SIG - Earnings call transcript Q2 2021 | Signet Jewelers Limited

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Operator

Hello. And welcome to the Signet Jewelers Second Quarter Fiscal 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. to conference like Sinisi. to now would turn over the Vinnie I go sir. Please ahead,

Vinnie Sinisi

very good Hey. to Alisa, much, Thanks and quarter conference our morning, earnings call. second Welcome everyone.

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

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

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

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

Gina Drosos

Good pandemic Vinnie. of COVID-XX time, us managed our cash and tightly Recall And and strategy the we quarter and in our preserve our thank of morning, same you to business. offset on we morning. as transformation. for to Path negative that a to the elements grow our invest impacts At Brilliance call joining this stores expenses QX ability first and digital everyone. second in closed you, to Thank pivoted accelerated many

our seeing we QX, in strategic efforts are yield Now results.

to Takes our why team. places operate am Care quarter our customer’s in This our are everything by team’s core inspired and I experts to and create of purpose partnership to needs, and retail remains QX well-being thanks and doing acknowledge safety values priority. healthcare discuss launched we meet first with I to agility work. our a this our customers we the and to by guided that results, safety top leading Love new everyday possible is team our members I this and environment in want Before ensure program shop Signet to safe

care as the Signet member with justice partnered NAACP colleagues relief equality and launch fueled activated and and fight and teams Our voice support compassion Legal our to glad most for team our COVID. to comfort a by as Defense of well fund all. impacted racism, Fund our We for the

growth drew We momentum sales scale. driving achieved reached this sales month-over-month stores as this turned double-digit reopening high like I our gratitude and into our team. QX. heartily core to and at I belief how strategic provide Mother’s second Along competitive emerge reflecting my my including the our this loyal for closed for of are Day team for the and of Signet would selling the on want now Despite XX.X%, using worldwide ourselves much period. full well and We quarter being discuss to learning effects stores from express will sequential confident continued in and this mid-July perspective to together is improvement are crisis position as pandemic, the of eCommerce we accelerate our were while additional QX with as same-store results, environment dynamic to QX resilient Same-store our in vendor transformation continued that partners stronger. long-term advantage. and customers, we we our sales quarter down

however they this uncertain, flexible eCommerce and holiday macro we in serve diligence and our prepared have preservation our are increase to environment distribution. the new in We liquidity, investments well to to choose place as shop. protect remains leveraged and have as customers to and cash cost fund digital season Though wherever capabilities

home. in Turning drove eCommerce consultations, appointments XX,XXX trained and appointments levels consultants and store transactions. by eCommerce generating year quarter. also established virtual our tools of higher sales than and XXX,XXX both of are first in individual This versus more in and historical QX, especially higher mortar than in-store and XX% prior XX% of this banners, manufacturing the transaction disruptions more team to and dedicated jewelry comprised selling In to virtual, the half growth from team videoconference was use led booked we and or to bricks associates digital, our James continued we May. in our these than Allen virtual curbside selling QX, conversion a average experience value Signet scaled from eCommerce of team, In QX while QX

of new sales achieved levels have We eCommerce penetration.

perspective, we to four roughly last more penetration years doubled our from the last For growing XX% have than eCommerce year. over fiscal X%

seeing penetration recognized Though this stores, During closure openings elevated our store even strategic combined penetration roughly important in continue new eCommerce still to magnified XX%. in in with penetration quarter temporary store QX, July, recognized COVID-XX category where jewelry reached selling eCommerce are August of the many was jewelry competitive that our and XX%. levels belief advantage scale we the heightened eCommerce at especially after we due virtual capabilities counsel This selling trust and with expertise Signet is reinforces bridal. footprint is a

holiday to online sales, orders dedicated to eCommerce that X we year’s have to year these our of meet demand. trajectory of holiday distribution times be throughput the last Given to expanded ready

traditional moved which and XXX we estate, optimize our year, real all Turning closures footprint, mall for the of XXX we planned to already locations. fiscal quickly as closed announced this we of have were continued substantially

we closures, count these fiscal since end. have XXXX by XX% year With store our reduced

mall lower better exposure typically with and locations, which occupancy traffic lower to costs continue reduce offer shift to towards malls We performance. off

locations. allows our multi-banner to testing closing our We driven physical channel. as continue other virtual quarter, we locations store data competitors stores, to from closings from and a take hyper-local approach, which as sales transfer Last or mentioned well us to

tested priority, store Jared we first a within James stores and Allen As locations.

