SOURCE: Signet Jewelers Limited

May 26, 2011 07:30 ET

Signet Reports 47.5% Increase in EPS for First Quarter Driven by a 10.2% Rise in Same Store Sales

HAMILTON, BERMUDA--(Marketwire - May 26, 2011) - Signet Jewelers Limited ("Signet") (NYSE: SIG) (LSE: SIG), the world's largest specialty retail jeweler, today announced its results for the 13 weeks ended April 30, 2011 ("Q1 Fiscal 2012(1)").

Highlights

--  Same store sales: up 10.2%
--  Total sales: $887.3 million, up 10.2%
--  Income before income taxes: $117.8 million, up $43.7 million or 59.0%
--  Basic and diluted earnings per share: both $0.87, up 47.5% and 50.0%
    respectively
--  New $400 million revolving credit facility entered into on May 24, 2011

Mike Barnes, Chief Executive Officer, commented: "We are very pleased with our strong start to the year, leading to record results for the first quarter. Our performance was led by our US division, with the UK division continuing to operate well in a challenging economy. We believe we continued profitable market share gains due to favorable reception to our product offerings as a result of superior quality and craftsmanship, attentive customer service and memorable marketing campaigns. I would like to thank all at Signet that contributed to this great performance.

The strong sales momentum has continued into the start of the second quarter, and our focus remains on enhancing our sustainable competitive advantages, improving our execution and maintaining financial flexibility. We remain well positioned to continue to increase sales productivity and achieve our financial objectives for this year."

Conference Call

There will be a conference call today at 8:30 a.m. Eastern Time (1:30 p.m. BST and 5:30 a.m. Pacific Time) and a simultaneous audio webcast and slide presentation available at www.signetjewelers.com. The slides are available to be downloaded from the website ahead of the conference call. To help ensure the conference call begins in a timely manner, all participants should dial in 5 to 10 minutes prior to the scheduled start time. The call details are:

    US dial-in:          +1 (212) 444 0412       Access code: 2298064
    European dial-in:    +44 (0)20 7806 1953     Access code: 2298064

A replay of the conference call and a transcript of the call will be posted on Signet's website as soon as is practical after the call has ended and will be available for one year.

(1) Fiscal 2011 is the year ended January 29, 2011 and Fiscal 2012 is the year ending January 28, 2012.

FIRST QUARTER FISCAL 2012 OVERVIEW

The strong results for Q1 Fiscal 2012 were led by a same store sales increase of 10.2% (Q1 Fiscal 2011: 5.8%), total sales were up by 10.2% to $887.3 million (Q1 Fiscal 2011: $805.4 million) and operating margin improved by 310 basis points to 13.4% (Q1 Fiscal 2011: 10.3%). As a result, income before income taxes and diluted earnings per share rose to $117.8 million (Q1 Fiscal 2011: $74.1 million) and $0.87 (Q1 Fiscal 2011: $0.58), up by 59.0% and 50.0% respectively.

Free cash flow was $92.4 million (Q1 Fiscal 2011: $177.9 million); non-GAAP measure, see Note 3. At April 30, 2011, Signet had no long term debt (May 1, 2010: $229.1 million) and cash and cash equivalents of $394.1 million (May 1, 2010: $447.1 million).

NEW REVOLVING CREDIT FACILITY

On May 24, 2011, Signet entered into a $400 million senior unsecured multi-currency five year revolving credit facility agreement that will be used for working capital requirements and general corporate purposes. The new credit agreement provides improved credit terms, lower fees and applicable interest rate margins and provides an enhanced financial structure until 2016.

The new facility replaces an existing $300 million facility entered into in June 2008, which was due to expire in June 2013. Unamortized facility fees of $1.3 million associated with the prior credit agreement will be written off in the quarter ending July 30, 2011.

RESULTS OF OPERATIONS

Sales and operating income

In Q1 Fiscal 2012, Signet's same store sales were up 10.2%, compared to a rise of 5.8% in Q1 Fiscal 2011. Total sales rose by 10.2% to $887.3 million (Q1 Fiscal 2011: $805.4 million). The breakdown of the sales performance is set out in Table 1 below.

