SIG - Earnings call transcript Q1 2021 | Signet Jewelers Limited

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Operator

Hello, and welcome to the Signet Jewelers First Quarter Fiscal ‘21 Earnings Call. At this time, all participants will be in a listen-only mode [Operator Instructions]. Please note today's event is being recorded. And now I would like turn the conference over to your host today, Vinnie Sinisi. Please go ahead, sir.

Vinnie Sinisi

Keith. much, very thanks Great, Good morning, conference first earnings to and welcome call. our quarter everyone

call CEO, On CFO, are today the Signet's Joan Gina Hilson. and Drosos

Any materially. historical cautionary During that and on a Form annual obligation risk uncertainties, our XX-K, on presentation, X-K. we XX-Q by and factors, results required report make language you risks reports forward-looking publicly today's may to to update actual differ the will number of other are no urge on are facts in disclosure forward-looking light quarterly law, current statements. future or not and statements Form information subject We events. to Form or undertake and certain as Except statements in reports we new of revise read

we'll certain measures. call, the financial discuss non-GAAP During

posted further should the of of GAAP non-GAAP turn financial well financial directly with to that, the to as review the measures, at news our those I'll call Gina. measures, comparable discussion For over most we Web the site on measures www.signetjewelers.com/investors. investors And as reconciliations non-GAAP release

Gina Drosos

morning, Good everyone thank joining us you Vinnie. on our you, Thank for call today. and

results, get few on few share events to Before into thoughts past I weeks. of a the we the our wanted

new unarmed particularly liberty place the in Defense and from and now. what and of While next no improve We four pain nothing an discussion race take mic Educational country proud has can pandemic color. these certainly brutal and meaningful townhall Racism open in stop for the to in intention the and another us to must members will discrimination the has these extremely matched Legal This happiness with that context, Fund. all. pursuit dedicated and actions of made heartache world Speaks unprecedented NAACP violence within Signet life, am immediately our a week, person on and denounced team a Signet are hateful also this not for. of protecting frank to Always give an I'm truly times we Signet donation of substantial and murder to the COVID-XX pattern global hosting a acts economic uncertainty, of called of I our yet stands Out with walls.

We celebrate lead our we're the will change dialogue and continue this throughout committed our and and year, all Signet, life this to open for love, industry express communities. our also and to and true is look to people. At to help in mission leverage insights actions making

to a performance. discussion our of Now on I'll QX move

with key post-COVID-XX This open Signet's priorities and omni-channel quarter, from two remarks thoughts months I'll COVID-XX Joan my competitive and positioning with strategic into an fiscal first for with on call turn fiscal I'll selling as solid Day began. then to to over provide retailer. I'll more commentary results the period, year acceleration over our Valentine's the the on efficient last our the assessment delivered financial to a and quarter during of effective disruption the world. strong low-single-digits the in and XXXX. the the strong ended Signet Prior we pandemic, comps February came momentum. in

financial of U.S. the X% we stores share now immediate much we actions employees in the jewelry safety of Thousands company stronger experience pivot the of XX% which took in and ensure markets We stability frame the for context customers. all The to like number customers compliance our highly share. Signet's U.S., to market our in and Signet in our March. category. Focusing temporarily late with and government with jewelry one first is of a jewelry the in market health retail in and fragmented on independent I'd larger digital. full market in and stores roughly mandates, an operate. presence to of actions underpenetrated the has share hold digital roughly closed all

One from we of it is with jewelry Signet's greatest long-term strengths comes significant trust one and do relationships and at expertise scale. the we independent share jewelers, that

journey across scaled In our across consultants investments, country, via of to quickly. What to virtual customers celebrate Signet never what relationships have and breadth omni-channel reinforcing able been pivot fashion engagement, and is gifts, couples points, relationships, a allowed with jewelry lifetime market integrated with support young Signet's touch an their on been those then the opportunity purchases. of ahead leading including jewelry our self fact, jewelry and that is company. expression and shopping has more is grow runway revenue crisis our and creating this of us share help digital we online. help the spontaneous as We've transfer birthdays platform They long for retail combined these consultations believe into help the virtual physical anniversaries. our of to trend statements and meaningful

successful examples. some XX have our held site and our Since spend. needs COVID-XX, traffic XX% despite increased more closed. than reached teams have last out customers’ customers, meeting while QX, advertising appointments In even year Here's virtual over in been were personally to reducing million XXX,XXX over store stores