new create a while we this XX curated or gains, staffing expand a space and off prior in of over locations existing physical to Given way and presence to is strong format jewelry Jared. This sales James positive maximizing mall for Allen, one-third holiday. terrific our to fleet results plan our to traffic

year. merchandising, core browse and provide marketing retailers during specifically and focus implemented worked department well to anticipation eCommerce with we engaging digital, support reach assortments, customer efforts, we our be we also the we to launches we efficiently By to search robust our of relevance. more invest our new instituting shifting independent been as have transactions focused new of stores and closing. to amplify we have more areas top banners our are QX strengthen continually cultural further extend and of content, have assortments in and online To as this launching new To jewelry marketing, as content. successful believe our where and customers, online consumer earlier maintain capabilities and mind and occurring prospecting as well product precisely in to in trade current in holiday. and social our relevant are them influencer programs holiday target on In PR capabilities further Turning to and with vendors our able for across sales, extended

As traffic increasing. is a result, website our

to we changing. our liquidity, and store company’s savings needs are our footprint, optimize workforce continue as cost to Turning also

These on and remain was believe we to savings reduced to We better of digitally this liquidity streamlined were track also structural achieve and quarter as to and increase culture. flow uncertainty strategic in pivot count needs. a $XXX ability levels, both last efforts bolstered focused our to capability we driven investment. both These free decisions a saving thoughtfully cash force very over us as as the reduction difficult, While to personnel better cost well had discussed made accelerate provides the which structure our million workforce by store both quarter, are quarter. that to our contributed digital decisions net align more this we manage positive in

I improved safely with with same-store capabilities, the effectively, traction to QX continued new and open all-in-all, quarter gain get and throughout in am our cash into stores So, QX. and scale liquidity quickly pleased sales and our digital leading to and manage progress

serve holiday While this the want will and to to And I over now, they full uncertainty, our prepared effectively, ahead beyond. are call we to Joan. are and shop the customers whenever season turn months however of

Joan Hilson

This we saw not but eCommerce our Thanks, XX.X% down COVID-XX, brick-and-mortar trends May, and in until with in morning growth up understand Strength design details which provide August as were into to of XX% this by centers quarter strong later last progress. as our reopened impacted with everyone. same-store service programs I last will our over XX.X% This continued Gina. lower extended sales Hello, you remains month, Due service year. sales year. in the last points. related the to in QX of XX.X%, better and regarding scale, June growth August, plan eCommerce same-store the versus quarter By basis year and closed momentum down to X.X% same-store in July. stores performance down help XX.X% roughly to with preliminary were negatively includes XXX sales included because sales recognition revenue than only

recognized expect the We year. revenue later to of in be this portion some

the to consumer on estimate and COVID However, stores behavior due uncertain we open. amount ability the have may to cannot our keep impact

million $XXX plan was $X.X lower related Path saving, operating costs. deleveraging Our approximately declined charges was $XXX charges plans. Brilliance of XX.X% a to cost and to structural million, and labor million primarily million $XX.X QX long-lived inventory impairment of resulting or to SG&A extended the $XX.X expense and driven X% well million was of by lower down to as costs costs restructuring year-over-year. $XXX service The for margin sales, lower sales Non-GAAP down excludes the was transformation as advertising revenues decline assets, occupancy improvement discussed well SG&A rate Interest earlier. was The year. million, partially from approximately quarter as to related of as last due gross pretax expenses. largely loss for fixed roughly on in offset million $XX.X related