Table 1                                                Q1 Fiscal 2012
                                                 -------------------------
                                                   US       UK     Signet
Sales, million                                   $ 738.0  $ 149.3  $ 887.3
% of total                                          83.2%    16.8%   100.0%

                                                   US       UK     Signet
                                                    %        %        %
                                                 -------  -------  -------
Change in same store sales                          12.5      0.2     10.2
Change in store space                               (1.1)    (1.5)    (1.2)
                                                 -------  -------  -------
Total change in sales at constant exchange
 rates(1,2)                                         11.4     (1.3)     9.0
Exchange translation impact(1)                        --      5.8      1.2
                                                 -------  -------  -------
Change in sales as reported                         11.4      4.5     10.2
                                                 -------  -------  -------

(1) The average US dollar to pound sterling exchange rate in Q1 Fiscal 2012
    was $1.62 (Q1 Fiscal 2011: $1.53).
(2) Non-GAAP measure, see Note 3.

In Q1 Fiscal 2012, Signet's gross margin was $349.7 million (Q1 Fiscal 2011: $293.6 million), up by $56.1 million or 19.1%. The gross margin rate increased by 290 basis points to 39.4% (Q1 Fiscal 2011: 36.5%), with the gross merchandise margin up by 50 basis points. The US division's gross merchandise margin was up by 70 basis points compared to Q1 Fiscal 2011, benefiting from selective price increases and reduced discounting, which more than offset higher commodity costs. The UK division's gross merchandise margin declined by 30 basis points, with the impact of an increase in the cost of commodities, a higher value added tax rate, and currency hedging benefits in Q1 Fiscal 2011 that were not repeated, being largely offset by a number of price increases.

Gross margin also benefited from an improved net bad debt to total US sales ratio compared to Q1 Fiscal 2011 and leverage on store occupancy costs in the US division. The net bad debt to total US sales ratio was 1.6% (Q1 Fiscal 2011: 2.6%). In-house customer finance participation in the US division was 53.8% (Q1 Fiscal 2011: 51.9%).

Selling, general and administrative expenses for Q1 Fiscal 2012 were $263.8 million (Q1 Fiscal 2011: $238.5 million), up by 10.6%. The US division's expenses were well controlled and increases primarily reflected additional advertising expenses, performance based bonus accruals and targeted increases in other employee-related costs. In the UK division, selling, general and administrative expenses were also tightly controlled at constant exchange rates, but increased in US dollars due to movements in exchange rates. Unallocated costs, principally central costs, which include corporate and general administrative functions, were $7.3 million (Q1 fiscal 2011: $4.2 million), primarily reflecting changes in executive management structure.

In Q1 Fiscal 2012, other operating income increased by $5.1 million to $32.8 million (Q1 Fiscal 2011: $27.7 million), up by 18.4%. This reflected a higher level of outstanding receivable balances.

In Q1 Fiscal 2012, net operating income increased by $35.9 million to $118.7 million (Q1 Fiscal 2011: $82.8 million), up 43.4%. The US division's net operating income increased by $37.8 million to $126.2 million (Q1 Fiscal 2011: $88.4 million), up 42.8%, while the net operating loss of the UK division decreased by $1.2 million to $0.2 million (Q1 Fiscal 2011: $1.4 million loss).

Operating margin increased by 3.1% to 13.4% (Q1 Fiscal 2011: 10.3%). The US division's operating margin was up by 380 basis points to 17.1% (Q1 Fiscal 2011: 13.3%) and that of the UK division improved by 90 basis points to (0.1)% (Q1 Fiscal 2011: (1.0)%).

Interest expense, net

In Q1 Fiscal 2012, interest income was $0.6 million (Q1 Fiscal 2011: $0.1 million). Interest expense was $1.5 million (Q1 Fiscal 2011: $8.8 million), the decrease reflected the prepayment during Fiscal 2011 of $280.0 million of private placement notes that incurred a blended fixed rate of interest of 8.11%.

Income before income taxes

For Q1 Fiscal 2012, income before income taxes increased by $43.7 million to $117.8 million (Q1 Fiscal 2011: $74.1 million), up 59.0%.

Income taxes

Income tax expenses in Q1 Fiscal 2012 were $42.4 million (Q1 Fiscal 2011: $23.8 million), an effective tax rate of 36.0% (Q1 Fiscal 2011: 32.1%). The increase in the effective tax rate was due to a greater proportion of US income taxed at higher rates and the favorable resolution of non-recurring prior year tax issues in Q1 Fiscal 2011.

