Signet Jewelers announcing its results for the 13 weeks ended May 2, 2020 (first quarter Fiscal 2021/Q1) stressed they are preliminary “due to a pending long-lived non-cash assets impairment review necessitated by the COVID-19 pandemic, and the impacts of that review on our financial statements”.

Signet's total sales amounted to US$852.1 million; lower by 40.5%, in the 13 weeks ended May 2, 2020 on a reported basis, and down 40.2% on a constant currency basis year-on-year (y-o-y).

Though February same store sales (SSS) were in the positive low single digit range, Q1 SSS decreased by 38.9%, “reflecting the temporary closure of all stores beginning in late March due to the novel coronavirus (COVID-19)”, the Company noted.

Signet’s e-commerce sales amounted to US$164.7 million, up 6.7%, which includes COVID-19 impacts. “Excluding the temporary James Allen distribution centre shut-down, e-commerce sales grew 18.2%,” Signet stressed. “Despite the disruption, the Company built upon its Omnichannel foundation to productively pivot temporarily to eCommerce-only operations while physical stores were closed. Signet's virtual selling efforts led to accelerating consumer demand, with eCommerce growth of 55% in April, excluding the James Allen center impact, and momentum continued into May.”

Signet said that in response to the COVID-19 crisis, it has accelerated its transformation to “a digital first, Omnichannel retailer”.

“Signet is reimagining the shopping experience using data analytics and customer research to meet our customers where they are: online with advanced virtual and digitally native experiences and in-store with store-in-stores and outlet locations that house multiple banners,” the Company explained. “As such, the Company believes that segment level reporting is the most consistent and useful way to deliver metrics going forward as the Company continues to innovate across its portfolio.”

The Company said that it had identified additional structural cost savings of more than US$100 million for the fiscal year, in response to the COVID-19 pandemic.

Looking at the Company’s performance by region, one observes that in North America same store sales declined by 39.0%; average transaction value (ATV) was lower by 6.5% and the number of transactions decreased by 34.5%.

While e-commerce sales grew 4.3% (excluding the temporary James Allen distribution center shut-down, eCommerce growth was 15.8%), brick and mortar same store sales were lower by 44.6%.

The Company’s international same store sales decreased 37.5%; ATV however increased by 2.7%; but the number of transactions was reduced by 41.2%. e-commerce sales grew 37.2%, with brick and mortar same store sales declining 46.6%.

Signet reported a GAAP operating loss of US $(291.1) million or (34.2)% of sales; this includes US$136.3 million of pre-tax impairment of goodwill, intangible and long lived assets. “The loss compares to US$(2.6) million, or (0.2)% of sales in the prior year first quarter and further reveals the impact of the COVID-19 pandemic; however, its effects were mitigated in part by the actions explained above.”

Signet’s non-GAAP operating loss amounted to US$(142.5) million, or (16.7)% of sales, compared to US$24.2 million, or 1.7% of sales in prior year first quarter. Non-GAAP operating loss excluded US$12.3 million in restructuring charges related to the Path to Brilliance transformation plan.

Signet announced a GAAP EPS of US$(3.83), including US$2.63 charge related to the impairment of goodwill, intangible assets and long lived assets and US$(0.63) resulting tax benefit. Excluding these items, EPS stood at US$(1.59) on a non-GAAP basis.

“GAAP and non-GAAP EPS in the quarter are based on net income (loss) available to common shareholders as the preferred shares are anti-dilutive and excluded from the ending share count due to the first quarter net income (loss),” the Company noted.

Signet reported cash and cash equivalents of US$1,066.6 million at end of the quarter under review, compared to US$195.1 million at the prior year quarter-end. “Signet notes that long term debt of US$1,336.0 million, compared to US $639.0 million at the prior year quarter end, includes the $900 million draw down on the revolving credit facility,” the Company stated.

Signet also stressed that as the COVID-19 pandemic has “rapidly altered the retail climate” the Company “is navigating that change by accelerating its application of the key Path to Brilliance initiatives”.

Signet's Board of Directors has “elected to temporarily suspend” the dividend programme on the common shares and has elected to pay the August quarterly dividend on its preference shares in kind, the Company said.

"Throughout the COVID-19 crisis, we have prioritized the health and safety of our team members and customers with every decision we make," said Virginia C. Drosos, Chief Executive Officer. "Our excellent team, operating in a culture of agility and efficiency, has been integral in allowing us to rapidly adapt and respond to this environment, building on the first two years of our Path to Brilliance strategy and accelerating our transformation into a digital-first, omni-channel retailer.”

She added: “We have moved forward in our digital journey while also making significant progress controlling costs, prioritizing investments to drive sustainable growth, and preserving liquidity."