Signet Jewelers Limited ("Signet") (NYSE and LSE: SIG), the world's largest specialty retail jeweler, today announced its results for the 13 weeks ended May 1, 2010 ("first quarter fiscal 2011").
First Quarter Highlights
-- Same store sales: up 5.8%
-- Total sales: $810.0 million, up 6.2%
-- Income before income taxes: $76.8 million, up 85.5%
-- Basic and diluted earnings per share: $0.61 and $0.60, up 96.8% and 93.5%
-- Free cash flow now expected to be towards the top end of the anticipated $150 million to $200 million range for fiscal 2011(1)
(1) Fiscal 2010 is the year ended January 30, 2010 and fiscal 2011 is the year ending January 29, 2011.
Terry Burman, Chief Executive of Signet commented: "We are very pleased with our start to the year. Jared and Ernest Jones performed particularly well. Our ability to create differentiated and sought after product, supported by superior customer service and memorable marketing campaigns, is an important driver of sales. We continue to focus on enhancing our sustainable competitive advantages, improving our execution and maintaining a strong balance sheet and financial flexibility. We therefore believe we remain well positioned to gain profitable market share."
Signet is the world's largest specialty retail jeweler and operated 1,904 stores at May 1, 2010; these included 1,354 stores in the US, where it trades as "Kay Jewelers," "Jared The Galleria Of Jewelry" and under a number of regional names. At that date Signet also operated 550 stores in the UK division, where it trades as "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.
Conference call
There will be a conference call today at 8.30 a.m. EDT (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, could all participants please dial in 5 to 10 minutes prior to the scheduled start time. The call details are:
US dial-in: +1 212 444 0895
European dial-in: +44 (0)20 7138 0845
US replay until June 1, 2010: +1 347 366 9565 Access code: 5573546#
European replay until June 1, 2010: +44 (0)20 7111 1244 Access code: 5573546#
Quarterly Performance
During the first quarter Signet made good progress towards achieving its financial objectives for fiscal 2011. These are:
-- $150 million to $200 million positive free cash flow;
-- Capital expenditure of about $80 million;
-- Controllable costs(1) to be little changed from fiscal 2010 at constant exchange rates.
(1) Controllable costs exclude net bad debt charge, expense movements resulting from sales variance to plan, the impact of amendments to the Truth In Lending Act and the US vacation entitlement policy change in fiscal 2010.
Sales and operating income
Same store sales were up 5.8%, an encouraging start to fiscal 2011. Total sales rose by 6.2% to $810.0 million (13 weeks to May 2, 2009: $762.6 million), reflecting an underlying increase of 5.2% at constant exchange rates; non-GAAP measure, see Note 13. The breakdown of the performance was as follows:
U U S
S K ignet
S $ $ $
ales, million 667.1 142.9 810.0
% of total 82.4% 17.6% 100.0%
C U U S
hange in sales S K ignet
% % %
----- ----- ------
Same store sales 7.2 (0.2) 5.8
Change in net store space (0.4) (1.5) (0.6)
----- ----- ------
Change at constant exchange rates 6.8 (1.7) 5.2
Exchange translation(1) - 5.5 1.0
----- ----- ------
T 6 3 6
otal sales growth as reported .8 .8 .2
----- ----- ------
(1) The average pound sterling to US dollar exchange rate was GBP 1/$1.53 (13 weeks to May 2, 2009: GBP 1/$1.45).
Gross margin was $296.3 million (13 weeks to May 2, 2009: $255.5 million), up by 16.0% and by 15.0% at constant exchange rates; non-GAAP measure, see Note 13. Gross margin rate increased by 310 basis points, the factors influencing the change are set out in the table below. Selling, general and administrative expenses benefited from a further small decrease in controllable costs. Other operating income decreased by 6.7% to $27.7 million (13 weeks to May 2, 2009: $29.7 million) as a result of the comparable prior year figure including a gain on foreign exchange of $0.9 million and some of the unfavorable impact of the amendments to the Truth In Lending Act.
Operating income increased by 63.2% to $85.5 million (13 weeks to May 2, 2009: $52.4 million which included a $4.0 million non-recurring, favorable impact from a change in US vacation entitlement policy), up 63.8% at constant exchange rates; non-GAAP measure, see Note 13. Operating margin was 10.6% (13 weeks to May 2, 2009: 6.9%), the factors influencing the change in operating margin are set out in the table below.