Net income

Net income for Q1 Fiscal 2012 increased by $25.1 million to $75.4 million (Q1 Fiscal 2011: $50.3 million), up 49.9%.

Earnings per share

For Q1 Fiscal 2012, basic and diluted earnings per share were both $0.87 (Q1 Fiscal 2011: $0.59 and $0.58), an increase of 47.5% and 50.0% respectively.

DIVISIONAL REVIEW

US division (about 80% of annual sales)

In Q1 Fiscal 2012, the US division's sales were up by 11.4% to $738.0 million (Q1 Fiscal 2011: $662.5 million) and same store sales increased by 12.5% compared to a rise of 7.3% in Q1 Fiscal 2011. See Table 2 below for further analysis of sales.

Table 2                                          Change from previous year
                                                 -------------------------
Q1 Fiscal 2012                          Average                    Average
                                          unit             Same      unit
                                        selling   Total    store   selling
                                Sales   price(1)  sales    sales   price(1)
Kay                            $ 435.4m $    360   13.4%     13.9%    11.8%
Jared                          $ 227.8m $    798   12.7%     11.8%     7.7%
Regional brands                $  74.8m $    385   (2.1)%     6.5%    13.7%
                               --------
US division                    $ 738.0m $    426   11.4%     12.5%    12.1%
                               --------

(1) Excludes the charm bracelet category, a product with an average unit
    selling price considerably lower, and a multiple purchase and frequency
    of purchase much greater, than products historically sold by the
    division.

Stores opened and closed in Q1 Fiscal 2012 are set out in Table 3 below.

                                                                   Annual
Table 3                 Kay      Kay    Regional                 net space
                      mall(1) off-mall   brands  Jared(2) Total    change
January 29, 2011          780      128      229       180 1,317        (2)%
Opened                      1        1       --        --     2
Closed                     (2)      --       (3)       --    (5)
                      -------  -------  -------  -------- -----
April 30, 2011            779      129      226       180 1,314
Openings, planned           8       11       --         4    23
Closures, planned          (5)      (7)     (18)       --   (30)
                      -------  -------  -------  -------- -----
January 28, 2012          782      133      208       184 1,307         0%
                      -------  -------  -------  -------- -----

(1) Includes stores in downtown locations.
(2) A Jared store is equivalent in size to about four mall stores.

UK division (about 20% of annual sales)

In Q1 Fiscal 2012, the UK division's sales were up by 4.5% to $149.3 million (Q1 Fiscal 2011: $142.9 million), down 1.3% at constant exchange rates; non-GAAP measure, see Note 3. Same store sales increased by 0.2%, compared to a decline of 0.2% in Q1 Fiscal 2011. See Table 4 below for further analysis of sales.

Table 4                           Change from previous year
                 ---------------------------------------------------------
Q1 Fiscal 2012             Average             Sales at            Average
                            unit               constant     Same     Unit
                           selling    Total    exchange    store   Selling
                  Sales   price(1,2)  sales    rates(3,4)  sales   price(2)
H.Samuel         $  79.5m     GBP 61     6.7%       0.7%     2.7%      8.9%
Ernest Jones(5)  $  69.8m    GBP 279     2.1%      (3.5)%   (2.4)%    10.3%
                 --------
UK division      $ 149.3m     GBP 97     4.5%      (1.3)%    0.2%      9.0%
                 --------

(1) The average unit selling price(2) for H.Samuel was $99, for Ernest
    Jones was $452 and for the UK division was $157.
(2) Excludes the charm bracelet category, a product with an average unit
    selling price considerably lower, and a multiple purchase and frequency
    of purchase much greater, than product historically sold by the
    division.
(3) Non-GAAP measure, see Note 3.
(4) The exchange translation impact on the total sales of H.Samuel was
    6.0%, and for Ernest Jones was 5.6%.
(5) Includes stores selling under the Leslie Davis nameplate.

Stores opened and closed in Q1 Fiscal 2012, together with planned changes for the balance of Fiscal 2012 are set out below.

