SIGNET JEWELERS LTD

Previous wording

The discussion and analysis in this Item 7 are intended to provide the reader with information that will assist in understanding the significant factors affecting the Company’s consolidated operating results, financial condition, liquidity and capital resources. This discussion should be read in conjunction with our consolidated financial statements and notes to the consolidated financial statements included in Item 8. This discussion contains forward-looking statements and information. The Company's actual results could materially differ from those discussed in these forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those discussed below and elsewhere in this report, particularly in “Forward-Looking Statements” above as well as the “Risk Factors” section within Item 1A.

Current wording

The discussion and analysis in this Item 7 is intended to provide the reader with information that will assist in understanding the significant factors affecting the Company’s consolidated operating results, financial condition, liquidity and capital resources. This discussion should be read in conjunction with our consolidated financial statements and notes to the consolidated financial statements included in Item 8. This discussion contains forward-looking statements and information. The Company's actual results could materially differ from those discussed in these forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those discussed below and elsewhere in this report, particularly in “Forward-Looking Statements” above as well as the “Risk Factors” section within Item 1A.

Previous wording

Refer to the “Results of Operations” section below for further information on performance during the fourth quarter and full year Fiscal 2024.

Current wording

Refer to the “Results of Operations” section below for additional information on performance during the fourth quarter and full year Fiscal 2025.

Previous wording

The Company intends to continue 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 non-GAAP 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 this Annual Report on Form 10-K, 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 and core strengths while investing to widen its competitive advantages.

Current wording

See the Purpose & Strategy section within Item 1 of this Annual Report on Form 10-K for additional information.

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 further pricing and inflationary environment changes impacting 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” section within Item 1A.

Current wording

The Company continues to monitor the impacts of certain macroeconomic factors on its business, such as inflation and the Russia-Ukraine and Middle East conflicts. Signet operates quality control and technology centers in Israel, and to date, these operations have not been 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 lab-grown 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. In addition, the Company will monitor potential impacts of changes to US economic policy, including taxes and tariffs, as a result of the new administration. See “Forward-Looking Statements” above as well as the “Risk Factors” section within Item 1A.

Previous wording

The Company faces a highly competitive and dynamic retail landscape throughout the geographies where it does business, as well as a challenging global macro-economic environment as described above impacting the jewelry industry. Refer to Item 1 for further information on the Company’s business, markets and strategy.

Current wording

The Company faces a highly competitive and dynamic retail landscape throughout the geographies where it does business, as well as a challenging global macro-economic environment as described above impacting the jewelry industry. Refer to Item 1 for additional information on the Company’s business, markets and strategy.

Previous wording

Monthly average exchange rates are used to prepare the Company’s consolidated statements of operations. In Fiscal 2025, it is anticipated a five percent movement in the British pound to US dollar exchange rate would impact the Company’s income before income taxes by approximately $0.4 million, while a five percent movement in the Canadian dollar to US dollar exchange rate would impact the Company’s income before income taxes by approximately $1.6 million.

Current wording

Monthly average exchange rates are used to prepare the Company’s consolidated statements of operations. In Fiscal 2026, it is anticipated a five percent movement in the British pound to US dollar exchange rate would impact the Company’s income before income taxes by approximately $0.2 million, while a five percent movement in the Canadian dollar to US dollar exchange rate would impact the Company’s income before income taxes by approximately $0.6 million.

Previous wording

Management considers same store sales useful as it is a major benchmark used by investors to judge performance within the retail industry. Same store sales growth is calculated by comparison of sales in stores that were open in both the current and the prior fiscal year. Sales from stores that have been open for less than 12 months are excluded from the comparison until their 12-month anniversary. Similarly, sales from acquired businesses made within the last 12 months are excluded from the comparison until their 12-month anniversary. Sales from stores that were acquired during the period and have not been included in the Company’s results for both the current and prior period presented are also excluded from same store sales. Sales after the 12-month anniversary are compared against the equivalent prior period sales within the comparable store sales comparison. Stores closed in the current financial period are included up to the date of closure and the comparative period is correspondingly adjusted. Stores that have been relocated or expanded, but remain within the same local geographic area, are included within the comparison with no adjustment to either the current or comparative period. Stores that have been refurbished are also included within the comparison except for the period when the refurbishment was taking place, when those stores are excluded from the comparison both for the current year and for the comparative period. Same store sales are also impacted by certain accounting adjustments to sales, primarily related to the deferral of revenue from the Company’s extended service plans.