New April, virtual provided by become selling uniquely QX to of conversion direct Our rates in integrated desirable momentum second addition shopping Day in James are center some the selling Allen. York the and virtual Signet. journey with James excluding James quarter impact Allen Mother's continued sustainable XX% shutdown XX.X%, the the has quarter City consultations excluding through the strong alternate COVID-XX. will due Allen's a believe growth sourcing of was a growth of to e-commerce for alone. and resulting distribution e-commerce a than higher E-commerce multifold traffic of season accelerated part and into We that

while more Signet is whenever be moments our needs of needed believe We online stores best celebrate their into physically life's digital may sales continuously than bringing will of the increasing our momentum those shows that experience, the that offering of never and invest on stores. have and best digital to and to wherever customers while shop. improve our now hold, meeting our We our they want some moments to

Turning to real estate.

As we stores open than quickly. performance public. to is four of Store have costs X,XXX yesterday, cover expected wall able rather to revenue with operating better approximately the

our try of of jewelry. protocols for based make regulations. the continuing We safety and the on and accelerate are them our teams incredible government store store of to appreciate continually the stores pace and urgency safe We openings to on implement people and shop to our to agility employees and customers to ready places for customers cleaning our

few we reduced XX%, to strategy, our moving you as last malls over As footprint out by the store path years, banners. know, of all regional largely D part of our brilliance and

to are Now in declining environment, further the we C current our and reducing malls. B our optimization exposure efforts, accelerating

reopen As closing additional that we in assessment, forward we to one with not XX%. least of closures negotiate the these reduction an we rent we full and XXX profitability, go will a We've occupancy to active our in are more with result in areas on North least fiscal stores year, store and a which discussions Furthermore, XXX landlord Greenfield than to focused this included jewelry, customer remain stores announcing a America are analysis committed partners at bringing market of been to payments costs. footprint cumulative specific at trade Europe XX

to Jared providing this JamesAllen and of and multiple such as look testing locations also over tests year. stores banners. uses combined physical forward and on the updates other reimagined footprint, our house course outlet these are location further and We We to format of

we targeted Le our like and to relationships techniques continue color focus hosted new selling opportunities SKUs perspective, an From ended Vian and with continue assortment improved merchandising. trend and events and last key excellent and our have for existing on launches, launches efficiency. customer QX product rationalize on key We and Mother's like upcoming digital for to we on ready Day, virtual enhanced to to optimize golden customers. our with customers maintain on inventory offerings, to capitalize brands Using acquisition levels. notable flat gifts values marketing holiday with reduced season. bigger for new Turning fewer summer platform, year's We product

Turning savings. to cost

in Over cash This and mitigate goal since million path reductions. savings transformation million three-year two $XXX brilliance, structural cost additional we year, us of profitability. this COVID-XX, savings, million in exceed enabling to to positions first our initial us to the $XXX out headwinds delivered than of to which net investments, digital into $XXX Furthermore, our cost years to improve and fiscal cost as of million more continue we fund $XXX well. expect have within identified we years

Turning to liquidity.

quarter. cash. discussed free rapid cash cash took had $XX last million steps the We equivalents flow in only of currently $X.X quarter, As to negative and in we billion and preserve have

revenue on the the While last our brilliance provided on. three] we two and COVID-XX structure us on key for digital testing marketing, stage our made lasting and mine path and the on. quarter, We've we've that foundation by of mentor full months new has more to in-depth efficiency once with agility said, [Year with and with embraced and with half rapid virtual closed progress crisis, footprint and of a never the store journey substantial learning advanced omni-channel an waste improvements. A impacts never a curated with almost assortment. have tools, momentum been first we've transformation down a relevant amidst few stores opportunity targeted anticipated We've years to build rapidly a embraced of strong to double merchandise strategy obvious could And of cost first optimization. accelerate our consultation and initiatives. customer efforts on strategic elements key

customers stronger relentlessly call Joan. And on turn opportunity I'll to team team this Our now and company. serve emerging from differently, the our a are as crisis energized to by over and is the we Signet focused