Table 5
                                          Ernest               Annual net
                             H.Samuel     Jones(1)   Total    space change
January 29, 2011                   338        202        540           (2)%
Opened                              --         --         --
Closed                              (1)        (1)        (2)
                             ---------  ---------  ---------
April 30, 2011                     337        201        538
Openings, planned                    1          2          3
Closures, planned                  (12)        (7)       (19)
                             ---------  ---------  ---------
January 28, 2012                   326        196        522           (3)%
                             ---------  ---------  ---------

(1) Includes stores selling under the Leslie Davis nameplate.

Signet operated 1,852 specialty retail jewelry stores at April 30, 2011, these included 1,314 stores in the US, where its store concepts include "Kay Jewelers", "Jared The Galleria Of Jewelry" and a number of regional names. At the same date, Signet also operated 538 stores in the UK, where its store concepts are "H.Samuel", "Ernest Jones" and "Leslie Davis". Further information on Signet is available at www.signetjewelers.com. See also www.kay.com, www.jared.com, www.hsamuel.co.uk and www.ernestjones.co.uk.

Investor Relations Program Details

Piper Jaffray Consumer Conference, New York

Signet will be taking part in the Piper Jaffray Consumer Conference in New York on Wednesday, June 8, 2011. Present will be Mike Barnes, Chief Executive Officer, and Ron Ristau, Chief Financial Officer. The presentation, which is scheduled for 11:50 a.m. Eastern Time, will be available on www.signetjewelers.com.

Annual General Meeting of Shareholders

The annual general meeting is to be held at 11:00 a.m. Eastern Time on June 16, 2011 at the Hilton Akron/Fairlawn, 3180 West Market Street, Akron, OH, 44333, USA.

Jefferies Consumer Conference, Nantucket, MA

Signet will be attending the Jeffries Consumer Conference, in Nantucket, MA on Wednesday, June 22, 2011. Present will be Mike Barnes, Chief Executive Officer, and Ron Ristau, Chief Financial Officer.

Second Quarter Results

The second quarter results for the 13 weeks ending July 30, 2011 are expected to be announced on Thursday, August 25, 2011.

This release contains statements which are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, based upon management's beliefs and expectations as well as on assumptions made by and data currently available to management, appear in a number of places throughout this release and include statements regarding, among other things, Signet's results of operation, financial condition, liquidity, prospects, priorities, growth, strategies and the industry in which Signet operates. The use of the words "expects," "intends," "anticipates," "estimates," "predicts," "believes," "should," "potential," "may," "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, including but not limited to general economic conditions, the merchandising, pricing and inventory policies followed by Signet, the reputation of Signet and its brands, the level of competition in the jewelry sector, the cost and availability of diamonds, gold and other precious metals, regulations relating to consumer credit, seasonality of Signet's business, financial market risks, deterioration in consumers' financial condition, exchange rate fluctuations, changes in consumer attitudes regarding jewelry, management of social, ethical and environmental risks, inadequacy in and disruptions to internal controls and systems, changes in assumptions used in making accounting estimates relating to items such as extended service plans and pensions, and risks relating to Signet being a Bermuda corporation.

For a discussion of these and other risks and uncertainties which could cause actual results to differ materially, see the "Risk Factors" section of Signet's Fiscal 2011 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 30, 2011. Actual results may differ materially from those anticipated in such forward-looking statements. Signet undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances, except as required by law.

Condensed consolidated income statements
(Unaudited)
                                                      13 weeks   13 weeks
                                                        ended      ended
                                                      April 30,    May 1,
                                                        2011       2010
                                                      $million   $million
                                                      ---------  ---------

Sales                                                     887.3      805.4
Cost of sales                                            (537.6)    (511.8)

                                                      ---------  ---------

Gross margin                                              349.7      293.6
Selling, general and administrative expenses             (263.8)    (238.5)
Other operating income, net                                32.8       27.7

                                                      ---------  ---------

Operating income, net                                     118.7       82.8
Interest expense, net                                      (0.9)      (8.7)

                                                      ---------  ---------

Income before income taxes                                117.8       74.1
Income taxes                                              (42.4)     (23.8)

                                                      ---------  ---------

Net income                                                 75.4       50.3

                                                      ---------  ---------

Earnings per share - basic                            $    0.87  $    0.59
                   - diluted                          $    0.87  $    0.58
                                                      ---------  ---------


The accompanying notes are an integral part of these condensed consolidated
financial statements.