Current wording

Management considers same store sales useful as it is a major benchmark used by investors to judge performance within the retail industry. Same store sales is calculated by comparison of sales in stores that were open in both the current and the prior fiscal year. Sales from stores that have been open for less than 12 months are excluded from the comparison until their 12-month anniversary. Similarly, sales from acquired businesses made within the last 12 months are excluded from the comparison until their 12-month anniversary. Sales from stores that were acquired during the period and have not been included in the Company’s results for both the current and prior period presented are also excluded from same store sales. Sales after the 12-month anniversary are compared against the equivalent prior period sales within the comparable store sales comparison. Stores closed in the current financial period are included up to the date of closure and the comparative period is correspondingly adjusted. Stores that have been relocated or expanded, but remain within the same local geographic area, are included within the comparison with no adjustment to either the current or comparative period. Stores that have been refurbished are also included within the comparison except for the period when the refurbishment was taking place, when those stores are excluded from the comparison both for the current year and for the comparative period. Same store sales are also impacted by certain accounting adjustments to sales, primarily related to the deferral of revenue from the Company’s extended service plans.

Previous wording

eCommerce sales include all sales with customers that originate online, including direct to customer, ship to store, and BOPIS. eCommerce sales are included in the calculation of same store sales for the period and the comparative figures from the 12-month anniversary of the launch of the relevant website. Brick and mortar same store sales are calculated by removing the eCommerce sales from the same store sales calculation described above. Comparisons at the divisional level are made in local currency and consolidated comparisons are made at constant exchange rates and exclude the effect of exchange rate movements by recalculating the prior period results as if they had been generated at the weighted average exchange rate for the current period. Same store sales exclude the 53 rd week in the fiscal year in which it occurs.

Current wording

eCommerce sales include all sales with customers that originate online, including direct to customer, ship to store, and BOPIS. eCommerce sales are included in the calculation of same store sales for the period and the comparative figures from the 12-month anniversary of the launch of the relevant website. Brick and mortar same store sales are calculated by removing the eCommerce sales from the same store sales calculation described above. Comparisons at the divisional level are made in local currency and consolidated comparisons are made at constant exchange rates and exclude the effect of exchange rate movements by recalculating the prior period results as if they had been generated at the weighted average exchange rate for the current period.

Previous wording

Cost of sales is mostly composed of merchandise costs (net of discounts and allowances). Cost of sales also contains:

Current wording

•Merchandise costs, net of discounts and allowances;

Previous wording

•Occupancy costs such as rent, repairs and maintenance, depreciation and real estate taxes.

Current wording

•Store operating and occupancy costs such as rent, utilities, real estate taxes, repairs and maintenance (including common area maintenance), depreciation and amortization; and

Previous wording

•Distribution and warehousing costs including freight, processing, inventory shrinkage and related payroll.

Current wording

•Distribution and inventory-related costs, including freight, processing, inventory scrap, shrinkage and related compensation and benefits.

Previous wording

Signet primarily uses an average cost inventory methodology and, as jewelry inventory turns slowly, the impact of movements in the cost of diamonds and gold takes time to be fully reflected in the gross margin. Signet’s inventory turns faster in the fourth quarter than in the other three quarters, therefore, changes in the cost of merchandise is more impactful on the gross margin in that quarter. An increase in inventory turnover would accelerate the rate at which commodity costs impact gross margin.

Current wording

Signet primarily uses an average cost inventory methodology and, as jewelry inventory turns slowly, the impact of movements in inventory costs takes time to be fully reflected in gross margin. Signet’s inventory turns faster in the fourth quarter, therefore, changes in the cost of merchandise are more impactful on the gross margin in that quarter. An increase in inventory turnover would accelerate the rate at which commodity costs impact gross margin.

Previous wording

SG&A primarily includes store staff and store administrative costs as well as advertising and promotional costs. It also includes field support center expenses such as information technology, finance, eCommerce and other operating expenses (such as private label credit costs) not specifically categorized elsewhere in the consolidated statements of operations.

Current wording

SG&A is mostly composed of store staff and store administrative costs as well as advertising and promotional costs. It also includes centralized administrative expenses such as information technology, credit costs and other administrative operating expenses not specifically categorized elsewhere in the consolidated statements of operations.