Joan Hilson

We in times, QX. COVID-XX provide To thought details Thanks, partner. note of quarter Gina, around in our but provide performance. unprecedented taken to light review to intend provide our quarter, discuss details not first I'll helpful the highlights results. of portfolio the morning, In actions going intra everyone. on conserve also quarter update good to we our be response would I'll credit first forward, for my will cash these financial it and do additional for an we've and remarks,

XX% We additional result COVID-XX merchandise prior increased note retailer. as were then and As the by March of lower pivoted as expenses late Day strong partially resulting able performance. to fixed reflecting a costs. resulted with cost temporary some long-lived e-commerce sale million pay de-leveraging lower we Valentine's and hold and mortar things to as this year, costs we compared grew color, Gina and mentioned gross reductions of same-store expense overhead furloughs, a $XXX.X the declined driven Brick significantly, only March. that e-commerce was virtual from Mother's process. operating and selling of margins assets. declined goodwill, sales our that customers, advertising into operating Gross reductions. digital e-commerce were margin million of our Adding we decline earlier, reductions, in loss which was in QX at a in beginning costs. on outreach by $XXX.X same-store accelerating This declined to from labor million This and loss low momentum to for $XXX.X lower season. quarter. pre-tax running lower led to impairment an saw sales year. employee intangibles $XXX.X non-GAAP million implemented our GAAP well point consistent appointment last Day the SG&A was by includes pandemic, to We offset of occupancy It late February, closures single-digits, in the and throughout temporary store sales we positive XX.X%

earnings pandemic. As COVID-XX by financial discussed necessitated in to the year-over-year, preliminary the due review reflecting are Interest XXXX release, non-cash QX long-lived refinancing. impairment expense XX% declined the asset statements the our

We effective Our the rate of to carry as under a tax cash result we'll certain application represent benefit XX.X% benefits Act. receive relief projected a backs. NOL estimate QX non-GAAP the of provided related of CARES

a non-GAAP $X.XX. year of quarter loss EPS First was $X.XX EPS non-GAAP of compared prior to

COVID the to of review quickly took preservation, actions like reminder a immediate our we our financial increase flexibility I'd to environment. the in As cash

discretionary spending. corporate we marketing reduced Specifically, and

Our voluntary Executives Directors and compensation of reductions. Board took

factor by extend capital strategic terms vendors. versus financial and key reduce with vendor Inventory support XX% key expenditures our with partners initiatives prioritize establish forward worked management and in go efforts. approximately year, our to a to We agreements we'll is that our payment flexibility. expect digital We last also

our equivalents We cash flexible merchandise, cut and QX are initiatives efforts billion. all $X.X clearance aimed The receipts of results cash of in million and planned continue was of balance of through efforts, to these free inventory with efficiency. negative support sell implementing $XX fulfillment flow in at

guidance kind. financial our preferred does dividend as suspended in clarity. The we remains until dividend have common our Finally, be market August will greater paid

Castlelake flow our like XXXX that the update approximately Now a non-prime customer purchase receivable an to Signet for receivables provide either unless CarVal have X% had year, or With party. offering. balance annual have representing respect earlier on by briefly of forward to to continue to terminated existing sales and non-prime credit through I'd receivables, last June of agreed accounts previously

to of terminate. remaining receivables place. X% company's agreement back the customers, in We the the extend expected the with The the company's payment remains XXXX which have book credit less revenue. to servicer, agreements than company now XXXX are agreed purchased by is retaining opened in receivables of The new fiscal X.X% Signet the to Genesis, be until for

this in to will financial and optimize confident over the over turn operator continue target plan investments I'd turn virtual I'll Q&A, footprint. to preserve initiatives a call our costs emerge further structural the intend the feel I cash, with to and like that Before reiterate we begin and We allow positioning. And to to reduce to the from Q&A physical to crisis session. now our to us call that

Operator

you. thank Yes,

will now begin Paul from [Operator comes session the Instructions]. And mentioned, we with Lejuez question-and-answer question first Citi. As the

Paul Lejuez

additional on I'm think have as said that contribution to XXX about of that be in performance further reopened? that stores is Thanks. as if are those stores two also now could we covering I means the if quantification Can wondering and talk the reopen, breakeven, provide won't those the the classes? then already any you’d that EBIT you're operating what four-wall XXX from you and seeing well the Curious same? costs. that closed. about one And of sales stores revenue the something

