Fiscal 2018 Holiday Sales Results. Wednesday, January 10, 2018

Transcription

1 Fiscal 2018 Hliday Sales Results Wednesday, January 10, 2018

2 Frward Lking Statements & Other Disclsure Matters Frward-Lking Statements This presentatin cntains statements which are frward-lking statements within the meaning f the Private Securities Litigatin Refrm Act f These statements, based upn management s beliefs and expectatins as well as n assumptins made by and data currently available t management, appear in a number f places thrughut this dcument and include statements regarding, amng ther things, Signet s results f peratin, financial cnditin, liquidity, prspects, grwth, strategies and the industry in which Signet perates. The use f the wrds expects, intends, anticipates, estimates, predicts, believes, shuld, ptential, may, frecast, bjective, plan, r target, and ther similar expressins are intended t identify frward-lking statements. These frward-lking statements are nt guarantees f future perfrmance and are subject t a number f risks and uncertainties, including but nt limited t, the effect f federal tax refrm and adjustments relating t such impact n the cmpletin f ur furth quarter and year-end financial statements, changes in interpretatin r assumptins, and/r updated regulatry guidance regarding the U.S. tax refrm, the benefits and utsurcing f the credit prtfli sale including future financial and perating results, the timing and expected cmpletin f the secnd phase f the credit utsurcing, general ecnmic cnditins, the impact f weather-related incidents n Signet s business, the benefits and integratin f R2Net, regulatry changes fllwing the United Kingdm s annuncement t exit frm the Eurpean Unin, a decline in cnsumer spending, the merchandising, pricing and inventry plicies fllwed by Signet, the reputatin f Signet and its brands, the level f cmpetitin in the jewelry sectr, the cst and availability f diamnds, gld and ther precius metals, regulatins relating t custmer credit, seasnality f Signet s business, financial market risks, deteriratin in custmers financial cnditin, exchange rate fluctuatins, changes in Signet s credit rating, changes in cnsumer attitudes regarding jewelry, management f scial, ethical and envirnmental risks, security breaches and ther disruptins t Signet s infrmatin technlgy infrastructure and databases, inadequacy in and disruptins t internal cntrls and systems, changes in assumptins used in making accunting estimates relating t items such as extended service plans and pensins, risks related t Signet being a Bermuda crpratin, the impact f the acquisitin f Zale Crpratin n relatinships, including with emplyees, suppliers, custmers and cmpetitrs, and ur ability t successfully integrate Zale Crpratin s peratins and t realize synergies frm the transactin. Signet will cntinue t analyze the full effects f the U.S. tax refrm n its financial statements and peratins, and will prvide yu mre detail n ur furth quarter earnings call. The impact f the U.S. tax refrm may differ frm this estimate, pssibly materially, due t, amng ther things, changes in interpretatins and assumptins Signet has made, guidance that may be issued and actins Signet may take as a result f the U.S. tax refrm. Fr a discussin f these and ther risks and uncertainties which culd cause actual results t differ materially frm thse expressed in any frward-lking statement, see the Risk Factrs sectin f Signet's Fiscal 2017 Annual Reprt n Frm 10-K filed with the SEC n March 16, 2017 and quarterly reprts n Frm 10-Q. Signet undertakes n bligatin t update r revise any frward-lking statements t reflect subsequent events r circumstances, except as required by law.

3 Hliday Seasn Summary Same stre sales ( SSS ) dwn 5.3%, reflecting psitive prgress n strategic pririties, ffset primarily by the credit utsurcing transitin impact: ecmmerce sales grwth f 48%, driven by R2Net and Sterling divisin Zale divisin SSS grwth f 4.0%, with Zales banner up 4.6% Sterling divisin SSS dwn 8.5%, primarily due t credit utsurcing transitin Cntinuing t address transitin issues related t credit utsurcing: System disruptins largely reslved applicatin vlumes and apprval rates have returned t pre-cnversin levels Transitinal issues, such as changes in perating prcess, taking lnger t nrmalize Sales at Kay stres and in bridal categry disprprtinately impacted 3

