Apr 04, 2019

Signet’s Q4 & FY 2019 Results Mostly Marked by Revenue Drops and Negative Income Growth

Signet Jewelers Limited yesterday released its results for the 13 weeks (fourth quarter Fiscal 2019) and 52 weeks (Fiscal 2019) ended February 2, 2019.

For the Q4 Fiscal 2019 same store sales decreased to US$ 2,154.7 million as compared to same store sales revenue of US$ 2,293.1 for the same period of the previous year – a fall of 2.0%.

“Signet's total sales were US$ 2.15 billion, down US$ 138.4 million or down 6.0%, in the 13 weeks ended February 2, 2019 on a reported basis and down 5.4% on a constant currency basis,” the Company announced, summarising its overall position.

It added: “eCommerce sales in the fourth quarter were US$ 260.6 million, up 5.4% year over year. eCommerce sales accounted for 12.1% of fourth quarter sales, up from 11.2% of total sales in the prior year fourth quarter. Brick and mortar same store sales declined 3.0% in the fourth quarter.”

The operating income (loss) calculated as a percentage of sales was (3.9) % for Q4 Fiscal 2019 as against 14.1% in Q4 2018.

For the quarter under consideration Signet reported GAAP diluted earnings per share (EPS) of US$ (2.25), “including the impact of a non-cash impairment charge related to goodwill and intangibles, restructuring charges, and resolution of a previously disclosed regulatory matter”. For the same period in Fiscal 2018, the company’s GAAP diluted EPS amounted to US$ 5.24.

For Fiscal 2019 same store sales decreased by 0.1% to US$ 6,247.1 million from same store sales worth US$ 6,253.0 million reported for the previous fiscal.

“Signet's total sales were US$ 6.2 billion, down US$ 5.9 million or 0.1%, compared to Fiscal 2018,” the Company reported.  

Further, with regards to Fiscal 2019, Signet stated: “eCommerce sales at banner websites and James Allen were US$ 682.4 million, up 39.0% on a reported basis. James Allen sales were US$ 223.7 million for the year and had a positive 50 bps impact on total company same store sales. eCommerce sales increased across all divisions and accounted for 10.9% of full year sales, up from 8.0% of total sales in the prior year. Brick and mortar same store sales declined 1.6% for the year.”

Operating income (loss) for Fiscal 2019 was (12.2) % as against 9.3% for the previous fiscal.

Signet reported GAAP diluted EPS of US$(12.62) – including the impact of a non-cash impairment charge related to goodwill and intangibles, loss recognized upon the sale of non-prime receivables, restructuring charges, and resolution of a previously disclosed regulatory matter – for Fiscal 2019; as compared to GAAP diluted EPS of US$7.44.

The Company’s net inventory on hand amounted to US$ 2.4 billion, as compared to US$ 2.3 billion worth of inventory at the end of the prior year, thus marking an increase of 4.8%. “The increase was primarily driven by greater investments in bridal inventory, particularly at Kay, and gold fashion items, as well as holiday sales below expectations,” Signet said.

Long-term debt was decreased by US$ 38.6 million to US$ 649.6 million, compared to US$ 688.2 million in the prior year period. This was “primarily due to the principal repayment of US$ 31.3 million on the term loan,” the Company stated.

"In Fiscal 2019, we began our Path to Brilliance transformation journey, building foundational capabilities to drive future growth,” Virginia C. Drosos, Chief Executive Officer, commented. “We made progress on our Path to Brilliance initiatives, achieving double-digit eCommerce growth, delivering US$ 85 million of net cost savings, and continuing to optimise our store footprint. However, we did not finish the year as strongly as expected due to a highly competitive promotional environment, continued consumer weakness in the UK, and lower than expected customer demand for legacy merchandise collections that impacted our holiday fourth quarter results."

Drosos added: “Using important learnings from Year One of our transformation, as we look forward to Fiscal 2020, we are accelerating initiatives to further develop the seamless and personalised OmniChannel jewelry experience that Signet can uniquely provide.”

 For Fiscal 2020, Signet has announced the following guidance:

  • Fiscal 2020 guidance for same store sales down 2.5% to flat and total sales of US$ 6.0 billion - US$ 6.1 billion
  • Fiscal 2020 guidance for GAAP diluted EPS of US$ 1.86 - US$ 2.66
  • Fiscal 2020 guidance for non-GAAP diluted EPS of US$ 2.87 - US$ 3.45
  • Maintains quarterly dividend at US$ 0.37 per share