Gina Drosos

as all we've on plan the approach stores. to local how close early We've our government And hyper expectations. So operating the our And actually expenses and a been revenue the we has dynamics has source opening cetera. exceeding yes, heard on market stores covering on we you of results said mandates, four-wall to can, the on right, as our and using that reopen based et source the of reopen safely basis. is I in our quickly we performance what script, the been based been similar analysis are, seen

in reopen booking omni-channel experience So really digital we to doing intend more we've new appointment carry leveraging capabilities that forward that strives made stores. integrated and we more the as

of Our to end the fleet of have by plan is open June. the XX% least at

Joan Hilson

And question. the then Paul with respect to second

of what the confident those are. the Our valuation on of analysis stores a for overall is we’ll the see that stores and not reopen, the us. time XXX stores, physical and we the disclosing contribution But really stems evaluation Greenfield operating not footprint. basis from forward the go that our that's one forward we of We're the footprint feel sales best go at

Gina Drosos

and should to in analysis, down, stores. clean more that country used really it how at sheet stores, done What we've is our The one customer of starting to stores one actually thing to differently the look markets focused put time breakthrough that that our a store, looking we to a we've we footprint internally I paper contribution first basis, what that two I that this lens which would think historically look an done Greenfield say the closing of have a store more and were profitability on if stores, way justify mapped at where and future is really analysis today, we or we've three would add almost on those decide like.

Paul Lejuez

the understanding the about sheet correct balance go of to come receivables, future Am guys made about the as and think carry no 'XX in F will piece the receivables. beyond, the non-prime in Signet on now commentary to the equation? those and the that on back we receivables I back just And you will you prime change

Joan Hilson

we'll our with sales new The change X.X% accounts. existing what was continue it purchases to for and and no of there prime. new add Signet the on is is expectation. is There's the accounts, will CarVal roughly on to What purchase account purchasing non-prime indicated I that Castlelake to come

Operator

next from Thank you. And Advisory. with the Dana Telsey Telsey question comes

Dana Telsey

the As margin merchandise margin also the what there? need the you're do Can and you you each all a year. or you these back, think unpack gross you. with what and appointments? been in Thank buckets about the with coming last had SG&A, staff, operate in you And limited virtual that seeing about as been, think gross whether costs seeing consistent more stores it's margin, of occupancy and staff stores you do you being leaner given you've

Joan Hilson

us selling, margin, nice able it over had over that value gross the feel itself balance a serve first the had the that lot we season consistent we to priced quarter items So was fourth the merchandise the that holiday selling of We quarter a leverage for to price over of saw Day were we selling regular clearance for quarter. that with Valentine's in respect and quarter. in well we as very

about merchandise we strategic we launch and as fewer products the consider through our bigger the we Then than Gina respect will mentioned So it look gross working cost performing and our to clearance business inventory savings, forward differently that think remarks. and inventory, continue pre-COVID. is promotion, margin as operate had in today our we and her behaving to prepared that recognize with balancing stores structural

We have evaluated operating hours.

staffing. stores evaluated have We

her virtual We selling script. mentioned that in have Gina

opening take that So, few program. that's points out putting roll and and to evaluating helping forward as really evaluation our a are our our just labor we costs are of stores in we SG&A, the are structural store that place to really these and us of related things

Gina Drosos

new is bit has budgeting her a is true us just other with ago, a brought of those year based thing and one anniversary approach. one zero the Signet little a Dana, of number who capabilities, Joan celebrated I'd mention

And we to care costs focus or continue about. customers that see so on don't

indirect the say and of meaningful, the structural so that's I'd that savings With kind a are now seeing cost an going very we're of savings focus forward. spend big

Dana Telsey

existing an And Is occupancy there opportunity remaining. there? expenses of stores

Gina Drosos

reopening. developers, partners working sense terms have us to a to rents we with with landlord work been we locations, move make in of this in through and as and and of both Dana, reduction of for that specific number continue our been very strategically situations collaboratively we’ll able through of have we them work

Operator

Lorraine And you. from next Thank America. comes question the of with Hutchinson Bank