Previous wording

The level of advertising expenditures can vary. The largest element of advertising expenditures has historically been national television advertising; however, Signet has continued to invest more on digital and social marketing in recent years as part of its transformational initiatives, in order to evolve its marketing allocations based on consumer habits, business needs, and maximize return on investment on its advertising investments.

Current wording

The level of advertising expenditures can vary year over year. In order to evolve its marketing allocations based on consumer habits, business needs, and maximize return on its advertising investments, the Company primarily focuses its spend on digital and social marking, supplemented by targeted national television advertising.

Previous wording

Other operating income (expense), net primarily consists of miscellaneous operating income and expense items such as litigation settlements, restructuring charges, gains or losses on sales of assets (including divestitures), foreign currency gains and losses, and gains and losses from undesignated derivative contracts. See Note 11 in Item 8 for further detail on the Company’s other operating income (expense), net.

Current wording

Other operating (expense) income, net primarily consists of miscellaneous operating income and expense items such as litigation settlements, restructuring charges, gains or losses on the sale of assets (including divestitures), foreign currency gains and losses, and gains and losses from undesignated derivative contracts. See Note 21 in Item 8 for further detail on the Company’s other operating (expense) income, net.

Previous wording

Signet’s total sales decreased 8.6% to $7.17 billion compared to $7.84 billion in the prior year. Signet’s same store sales decreased 11.6%, compared to a decrease of 6.1% in the prior year. These declines were driven by the impact of heightened inflationary pressure on consumers’ discretionary spending and the decline in the bridal category, driven by lower engagements. The total sales decrease was partially offset by the inclusion of the full year sales of Blue Nile, which was acquired in the third quarter of Fiscal 2023, and the impact of the 53 rd week as noted above.

Current wording

Signet’s total sales decreased 6.5% to $6.70 billion compared to $7.17 billion in the prior year. Signet’s same store sales decreased 3.4%, compared to a decrease of 11.6% in the prior year. These declines were driven primarily by a slower than expected engagement recovery, store closures and the prestige watch divestiture in the UK, integration challenges at the Digital brands in the first half of the year, the impact of the macro environment on consumer spending, and the impact of the 53 rd week as noted above.

Previous wording

eCommerce sales year to date were $1.64 billion, up $41.0 million or 2.6% compared to $1.60 billion in the prior year. eCommerce sales accounted for 22.9% of year to date sales, up from 20.4% of total sales in the prior year. Brick and mortar same store sales decreased 11.3% from the prior period. The increase in eCommerce sales as of percentage of sales is primarily due to the addition of Blue Nile to Signet’s portfolio in Fiscal 2023.

Current wording

eCommerce sales year to date were $1.52 billion, down $118.7 million or 7.2% compared to $1.64 billion in the prior year. eCommerce sales accounted for 22.7% of year to date sales, down slightly from 22.9% of total sales in the prior year. The decrease in total eCommerce sales was driven by the challenges in the Digital brands noted above. Brick and mortar same store sales decreased 2.9% when compared with the prior period.

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

AUR is an operating metric defined as merchandise sales divided by merchandise units. The AUR is measured each period based on the reported sales for the corresponding period presented.

Previous wording

The International reportable segment’s total sales decreased 8.4% to $430.7 million compared to $470.1 million in the prior year, primarily due to the underperformance of the Ernest Jones banner and the overall impact of heightened inflationary pressure on consumers’ discretionary spending. Total sales at constant exchange rates decreased 10.3%. The number of transactions decreased 10.6%, while ATV decreased 0.6% over prior year.

Current wording

The International reportable segment’s total sales decreased 13.4%, or 15.0% at constant exchange rates, to $373.2 million compared to $430.7 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. The number of units decreased 8.0% and AUR decreased 2.8% over prior year.

Previous wording

(1)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 wording

(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.

Previous wording

(2)Includes sales from Signet’s diamond sourcing operation.

Current wording

(3)Includes sales from Signet’s diamond sourcing operation.

Previous wording

In the fourth quarter of Fiscal 2024, gross margin was $1.08 billion or 43.3% of sales compared to $1.11 billion or 41.7% of sales in the prior year fourth quarter. The increase in gross margin rate for the fourth quarter of Fiscal 2024 compared to the fourth quarter of Fiscal 2023 reflects the continued growth of services and the strength of Company’s merchandise strategy of branding and newness driving overall higher merchandise margins.