Condensed consolidated balance sheets
(Unaudited)

                                          April 30,  January 29,  May 1,
                                             2011       2011       2010
                                           $million   $million   $million
                                           ---------  ---------  ---------

Assets

                                           ---------  ---------  ---------

Current assets:
Cash and cash equivalents                      394.1      302.1      447.1
Accounts receivable, net                       904.3      935.9      801.7
Other receivables                               25.2       38.2       25.2
Other current assets                            84.6       79.2       69.0
Deferred tax assets                              2.7        2.7        0.7
Inventories                                  1,221.2    1,184.2    1,122.0

                                           ---------  ---------  ---------

Total current assets                         2,632.1    2,542.3    2,465.7

                                           ---------  ---------  ---------

Non-current assets:
Property, plant and equipment, net of
 accumulated depreciation of $639.1
 million, $614.4 million, and $577.8
 million, respectively                         343.6      351.5      375.2
Other intangible assets, net of
 accumulated amortization of $33.9
 million, $31.3 million, and $25.0
 million, respectively                          29.7       27.5       23.6
Other assets                                    60.9       59.7       59.1
Deferred tax assets                            106.2       86.0      111.4
Retirement benefit asset                        27.1       22.8         --

                                           ---------  ---------  ---------

Total assets                                 3,199.6    3,089.8    3,035.0

                                           ---------  ---------  ---------

Liabilities and Shareholders' equity

                                           ---------  ---------  ---------

Current liabilities:
Loans and overdrafts                            28.0       31.0       47.2
Accounts payable                               144.9      125.9      104.2
Accrued expenses and other current
 liabilities                                   247.2      292.4      233.9
Deferred revenue                               142.5      146.0      134.7
Deferred tax liabilities                       102.2       77.1       79.6
Income taxes payable                            43.4       38.6       32.1

                                           ---------  ---------  ---------

Total current liabilities                      708.2      711.0      631.7

                                           ---------  ---------  ---------

Non-current liabilities:
Long-term debt                                    --         --      229.1
Other liabilities                               86.4       86.6       78.9
Deferred revenue                               360.5      353.2      343.6
Retirement benefit obligation                     --         --        1.8

                                           ---------  ---------  ---------

Total liabilities                            1,155.1    1,150.8    1,285.1

                                           ---------  ---------  ---------


Shareholders' equity:
Common shares of $0.18 par value:
 authorized 500 million shares, 86.8
 million shares issued and outstanding
 (January 29, 2011: 86.2 million shares
 issued and outstanding; May 1, 2010: 85.5
 million shares issued and outstanding)         15.5       15.5       15.4
Additional paid-in capital                     206.2      196.8      172.4
Other reserves                                 235.2      235.2      235.2
Treasury shares                                   --         --         --
Retained earnings                            1,737.7    1,662.3    1,512.2
Accumulated other comprehensive loss          (150.1)    (170.8)    (185.3)

                                           ---------  ---------  ---------

Total shareholders' equity                   2,044.5    1,939.0    1,749.9

                                           ---------  ---------  ---------

Total liabilities and shareholders' equity   3,199.6    3,089.8    3,035.0

                                           ---------  ---------  ---------

The accompanying notes are an integral part of these condensed consolidated
financial statements.





Condensed consolidated statements of cash flows
(Unaudited)


                                                      13 weeks   13 weeks
                                                        ended      ended
                                                      April 30,    May 1,
                                                        2011       2010
                                                      $million   $million
                                                      ---------  ---------

Cash flows from operating activities:
Net income                                                 75.4       50.3
Adjustments to reconcile net income to cash provided
 by operating activities:
  Depreciation of property, plant and equipment            20.4       22.4
  Amortization of other intangible assets                   2.1        2.0
  Pension                                                  (2.7)      (1.9)
  Share-based compensation                                  2.7        2.3
  Deferred taxation                                        (0.5)       5.3
  Facility amendment fee amortization and charges           0.2        2.3
  Other non-cash movements                                 (0.1)      (0.7)