Lorraine Hutchinson

ask a you seen down penetration lend credit on reluctance to Have I any on as the year-over-year wanted about about rate to macro basis. given was climate? the ADS part volatile

Gina Drosos

would quarter of Lorraine, to when that I What credit time, we of the mix that a you good first channel was to that an is period had is mix of say, business we moved about e-comm on lower. for only think the e-commerce the in

we so offer And time. not online leasing do this at

year. We have in it are implementing and this September that to expect of as

what credit that's So the rate. is really driving penetration

Lorraine Hutchinson

And as can you bridal trends the you of on year? comment started your engagement

Gina Drosos

still So getting seen interested we've very actually that married. customers are in

do of their launched we of over tell they feeling signed XXX better wedding did Our research are out hours, relationships too And to their coming half than about not XX before. you indicates Jared I'll program. virtual quarantine had we more And customers that wedding. ago people than within period, virtual up a long

have also business. but in the in numbers in bridal sentiments consumer seen some So strength the we

Operator

Ike with question Boruchow from And Instructions] the [Operator Fargo. Wells next comes

Ike Boruchow

understand had a going maybe couple the on make on. sure Joan, credit, exactly guess, just to questions I I what's I of So just

it March, and terminating. don't they first, So that in March, and on now CarVal was plan Castlelake, just so believe it I I Castlelake. was thought CarVal like in it's sounds terminating

what's understand now? going a is I'm try a sales? and be which obviously Gina, balance the of trying like went the guess or revenue dramatically through kind the I and time I sales sales. away base other guess dollars, around doing on higher last And is prime Because then is that sound year of credit. out the period versus kind I two go doesn't the more Is just it year’s is letting to what between to then a question sales to last and process volatility. that customer? lot on follow-ups, of receivables subprime get thought one different. having opted Thanks. And know for of maybe So level mean lot then the I that sheet company and of X.X% this so on it, of I just focusing exactly guess to quick changed but the

Joan Hilson

at With late-March. respect accurate. to that CarVal, terminated Castlelake that’s CarVal did terminate Castlelake, in had time. not

the bit that to for which we we one we online. suite financing online believe question the is CarVal of we I'm your closed As existing with the X.X% of leasing conversations is to add Signet through of September. customers. We new accounts that see of little is for the loans, we've those are purchase expectation, will offering on products additional go that that, is in adding online respond this in Castlelake, forward both there's and perspective parties, going what and keeping parties to with we ons to sorry, and a fiscal And progressive that also there's with alternatives a progress that today of what established mix how that’s both both -- basis in-stores parties. it Gina, a are piloting an and have XXXX. purchase was which services, receivables that's agreement do was and full currently From

options So believe our really the a financing us this suite that with and suite as don't of is, see gives and helps customers us serve many to full that offering we continue negative. to

Gina Drosos

exist new models when make better and two, tools. that lend Joan more allowing part a the to predictive us Joan I on answer if the place, so as have new just competitive one, this three, we Signet market strategic entire as we see and of that question, have in advantage. customer the Number portfolio I things. strategic. think we a us gives the really owned for Number that think controlling So Number we to what we new is acquisitions, that book in mentioned, four of strategic moment manage build and before said models whom didn't to

So double we digits year, which online lower can as as pay leasing, direct grew tools well which a last FICO customers strong option. coming is our has into like a split and firm,

we make to stronger. the now, servicer to So portfolio. leverage to we fourth chance is And who's our Genesis, all really the tools helping manage the operations those a really then of have lending one new have this

we're really the now of small So the only for the not portfolio, full that thing. of underwriter the operator entire part

Operator

Thank to you. And the would turn like for floor to management I question. the that was last any closing comments.

Gina Drosos

to Great. morning. everyone Signet, inspired us crazy for Well, it's all been for you But thank us. joining months and customers’ this few resilience. we have by I We're us. ahead creativity of a continue updating we're employees' Thanks know of our at opportunities our we you we very forward transformation on brilliance much. the year journey. our And as to energized about throughout path look the

Operator

The now you. concluded. has for Thank conference Thank attending you today's presentation.

now may lines. disconnect your You

Signet Jewelers Limited (SIG) 9 Jun 202021 Q1 Earnings call transcript