Current wording

Gross margin for Fiscal 2025 was $2.6 billion or 39.2% of sales compared to $2.8 billion or 39.4% of sales in Fiscal 2024. In the fourth quarter of Fiscal 2025, gross margin was $1.00 billion or 42.6% of sales compared to $1.08 billion or 43.3% of sales in the prior year fourth quarter. The decrease in gross margin rate for both the Fiscal 2025 and fourth quarter comparative periods reflects the deleveraging of fixed costs on lower sales volume partially offset by higher merchandise margins, driven by increased AUR, growth in services, product newness and higher fashion penetration.

Previous wording

SG&A for Fiscal 2024 was $2.20 billion or 30.6% of sales compared to $2.21 billion or 28.2% of sales in Fiscal 2023. In the fourth quarter of Fiscal 2024 SG&A was $671.9 million or 26.9% of sales compared to $702.5 million or 26.3% of sales in the prior year fourth quarter. The increase in SG&A as a percentage of sales for both the Fiscal 2024 and fourth quarter comparative periods was primarily due to the deleveraging of fixed costs as a result of lower sales in the core banners, which were partially offset by overall cost savings initiatives.

Current wording

SG&A for Fiscal 2025 was $2.12 billion or 31.7% of sales compared to $2.20 billion or 30.6% of sales in Fiscal 2024. In the fourth quarter of Fiscal 2025 SG&A was $639.2 million or 27.2% of sales compared to $671.9 million or 26.9% of sales in the prior year fourth quarter. The increase in SG&A as a percentage of sales for both the Fiscal 2025 and fourth quarter comparative periods was driven by higher advertising expense and deleverage of fixed costs, primarily the fixed portion of labor. In addition, the second half of Fiscal 2025 included approximately $8.0 million of leadership transition costs, including $6.0 million in the fourth quarter.

Previous wording

During Fiscal 2024, the Company recorded non-cash, pre-tax asset impairments related to the impairment of long-lived assets and intangible assets of $9.1 million. During the fourth quarter of Fiscal 2024, the Company recorded non-cash, pre-tax asset impairments of $3.4 million, primarily related to intangible assets.

Current wording

During Fiscal 2024, the Company recorded pre-tax asset impairments related to the impairment of long-lived assets and intangible assets of $9.1 million. During the fourth quarter of Fiscal 2024, the Company recorded pre-tax asset impairments of $3.4 million, primarily related to intangible assets.

Previous wording

In Fiscal 2024, other operating income was $2.9 million compared to an expense of $209.9 million in Fiscal 2023. Fiscal 2024 was primarily driven by the net gain on divestitures of $12.3 million partially offset by restructuring charges of $7.5 million and foreign exchange losses. Fiscal 2023 was primarily driven by the litigation charges of $203.8 million.

Current wording

In Fiscal 2025, other operating expense was $20.3 million compared to income of $2.9 million in Fiscal 2024. Fiscal 2025 was primarily driven by restructuring charges of $11.5 million and foreign exchange losses of $2.2 million. Fiscal 2024 was primarily driven by the net gain on divestitures of $12.3 million partially offset by restructuring charges of $7.5 million and foreign exchange losses of $3.0 million.

Previous wording

In the fourth quarter of Fiscal 2024, other operating income was $10.3 million compared to an expense of $18.4 million in the fourth quarter of Fiscal 2023. The fourth quarter of Fiscal 2024 was primarily driven by the net gain on divestitures of $13.6 million partially offset by restructuring charges of $1.9 million. The fourth quarter of Fiscal 2023 was primarily driven by charges related to a litigation matter of $15.9 million.

Current wording

In the fourth quarter of Fiscal 2025, other operating expense was $7.1 million compared to income of $10.3 million in the fourth quarter of Fiscal 2024. The fourth quarter of Fiscal 2025 included restructuring charges of $0.5 million and foreign exchange losses of $0.8 million. The fourth quarter of Fiscal 2024 was primarily driven by the net gain on divestitures of $13.6 million partially offset by restructuring charges of $1.9 million.

Previous wording

(2)Fiscal 2024 includes a $12.3 million gain from the divestiture of the UK prestige watch business, net of transaction costs and $1.2 million of restructuring charges.

Current wording

In Fiscal 2025, operating income in the International reportable segment was $1.0 million, or 0.3% of segment sales, and includes $5.2 million of restructuring charges and $2.6 million of net losses from the previously announced divestiture of the UK prestige watch business. In Fiscal 2024, operating income in the International reportable segment was $13.1 million, or 3.0% of segment sales, and includes a $12.3 million gain from the divestiture of the UK prestige watch business.