Changes in operating assets and liabilities:
Decrease in accounts receivable                            32.0       55.1
Decrease in other receivables and other assets             11.9        2.3
Decrease in other current assets                            8.1        9.5
(Increase)/decrease in inventories                        (24.3)      38.9
Increase in accounts payable                               17.9       38.5
Decrease in accrued expenses and other liabilities        (47.3)     (33.6)
Increase in deferred revenue                                3.5        2.8
Increase/(decrease) in income taxes payable                 4.7      (11.1)
Effect of exchange rate changes on currency swaps           1.3       (0.2)

                                                      ---------  ---------

Net cash provided by operating activities                 105.3      184.2

                                                      ---------  ---------

Investing activities:
Purchase of property, plant and equipment                  (8.8)      (4.7)
Purchase of other intangible assets                        (4.1)      (1.6)

                                                      ---------  ---------

Net cash used in investing activities                     (12.9)      (6.3)

                                                      ---------  ---------

Financing activities:
Proceeds from issue of common shares                        4.0        0.8
Credit facility fees paid                                  (0.2)      (1.0)
(Repayment of)/proceeds from short-term borrowings         (4.0)       3.1
Repayment of long-term debt                                  --      (50.9)

                                                      ---------  ---------

Net cash used in financing activities                      (0.2)     (48.0)

                                                      ---------  ---------

Effect of exchange rate changes on cash and cash
 equivalents                                               (0.2)       1.0

Cash and cash equivalents at beginning of period          302.1      316.2
Increase in cash and cash equivalents                      92.2      129.9

                                                      ---------  ---------

Cash and cash equivalents at end of period                394.1      447.1

                                                      ---------  ---------

The accompanying notes are an integral part of these condensed consolidated
financial statements.

1. Basis of preparation

Signet Jewelers Limited (the "Company") and its subsidiaries (collectively, "Signet") is a leading retailer of jewelry, watches and associated services. Signet manages its business as two geographical segments, being the United States of America (the "US") and the United Kingdom (the "UK"). The US division operates retail stores under brands including Kay Jewelers, Jared The Galleria Of Jewelry and various regional brands, while the UK division's retail stores operate under brands including H.Samuel and Ernest Jones.

These condensed consolidated financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") have been condensed or omitted from this report, as is permitted by such rules and regulations. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes included in Signet's Annual Report on Form 10-K for the year ended January 29, 2011.

Correction of immaterial error

During the third quarter of Fiscal 2011, Signet changed its accounting for extended service plans. Previously, revenue from the sale of extended service plans was deferred, net of direct costs arising from the sale, and was recognized in proportion to the historical actual claims incurred. Signet has conducted a review of the claims cost patterns, including estimates of future claims costs expected to be incurred, and concluded that the deferral period required extension and that claims cost is a more appropriate basis for revenue recognition than the number of claims incurred. In addition, Signet now defers all revenues and recognizes direct costs in proportion to the revenue recognized. The policy is in accordance with ASC 605-20-25. The impact resulted in an overstatement of extended service plan revenue and an understatement of deferred revenue. These plans are only sold by the US division and therefore only affect the US segment reporting.

Signet evaluated the effects individually and in the aggregate and determined that its prior period financial statements were not materially misstated. However, Signet determined that the cumulative effect of adjusting this in the third quarter of Fiscal 2011 would be material to the Fiscal 2011 financial statements. Therefore, Signet adjusted the affected prior periods and presented the results in this quarterly report.

As a result of applying this correction, the following consolidated balance sheet, consolidated income statement and consolidated statement of cash flows were impacted as follows:

Impact on consolidated balance sheet                      May 1, 2010
                                                            $million
                                                      --------------------
                                                       Amounts
                                                     previously     As
                                                      reported   corrected
                                                      ---------  ---------

Assets
Current assets:
  Other current assets                                     51.1       69.0
Total current assets                                    2,447.8    2,465.7
Non-current assets:
  Other assets                                             12.0       59.1
  Deferred tax assets                                      52.8      111.4
Total assets                                            2,911.4    3,035.0

Liabilities and Shareholders' equity
Current liabilities:
  Deferred revenue                                        115.9      134.7
Total current liabilities                                 612.9      631.7
Non-current liabilities:
  Deferred revenue                                        143.1      343.6
Total liabilities                                       1,065.8    1,285.1
Total shareholders' equity                              1,845.6    1,749.9
Total liabilities and shareholders' equity              2,911.4    3,035.0