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

track Brilliance structural fiscal to are cost Path million ‘XX. net savings on to $XXX Turning exceed in saving, to cost

net and sourcing, to for direct costs. operating in $XXX include of Path though centers, Even third and million. structure years, quarter. we savings These clearance along $XX use replenish our of savings were were by inventory portion least related last inventory $XXX severance spend year. year The at largely consisting stores down savings quarter, support in permanent capital expect along with driven three efficiency cost active in management efficiencies the closed of diligent cash net ended indirect the in million originally cost $XXX.X of QX Brilliance, charge million south $XX.X cash closures now levels to in one-time Now generated million QX -- quarter We of $X.X and reductions was from equivalent. from core products. savings targeted our resulted improved inventory in to new and we our workforce Inventory though The a over of stores also of working million stores good our the with billion $XX for of occupancy with payments cash to end. and store at activity continued lower operating

ability transformation us experience accelerate Our the new and virtual create liquidity shoppers. with provides for digital position our to

$XXX to fluctuations As inventory our $XX million, paid the borrowing such, year. reflecting of ABL level $XXX now down we Subsequent of approximately quarter on to base. capital million end, our the expect compared be expenditures we impact last to million

we services, financial of our with our leasing years in our one-time to use program. credit have and Turning over private card paying products the improve financing addition enhanced last few to products to fleet label

all offerings to financial the our channel We our service are ahead of plans and our extending service of of extended holiday. online availability

our that net account sheet banners. Turning sales our purchasing proud and mentioned potential QX our to options our to incredibly purchase last on of of The and to receivable and new $XX.X our of expectations. the wide the of at across and digital portfolio, with non-prime financing our using we closing, accounts to been tools. receivables assist with excellence new size end allowances. provide has we all the jewelry goal these is quarter members early to we are aggregated performance of our deliver Signet pivot million In within began that for new prudently manage breadth these balance Ultimately, ensure capture of team our service their customers customers agility in

liquidity. our came effectively teams prioritize together working preserve Our investments, managing to and capital

to look we session. season. positively our Importantly, begin customers to to we operator the are seeing Q&A respond the call the over upcoming forward settling And and I our down the will in now, turn to holiday efforts

Operator

question first ahead. Citi. The comes you. Paul go Thank Instructions] today [Operator Please from Lejuez of

Tracy Kogan

I filling questions. Tracy It’s Paul. Thanks. in two for had

if are what customers. wondering tell could was you you from seeing us eComm I your First,

higher categories you does that, of and I customer? conversion was I if basket getting towards you year? look us could prior then, or was new if wondering, the mentioned, higher, holiday, are the say, customers was collections you and your to in in different they terms year think, look there. what customers more it’s customer expect if a the like buying guess, new of And of give versus you demographic, whether And are you you could newness but secondly, a I as wonder existing sense I last a Thanks. this the

Gina Drosos

the take So, interesting. I eCommerce. very been on will first question It’s

of sales. a leveling This traditionally of not developed been and XX% has category. about eCommerce, very well of So out kind in jewelry maximizing

that because tools. quarter, through but new using digital closed, the break were also to in in able been stores course, have selling purpose of our We

other things jewelry that lower average changing are price that are online. a traditionally purchase on was The retail

We average value we in are sales. virtual are this sales quarter seeing consulted transaction than have those in higher past. particularly higher It’s when the seen

new are the those consultants a and seeing customers virtual of purchasing value came have we with customers, So and this normal that many online eComm that purchase new quarter even before. we then we younger a and transaction this more have our purchases from did average definitely in than appointments typically seen XX% multi-cultural are of XXX,XXX are more over customers, quarter higher

experience. continue term opportunity We are are retailers customer and potential tremendous some us our new working struggling, digital to our jewelry to a share hard we longer new especially tools very as marketing think improve prospecting, and gain. other So gives for acquisition a for

Joan Hilson

supply we to the continue some earlier newness get we do respect of to to we supply what third the them last is well season. in we able in to newness higher of work with in have But season our with So work importantly, as our have Mother’s year. consistent those with been and will we to with that Day base launches, as our see bring that for quarter, ensure postpone penetration a selling holiday orders Tracy, them have

have penetration. also launches So new new that more we -- within launches

So our to to we holiday. about customers the newness this good are feeling coming ability bring

Gina Drosos

part season data is we an Path and our indicates are to will things really shop customer I add on customer strategy just proprietary that, they earlier focused on the as in have our of first one of kind with of the that that data past. Brilliance this jewelry getting of than planning holiday to XX% customers are

So we will be ready for that.

Tracy Kogan

Thanks.

follow up to new eComm overall think, you new, your I did to eComm concept your one Signet comments XX% new mean were on of, that ex-Signet? just Just or customers

Gina Drosos

New to Signet overall.