Previous wording

Income tax benefit for Fiscal 2024 was $170.6 million, with an effective tax rate (“ETR”) of (26.7)%, compared to an income tax expense of $74.5 million, with an effective tax rate of 16.5% in Fiscal 2023. The ETR and tax benefit for Fiscal 2024 reflects the impact of a $263.3 million deferred tax asset recorded in the fourth quarter related to the enactment of the Corporate Income Tax Act of 2023 (“Act”) in Bermuda. The Act included an economic transition adjustment intended to be a fair and equitable transition into the new tax regime, and resulted in a deferred tax benefit for the Company. Other factors impacting the effective rate in Fiscal 2024 were the favorable impact of an uncertain tax position of $20.5 million settled in the fourth quarter, the foreign rate differences and benefits from global reinsurance and financing arrangements, and other discrete tax benefits recognized. The Fiscal 2024 discrete tax benefits relate to the reclassification of remaining taxes on the pension settlement out of AOCI of $4.1 million, the excess tax benefit for share-based compensation which vested during the year of $7.7 million and the $1.7 million reversal of valuation allowance related to capital losses in the UK. The ETR for Fiscal 2023 was lower than the US federal income tax rate primarily due to the favorable impacts from the Company’s global reinsurance and financing arrangements, partially offset by the unfavorable impact of an uncertain tax position related to a prior year of $20.5 million recorded in Fiscal 2023. Refer to Note 10 of Item 8 for additional information.

Current wording

Income tax expense for Fiscal 2025 was $63.0 million, with an effective tax rate (“ETR”) of 50.7%, compared to an income tax benefit of $170.6 million, with an effective tax rate of (26.7)% in Fiscal 2024. The ETR for Fiscal 2025 was different than the US federal income tax rate, primarily due to the non-deductible impairment charges described above, partially offset by the favorable impact from the Company’s global reinsurance and financing arrangements. The ETR and tax benefit for Fiscal 2024 reflects the impact of a $263.3 million deferred tax asset recorded in the fourth quarter related to the enactment of the Corporate Income Tax Act of 2023 (the “Act”) in Bermuda. The Act included an economic transition adjustment intended to be a fair and equitable transition into the new tax regime and resulted in a deferred tax benefit for the Company. Other factors impacting the effective rate in Fiscal 2024 were the favorable impact of an uncertain tax position of $20.5 million settled in the fourth quarter, the foreign rate differences and benefits from global reinsurance and financing arrangements, and other discrete tax benefits recognized. The Fiscal 2024 discrete tax benefits relate to the reclassification of remaining taxes on the pension settlement out of AOCI of $4.1 million, the excess tax benefit for share-based compensation which vested during the year of $7.7 million and the $1.7 million reversal of valuation allowance related to capital losses in the UK.

Previous wording

In the fourth quarter of Fiscal 2024, income tax benefit was $199.2 million, with an ETR of (46.7)%, compared to expense of $89.5 million, with an ETR of 24.4% in the fourth quarter of Fiscal 2023. The ETR and tax benefit for the fourth quarter of Fiscal 2024 were primarily driven by the $263.3 million deferred tax benefit resulting from the Bermuda economic transition adjustment discussed above and the favorable impact of an uncertain tax position of $20.5 million settled in the fourth quarter. The ETR for the fourth quarter of Fiscal 2023 was higher than the US federal income tax rate, primarily due to the unfavorable impact of an uncertain tax position related to a prior year of $20.5 million recorded in the fourth quarter of Fiscal 2023, partially offset by favorable impacts from the Company’s global reinsurance and financing arrangements.

Current wording

In the fourth quarter of Fiscal 2025, income tax expense was $53.5 million, with an ETR of 34.7%, compared to an income tax benefit of $199.2 million, with an ETR of (46.7)% in the fourth quarter of Fiscal 2024. The ETR for the fourth quarter of Fiscal 2025 was higher than the US federal income tax rate, primarily due to the non-deductible impairment charges described above, partially offset by the favorable impact from the Company’s global reinsurance and financing arrangements. The ETR and tax benefit for the fourth quarter of Fiscal 2024 were primarily driven by the $263.3 million deferred tax benefit resulting from the Bermuda economic transition adjustment discussed above and the favorable impact of an uncertain tax position of $20.5 million settled in the fourth quarter.