                                                      ---------  ---------


Impact on consolidated income statement                  13 weeks ended
                                                           May 1, 2010
                                                            $million
                                                      --------------------
                                                       Amounts
                                                     previously     As
                                                      reported   corrected
                                                      ---------  ---------
Sales                                                     810.0      805.4
Cost of sales                                            (513.7)    (511.8)
Gross margin                                              296.3      293.6
Operating income                                           85.5       82.8
Income before income taxes                                 76.8       74.1
Income taxes                                              (24.8)     (23.8)
Net income                                                 52.0       50.3
Earnings per share - basic                            $    0.61  $    0.59
Earnings per share - diluted                          $    0.60  $    0.58

                                                      ---------  ---------


Impact on consolidated statement of cash flows           13 weeks ended
                                                           May 1, 2010
                                                            $million
                                                      --------------------
                                                       Amounts
                                                     previously     As
                                                      reported   corrected
                                                      ---------  ---------

Cash flows from operating activities:
  Net income                                               52.0       50.3
Adjustments to reconcile net income to cash
provided by operating activities:
  Deferred income taxes                                     6.3        5.3
Changes in operating assets and liabilities:
  Decrease in other receivables and other assets            3.7        2.3
  Decrease in other current assets                         10.0        9.5
  (Increase)/decrease in deferred revenue                  (1.8)       2.8
Net cash provided by operating activities                 184.2      184.2

                                                      ---------  ---------

2. Foreign currency translation

The exchange rates used in these financial statements for the translation of UK pound sterling transactions and balances into US dollars are follows:

                                         13 weeks   52 weeks      13 weeks
                                           ended      ended         ended
                                          April 30, January 29,    May 1,
                                            2011       2011         2010
                                         ---------- ---------    ----------

Income statement (average rate)                1.62      1.55(1)       1.53
Balance sheet (period end rate)                1.67      1.59          1.53

                                         ---------- ---------    ----------

(1) Not meaningful to these financial statements as the 52 week income
    statement is not presented.

The average exchange rate is used to prepare the income statement for the 13 weeks ended April 30, 2011 and May 1, 2010, and is calculated from the weekly average exchange rates weighted by sales of the UK division.

3. Non-GAAP measures and other information

Income statement as a percentage of sales

                                                      13 weeks   13 weeks
                                                        ended      ended
                                                      April 30,    May 1,
                                                        2011        2010
                                                          %          %
                                                      ---------  ---------


Sales                                                     100.0      100.0
Cost of sales                                             (60.6)     (63.5)

                                                      ---------  ---------

Gross margin                                               39.4       36.5

Selling, general and administrative expenses              (29.7)     (29.6)
Other operating income, net                                 3.7        3.4

                                                      ---------  ---------

Operating income, net                                      13.4       10.3
Interest expense, net                                      (0.1)      (1.1)

                                                      ---------  ---------

Income before income taxes                                 13.3        9.2
Income taxes                                               (4.8)      (3.0)

                                                      ---------  ---------

Net income                                                  8.5        6.2

                                                      ---------  ---------

A number of non-GAAP measures are used by management to analyze and manage the performance of the business, and the required disclosures for these non-GAAP measures are given below. Management does not, nor does it suggest investors should, consider such non-GAAP measures in isolation from, or in substitution for, information prepared in accordance with US GAAP.

Income statement at constant exchange rates

Movements in the US dollar to pound sterling exchange rate have an impact on Signet's results. The UK division is managed in pounds sterling as sales and costs are incurred in that currency and its results are then translated into US dollars for external reporting purposes. Management believes it assists in understanding the performance of Signet and its UK division if constant currency figures are given. This is particularly so in periods when exchange rates are volatile. The constant currency amounts are calculated by retranslating the prior year figures using the current year's exchange rate. Management considers it useful to exclude the impact of movements in the pound sterling to US dollar exchange rate to analyze and explain changes and trends in Signet's sales and costs.

a) First quarter Fiscal 2012 percentage change in results at constant exchange rates

