to the integration of Blue Nile; Fiscal 2024 includes expenses related to the integration of Blue Nile, primarily severance and retention, and exit and disposal costs.
Previous report — wording carried elsewhere
(3) Fiscal 2025 includes severance and retention expenses related to the integration of Blue Nile; Fiscal 2024 includes expenses related to the integration of Blue Nile, primarily severance and retention, and exit and disposal costs.