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 provided by 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. Adjusted free cash flow, a non-GAAP measure, excludes the proceeds from the sale of in-house finance receivables. Free cash flow and adjusted free cash flow are indicators frequently used by management in evaluating its overall liquidity needs and determining appropriate capital allocation strategies. Free cash flow and adjusted free cash flow do not represent the residual cash flow available for discretionary purposes. See Note 12 of Item 8 for additional information regarding the sale of the in-house credit card receivable portfolio.

Current wording

Free cash flow is a non-GAAP measure defined as the net cash provided by operating activities less capital expenditures. 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

(1)Fiscal 2024 includes a credit to income related to the adjustment of a prior litigation accrual recognized in the first quarter of Fiscal 2023. Refer to Note 28 of Item 8 for additional information.

Current wording

(1)Fiscal 2025 primarily includes asset impairment charges related to goodwill and indefinite-lived intangible assets. Fiscal 2024 charges were primarily the result of the Company’s rationalization of its store footprint. Fiscal 2023 includes asset impairment charges related to the Company’s headquarters. Refer to Note 14 and Note 16 of Item 8 for additional information.

Previous wording

(4) Includes gain on sale of the UK prestige watch business, net of transaction costs. Refer to Note 4 of Item 8 for additional information.

Current wording

(3) Fiscal 2025 includes charges associated with the previously announced divestiture of the UK prestige watch business. Fiscal 2024 includes gain on sale of the UK prestige watch business, net of transaction costs. Refer to Note 4 of Item 8 for additional information.

Previous wording

Non-GAAP operating income is a non-GAAP measure defined as operating income excluding the impact of certain items which management believes are not necessarily reflective of normal operational performance during a period. Management finds the information useful when analyzing operating results to appropriately evaluate the performance of the business without the impact of these certain items. Management believes the consideration of measures that exclude such items can assist in the comparison of operational performance in different periods which may or may not include such items. Management also utilizes non-GAAP operating margin, defined as non-GAAP operating income as a percentage of total sales, to further evaluate the effectiveness and efficiency of the Company’s flexible operating model.

Current wording

Adjusted operating income is a non-GAAP measure defined as operating income excluding the impact of certain items which management believes are not necessarily reflective of normal operational performance during a period. Management finds the information useful when analyzing operating results to appropriately evaluate the performance of the business without the impact of these certain items. Management believes the consideration of measures that exclude such items can assist in the comparison of operational performance in different periods which may or may not include such items. Management also utilizes adjusted operating margin, defined as adjusted operating income as a percentage of total sales, to further evaluate the effectiveness and efficiency of the Company’s flexible operating model.

Previous wording

Non-GAAP diluted EPS is a non-GAAP measure defined as diluted EPS excluding the impact of certain items which management believes are not necessarily reflective of normal operational performance during a period. Management finds the information useful when analyzing financial results in order to appropriately evaluate the performance of the business without the impact of these certain items. In particular, management believes the consideration of measures that exclude such items can assist in the comparison of performance in different periods which may or may not include such items. The Company estimates the tax effect of all non-GAAP adjustments by applying a statutory tax rate to each item. The income tax items represent the discrete amount that affected the diluted EPS during the period.

Current wording

Adjusted diluted EPS is a non-GAAP measure defined as diluted EPS excluding the impact of certain items which management believes are not necessarily reflective of normal operational performance during a period. Management finds the information useful when analyzing financial results in order to appropriately evaluate the performance of the business without the impact of these certain items. In particular, management believes the consideration of measures that exclude such items can assist in the comparison of performance in different periods which may or may not include such items. The Company estimates the tax effect of all non-GAAP adjustments by applying a statutory tax rate to each item. The income tax items represent the discrete amount that affected the diluted EPS during the period.

Previous wording

(6) Fiscal 2024 relates to the impact of the deferred income tax benefit from the Bermuda economic transition adjustment. Refer to Note 10 of Item 8 for additional information.

Current wording

(10) Relates to the impact of the deferred income tax benefit from the Bermuda economic transition adjustment. Refer to Note 10 of Item 8 for additional information.