                                                       13 weeks
                                                         ended
                                                        May 1,
                                              Impact   2010 at   Change at
                 13 weeks  13 weeks             of     constant   constant
                   ended     ended           exchange  exchange   exchange
                   April    May 1,             rate      rates     rates
                 30, 2011    2010    Change  movement (non-GAAP) (non-GAAP)
                 $million  $million    %     $million  $million      %
                 --------  --------  ------  --------  --------  ---------

US                  738.0     662.5    11.4        --     662.5       11.4
UK                  149.3     142.9     4.5       8.4     151.3       (1.3)
                 --------  --------  ------  --------  --------  ---------
Sales               887.3     805.4    10.2       8.4     813.8        9.0
Cost of sales      (537.6)   (511.8)    5.0      (6.2)   (518.0)       3.8
                 --------  --------  ------  --------  --------  ---------
Gross margin        349.7     293.6    19.1       2.2     295.8       18.2
Selling, general
 and
 administrative
 expenses          (263.8)   (238.5)   10.6      (2.6)   (241.1)       9.4
Other operating
 income, net         32.8      27.7    18.4        --      27.7       18.4
                 --------  --------  ------  --------  --------  ---------
Operating
 income, net        118.7      82.8    43.4      (0.4)     82.4       44.1
Interest
 expense, net        (0.9)     (8.7)  (89.7)       --      (8.7)     (89.7)
                 --------  --------  ------  --------  --------  ---------
Income before
 income taxes       117.8      74.1    59.0      (0.4)     73.7       59.8
Income taxes        (42.4)    (23.8)   78.2       0.1     (23.7)      78.9
                 --------  --------  ------  --------  --------  ---------
Net income           75.4      50.3    49.9      (0.3)     50.0       50.8
                 --------  --------  ------  --------  --------  ---------

Earnings per
 share - basic   $   0.87  $   0.59    47.5  $  (0.01) $   0.58       50.0
Earnings per
 share - diluted $   0.87  $   0.58    50.0        --  $   0.58       50.0

Operating
 income/(loss),
 net
US                  126.2      88.4    42.8        --      88.4       42.8
UK                   (0.2)     (1.4)  (85.7)     (0.1)     (1.5)     (86.7)
Unallocated          (7.3)     (4.2)   73.8      (0.3)     (4.5)      62.2
                 --------  --------  ------  --------  --------  ---------
Operating
 income, net        118.7      82.8    43.4      (0.4)     82.4       44.1
                 --------  --------  ------  --------  --------  ---------

b) Net cash

Net cash is the total of loans, overdrafts and long term debt less cash and cash equivalents, and is helpful in providing a measure of the total indebtedness of the business.

                                           April 30, January 29,  May 1,
                                             2011        2011      2010
                                           $million   $million   $million
                                           ---------  ---------  ---------

Long-term debt                                    --         --     (229.1)
Loans and overdrafts                           (28.0)     (31.0)     (47.2)

                                           ---------  ---------  ---------

                                               (28.0)     (31.0)    (276.3)

Cash and cash equivalents                      394.1      302.1      447.1

                                           ---------  ---------  ---------

Net cash                                       366.1      271.1      170.8

                                           ---------  ---------  ---------

c) Free cash flow

Free cash flow is a non-GAAP measure defined as the net cash provided by operating activities less net cash flows used in investing activities. Management considers that it is helpful in understanding how the business is generating cash from its operating and investing activities that can be used to meet the financing needs of the business. Free cash flow does not represent the residual cash flow available for discretionary expenditure.

                                                      13 weeks   13 weeks
                                                        ended      ended
                                                      April 30,    May 1,
                                                        2011       2010
                                                      $million   $million
                                                      ---------  ---------

Net cash provided by operating activities                 105.3      184.2
Net cash used in investing activities                     (12.9)      (6.3)

                                                      ---------  ---------

Free cash flow                                             92.4      177.9

                                                      ---------  ---------

Contact Information

  • Enquiries:
    Mike Barnes
    Chief Executive Officer
    Signet Jewelers
    +1 441 296 5872

    Ron Ristau
    Chief Financial Officer
    Signet Jewelers
    +1 441 296 5872

    Press:
    Alecia Pulman
    ICR, Inc
    +1 203 682 8224

    Jonathan Glass
    Brunswick
    +44 (0)20 7404 5959