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Signet Jewelers returns to growth for its full year ended February 1

GINA DROSOS FINAL PORTRAIT

Signet Jewelers ended its 2020 fiscal year with a strong holiday season and fourth quarter. Same store sales in North America were up 2.9% in Q4, although world-wide growth was trimmed to 2.3% by a below par performance in the United Kingdom where same store sales fell by 3.1% in the quarter.

The group ended its financial year on February 1, before the current Coronavirus pandemic reached the United States or Britain. The group closed all of its stores on both sides of the Atlantic on March 23.

Any commentary on the 2020 financial year is rendered virtually meaningless in the face of the current outbreak, which Signet’s CEO Virginia Drosos (pictured top) recognizes when she says:

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“On behalf of the Signet team, our thoughts and prayers are with all those who are impacted by the Covid-19 pandemic. We have heartfelt appreciation and admiration for all who are working tirelessly to fight the spread of this disease.”

Covid-19 has derailed the turnaround plan put in train by Ms Drosos, but the improving performance of the group ahead of the current crisis is vital to help it see through to the other side.

“While it is difficult in the current environment to reflect on the past, it’s important to consider where we’ve been and look ahead with the expectation of recovery. Prior to this crisis, our Signet team delivered results ahead of expectations for the fourth quarter and Fiscal 2020. Moreover, we delivered our best overall holiday business performance in four years. As we entered Fiscal 2021, our momentum from holiday continued, including a strong Valentine’s Day selling period, validating that the strategic initiatives and investments we made in the first two years of our Path to Brilliance transformation are delivering results,” Ms Drosos describes.

Signet ended the year to February 1 with sales of $6.13 billion, up 0.6% on prior year. North American sales were up by 1.1% while the UK business was down by 4.9%.

North America same store sales grew 2.9%, with ecommerce sales growth of 15%, and brick and mortar same store sales growth of 1.1%.

Average transaction values decreased by 0.5% and the number of transactions increased 3.4% driven by higher conversion in-store.

Bridal and fashion jewelry sales grew on a same store sales basis while watches and “other” categories declined on a same store sales basis.

Net cash provided by operating activities for Fiscal 2020 was $555.7 million. Free cash flow for Fiscal 2020 was $419.4 million, a $300.7 million improvement versus prior year adjusted free cash flow of $118.7 million.

The company is not providing Fiscal 2021 financial guidance at this time.

The job of Ms Drosos and her team right now is to maintain some turnover through ecommerce while conserving cash.

“What’s paramount now is that we are moving quickly and aggressively to strengthen Signet’s financial flexibility by reducing capital expenditures, driving transformational cost savings, and accelerating optimization of our real estate footprint. In addition, we have accessed $900 million from our revolving credit facility, suspended our common dividend, and elected to pay the May quarterly dividend on the preference shares in kind rather than in cash.  In line with our Customer First and Omni-channel strategies, we are prioritizing choiceful [sic] digital investments, including advancing our e-commerce experience and enabling a more flexible fulfillment model. We believe the exceptional team, capabilities, and agility we have built through our Path to Brilliance transformation position us well to navigate these unprecedented business times and emerge with greater competitive advantages. I want to thank all of our team members for their continued commitment to each other, our customers, our shareholders and our company. Amidst all challenges, they are demonstrating remarkable compassion, courage, and creativity,” Ms Drosos concludes.

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Tags : Signet Jewelers
Rob Corder

The author Rob Corder