Previous wording

The adjusted debt and adjusted net debt leverage ratios are non-GAAP measures calculated by dividing Signet’s adjusted debt or adjusted net debt by adjusted EBITDAR. Adjusted debt is a non-GAAP measure defined as debt recorded in the consolidated balance sheet, plus redeemable Series A Convertible Preference Shares (“Preferred Shares”), plus an adjustment for operating leases (5x annual rent expense). Adjusted net debt, a non-GAAP measure, is adjusted debt less the cash and cash equivalents on hand as of the balance sheet dates. Adjusted EBITDAR is a non-GAAP measure, defined as earnings before interest and income taxes, depreciation and amortization, share-based compensation expense, other non-operating expense, net and certain non-GAAP accounting adjustments (“Adjusted EBITDA”) and further excludes minimum fixed rent expense for properties occupied under operating leases. Adjusted EBITDA and Adjusted EBITDAR are considered important indicators of operating performance as they exclude the effects of financing and investing activities by eliminating the effects of interest, depreciation and amortization costs and certain accounting adjustments. Management believes these financial measures are helpful to investors and analysts to analyze trends in Signet’s business and evaluate Signet’s performance. The adjusted debt leverage ratio is a key priority of the Company’s capital allocation strategy used in measuring the Company’s optimized capital structure. The adjusted net debt leverage ratio is supplemental to the adjusted debt ratio as it is useful to both investors and management to consider cash on hand available to pay down or issue debt.

Current wording

The debt and net debt leverage ratios are non-GAAP measures calculated by dividing Signet’s debt or net debt by adjusted EBITDA. Debt as used in these ratios is defined as current or long-term debt recorded in the consolidated balance sheet plus Preferred Shares. Net debt as used in these ratios is debt less the cash and cash equivalents on hand as of the balance sheet date. The adjusted debt and adjusted net debt leverage ratios are non-GAAP measures calculated by dividing Signet’s adjusted debt or adjusted net debt by adjusted EBITDAR. Adjusted debt is a non-GAAP measure defined as debt recorded in the consolidated balance sheets, plus Preferred Shares, plus an adjustment for operating lease liabilities. Adjusted net debt, a non-GAAP measure, is adjusted debt less the cash and cash equivalents on hand as of the balance sheet dates. Management believes these financial measures are helpful to investors and analysts to analyze trends in Signet’s business and evaluate Signet’s performance. The debt and adjusted debt leverage ratios are key to the Company’s capital allocation strategy as measures of the Company’s optimized capital structure. The net debt and adjusted net debt leverage ratios are supplemental to the debt and adjusted debt ratios as both investors and management find it useful to consider cash and cash equivalents available to pay down debt.

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 February 3, 2024, the Company had $1.4 billion of cash and cash equivalents, $147.8 million of outstanding debt related to the 4.70% senior unsecured notes due in June 2024 (the “Senior Notes”) and no outstanding borrowings on the ABL Revolving Facility. The available borrowing capacity on the ABL Revolving Facility was $1.1 billion as of February 3, 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 February 1, 2025, the Company had $604.0 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 February 1, 2025.

Previous wording

The Company has a disciplined approach to capital allocation, utilizing the following capital priorities: 1) invest in its business to drive growth through both organic investments and acquisitions; 2) optimize its capital structure and maintain an adjusted leverage ratio (a non-GAAP measure as defined in the Non-GAAP Measures section above) of less than 2.75x; and 3) return cash to shareholders through share repurchases and dividends.

Current wording

The Company has a disciplined approach to capital allocation, utilizing the following capital priorities: 1) drive growth through both organic investments and acquisitions; 2) optimize its capital structure and maintain an adjusted leverage ratio (a non-GAAP measure as defined in the Non-GAAP Measures section above) at or below our stated goal; and 3) return cash to shareholders through share repurchases and dividends.

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, enhancing the Company’s new and modernized eCommerce platform and optimizing a connected commerce shopping journey for its customers. In addition, cost reductions and structural improvements since the Company’s transformation began have generated annual cost savings of more than $800 million, which has fueled the investments described above. 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 overall health of the Company’s inventory, utilizing a disciplined approach to drive continued reductions in sell down and clearance inventory.

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 in acquisitions and new capabilities built during the past few years laid the foundation for the Company’s growth, including prioritizing investments in digital technology and data analytics, and enhancing and optimizing a connected commerce shopping journey for its customers, all of which has been funded through cost reductions and structural improvements in the Company’s operations. 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 $153.0 million for capital expenditures and $47.4 million related to investments in digital and cloud IT initiatives in Fiscal 2025.