Tracy Kogan

Great. Thank you.

Operator

of ahead. question Please Bank go next Hutchinson from The comes of Lorraine America.

Lorraine Hutchinson

bridal Thanks. versus you prior to periods? quarter Good buy as in morning. trends willing customers engagements hoping particularly that are I a should seeming comment bridal both was you progressed then on also if are and more seeing online

Gina Drosos

able in. I including of you on category say, been quarter would saw then jump us start that bridal. fall across month-on-month particularly can online, going we stores. especially counsel it’s scale. consumers the also in have are back as most younger been and at man now store, bring most interested right to selling in stronger optimistic But in We has in all years for will I the improvements So, strong Joan and been bridal

also engagement seeing are strong happening. We

of our think their and pre-engagement X% and relationship bridal that decided nice tailwind them COVID-XX So couples that’s with our during stronger indicates together saying their that during really research over relationship a in XX% business. of say half worsened COVID-XX got that we quarantine to only

of in part because AUR We higher are in seeing online consultation. the bridal also our business a

Joan Hilson

add as performance we include and Chosen of Le interestingly, of to I that also which and is, we that our are Wang, some August, into the in saw to What would our Jared. with the well performance Neil pleased continue seeing and continue Vera Vian by best Lane, we be brands bigger

Gina Drosos

have we really customers. last in the custom creating year offering -- our game our saw over We for upped

bespoke Wang, So driver really now and bridal business. also can for the of strong and on been part choose so in setting, creative Neil Lane diamond, Vera our choose piece the the you example, that’s

Lorraine Hutchinson

will some as customers you be shop then about think you still may spoke your there traffic And earlier. clearly stores constraints Thanks. and your about they within holiday,

ensure you out? you So making what are can the can weeks to changes those volumes that are during the types spread those of try handle key usually to you see holiday you and

Joan Hilson

the of customer lot uncertainty more I discretionary resurgence of half a think, is in things. of I year, the lots Look, the of for COVID, mean, probably, there will election, demand categories, there back be

focused really are to stores jewelry is on company that this holiday which customers control, ready our we we one the are can what be Number serve So can being safe. season.

called have We Takes wearing a both masks piece about and also partnered high authority Care, which for very of of touch proprietary masks and leading program is staff and areas every jewelry. distancing, all frequent healthcare developed our with cleaning customers really Love complementary and store social our

in holiday feel newness. As Joan have that very said earlier, our earlier and about we shipped we strongly newness

I newness a be lot last ready. think pinpointed to we learning of very successfully over that’s couple years holiday done the have so and last and that in more of

have our ready. online We gotten business

website open are selling able able associates our more that if of mentioned, aren’t be as either do also home, have as to virtual will this a packages if from times from in we sales. were faster. so year been And their can than And increased more then there distribution shop They open. our capability, remarks, they I half stores, or our are stores we more stores anticipating to X ago. to to be have Our we are I our my trained online year mentioned then, ship that easier eCommerce that prepared stand with up

we ready of customer acquisition keep new doing, and funnel. to prospecting to filling and a obviously, are are we work lot our try So on

Gina Drosos

to is the fulfillment U.S. The in, be XX% as work buy capabilities in and that, only thing flexible that be just banners. store online, orders pickup on said. our able of I ship SNDC would increasing add are available eCommerce our of SKUs Joan investing will capacity, to And all for Gina, for we our [ph] will

after we in manual from customers to banners. As but banners automated our have ship more as, in and have our a improved store provided not of the all product well approach

ours. And options purchasing, that’s for plans extended as able meaningful So improvement our have have warranty and we online our expanded credit as we eComm said, well.

have So of lot them thought a of may would customers want understanding like this we put lot to shop the and they shop to forth how effort prepare holiday to to. into however for

Lorraine Hutchinson

Thank you.

Operator

[Operator ahead. next Advisory go of from Dana comes Instructions] question Telsey The Telsey Please Group.