4 Key Hliday Sales Drivers Innvatin and Newness acrss Prduct Assrtment: Strng bridal sales at Zale driven by new slitaire designs and fancy cut diamnds New Enchanted Disney cllectin and line extensins in Vera Wang Lve and Chsen delivered strng results Successful trend identificatin and fresh assrtment drve slid fashin perfrmance, with sales frm new fashin merchandise up duble-digits in Signet s Nrth America banners Assrtments in stacking and layering, diamnd bracelets and yellw gld and at price pints under $1,000 were tp perfrmers in fashin Marketing and Prmtinal Strategies: Shifted marketing strategy t higher ROI digital advertising, increasing digital spend by 35%, t 29% f ttal spend Investments in paid digital marketing and search engine ptimizatin imprved traffic and custmer engagement Scial media drve 55% increase in impressins and 146% increase in click-thrugh rates Targeted prmtins supprted by chesive mnichannel messaging wrked well at Zale 4

5 Lking Ahead Fiscal 2018 guidance updated reflecting psitive impact frm U.S. tax refrm: SSS dwn mid-single digit, in line with Nvember 21 guidance EPS f $6.17 t $6.22, within previus guidance range, excluding the impact f U.S. tax refrm EPS f $6.45 t $6.50 reflecting the expected benefit f U.S. tax refrm¹ Cmmitted t strng executin f strategic pririties: Addressing transitin issues related t credit utsurcing remains a tp pririty Cntinuing t take actin t drive Custmer First, OmniChannel and Culture f Agility and Efficiency bjectives t lead grwth in the industry ver time (1) Excludes the impact f tax refrm in the United States related t revaluatin f net deferred tax liabilities estimated t have a favrable impact f $0.50 t $0.67 n EPS. 5

6 Sales Perfrmance Hliday Seasn Same Stre Sales % 1 Nn-same stre sales %, net 2 Ttal sales % at cnstant exchange rate Exchange translatin impact % Ttal sales % Ttal sales (in millins $) Kay Jared R2Net Reginal brands Sterling Jewelers divisin ,146.4 Zales Jewelers Grdn s Jewelers Zale US Jewelry Peples Jewellers Mappins Zale Canada Jewelry Zale Jewelry Piercing Pagda Zale divisin H.Samuel Ernest Jnes UK Jewelry divisin Other segment Signet ,881.7 (1) Fr stres pen fr at least 12 mnths. (2) Fr stres nt pen in the last 12 mnths. 6

7 A Clser Lk at Sterling Divisin Credit Transitin Credit was a material driver f hliday sales decline in Sterling Sterling credit sales declined $102.1 millin, r 14.4% ver prir year Lease sales f $13.4 millin, partially ffsetting credit sales decline New custmers and existing accunts cntributed abut equally t verall declines Applicatin vlumes and apprval rates gradually mved t be mre in-line with pre-cnversin levels, while prcess-related issues persist Cntinuing t take actin t address utstanding issues and strengthen credit prgram Adjustments t the in-stre prcess and credit prgrams Mre real-time and detailed reprting Increased cmmunicatins and marketing related t credit Zale US jewelry credit sales were up $1.6 millin, r 0.8% ver prir year 7

8 Q4 & FY 2018 Sales and Earnings Guidance Q4 Fiscal 2018 Previus Updated (Excluding U.S. Tax Refrm) Updated (Including U.S. Tax Refrm)² Same stre sales Dwn lw t mid single-digit % Dwn mid single-digit % Dwn mid single-digit % EPS¹ $3.86 t $4.26 $3.93 t $3.98 $4.21 t $4.26 Weighted average cmmn shares 67 millin 67 millin Fiscal Year 2018 Previus Updated (Excluding U.S. Tax Refrm) Updated (Including U.S. Tax Refrm)² Same stre sales Dwn mid single-digit % Dwn mid single-digit % Dwn mid single-digit % EPS¹ $6.10 t $6.50 $6.17 t $6.22 $6.45 t $6.50 Effective tax rate 22% 18% 14% - 15% Weighted average cmmn shares 69 millin t 70 millin 69 millin t 70 millin 69 millin t 70 millin (1) Includes net impact f utsurcing the credit prtfli and related transactin csts, net impact f R2Net acquisitin, separatin csts, and share repurchases assciated with the credit transactin prceeds. (2) Excludes the impact f tax refrm in the United States related t revaluatin f net deferred tax liabilities estimated t have a favrable impact f $0.50 t $0.67 n EPS. 8

9 Signet Jewelers Ltd.