Dana Telsey

Good the see morning, nice to and everyone, progress.

year? As about And deadlines. whether also we year or different this last year you. of they are to compared it introductions? terms spend, than season costs, you of in are introductions year of how costs, is timing How shipping category this holiday you earlier advertising Thank product have last heard shipping this marketing think planning year, as

Gina Drosos

you. Thank Dana. Hi,

So One that. on in is mentioned, I earlier, we available online our and in say, stores. as so couple new I September of would things, products getting are

of are big jewelry. terms meaningful towards sentimental In more seeing trends and newness, we

ways, jewelry relationships really has in focus caused been COVID-XX customers think I on has with and trending. new to different

we journey showcasing of in So on period life journey about we and new like Zales, a am this. collection of really resilient across are through that we launches the have that banners. all excited have I that kind our goes

We launches concepts in also K. of both in strong Jared. and have sentimental very

strengthening our this are environment. we that So are custom we mentioned adapting I think offering. I to

jewelry diamond Joan customize We I a for people know have so we it’s anything spoke you that want engraving to have and to don’t that’s more setting evolution often to and another I their have choosing if made partners, add are that. seeing their or ring whether

Joan Hilson

would only say No. are we cost, the shipping I on of aware that.

our plans through that. working it have in We and are

balance we marketing our to working has products it out respect as and serve a have our effective have the see mix. them need make smooth Dana. a we marketing, We And bringing time bit nice We just vendors are mentioned to they they of sure as believe to earlier linear digital, then, with a to whatever and we in on and -- timing that that bit, speaking and balance that are social to. an we of customers wherever with

know marketing. anything Gina, on don’t I want So add if you if to

Gina Drosos

I more have years couple we to to than that on always last just Yeah. really the over mean say strategy. of switch

QX, balanced we while Signet majority more more spend a of digital. the have much year used in So shifted to message the vast to across our marketing much and marketing

can time. at less customer really getting the platform, do dynamic the with the more data our customers our we messaging via content to right optimization So right right

Dana Telsey

you. Thank

Operator

Fargo. The next Boruchow question Please Wells from of Ike ahead. comes go

Ike Boruchow

stabilize Good break color margins I from And am occupancy on anything comps margins, should if is just there maybe home so we And improve you as the this questions, missed we everyone. I A eComm, merchandise the and the regarding last out are versus just your half to promotional got on should the XX.X%, savings there? you. begin then question able quarter-to-date back like to Hey. is there the gross of year? morning, on sales a if on am be those you worked more steady, stores commentary on any curious going did the to begin August apologies, positive couple Thank I even that strong now of on of very I margins I then and three, in guess guess, that assume the through new that have sorry standpoint? the

Gina Drosos

will I sales question. August. to say I We the eCommerce that. pleased in So strong held that take see was particularly did first

to We eCommerce in of opened XX% at over mid-July. got got just held XX% of we on store sales re-openings and stores our to So north have by scale August.

category, bridal integrated in-store the of journey, competitive our reinforcement these shopping which of advantage is recognized especially belief both importance that and given in store combination it’s the for the… given jewelry and is us footprint, this expertise and the me Signet to So customer’s trust sales. in the is digital Joan which take a jewelry counseling of new our capabilities,

Joan Hilson

to we penetration merged margin, stores it on margin to know distribution. down and level remarks, mentioned declined a result of clearance largely as the that a prepared was respect time higher due also cost efficiencies see give discipline associated It deleveraging of as continue cost, both core guidance in through than we With well year quarter. as to management, as a the I quarter with and remain this our fixed well. this we efforts we work -- those plans this our working on And and promote committed throughout replenishment we but on last cannot year. And we inventory and on as inventory at appropriate and will each on our gross margin, as to

Ike Boruchow

Got it. you. Thank

Operator

Thank to for comments. floor now the any the Drosos I to that’s Gina like you. question. last would closing And turn

Gina Drosos

Great. morning. Well, this thanks us everyone for joining

our team pleased Again, are for you with Signet safety. and season values. your QX mission we wish and holiday made to in your and beyond. serve families members, health extraordinary core the we you and your our and contributions And We progress to thank for we and continued have Thank you. passion continued to customers are this commitment and listening everyone well-prepared to our

Operator

today’s now you Thank for concluded. presentation. is conference attending The

You disconnect. now may

Signet Jewelers Limited (SIG) 3 Sep 202021 Q2 Earnings call transcript