SIGNET JEWELERS LTD, 10-Q filed on 9/3/2020
Quarterly Report
v3.20.2
Document and Entity Information - shares
6 Months Ended
Aug. 01, 2020
Aug. 28, 2020
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Aug. 01, 2020  
Document Transition Report false  
Entity File Number 1-32349  
Entity Registrant Name SIGNET JEWELERS LIMITED  
Entity Incorporation, State or Country Code D0  
Entity Address, Address Line One Clarendon House  
Entity Address, Address Line Two 2 Church Street  
Entity Address, City or Town Hamilton  
Entity Address, Postal Zip Code HM11  
Entity Address, Country BM  
City Area Code 441  
Local Phone Number 296 5872  
Title of 12(b) Security Common Shares of $0.18 each  
Trading Symbol SIG  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   52,342,997
Amendment Flag false  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q2  
Entity Central Index Key 0000832988  
Current Fiscal Year End Date --01-30  
v3.20.2
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
shares in Millions, $ in Millions
3 Months Ended 6 Months Ended
Aug. 01, 2020
Aug. 03, 2019
Aug. 01, 2020
Aug. 03, 2019
Income Statement [Abstract]        
Sales $ 888.0 $ 1,364.4 $ 1,740.1 $ 2,796.1
Cost of sales (663.9) (901.3) (1,312.2) (1,833.6)
Restructuring charges - cost of sales 0.2 (4.4) 0.6 (4.4)
Gross margin 224.3 458.7 428.5 958.1
Selling, general and administrative expenses (265.9) (411.4) (624.3) (886.6)
Restructuring charges (28.9) (23.4) (41.6) (50.2)
Asset impairments (20.3) (47.7) (156.6) (47.7)
Other operating income, net 1.1 1.4 4.7 1.4
Operating income (loss) (89.7) (22.4) (389.3) (25.0)
Interest expense, net (9.4) (10.1) (16.5) (19.3)
Other non-operating income, net 0.2 0.2 0.3 0.5
Income (loss) before income taxes (98.9) (32.3) (405.5) (43.8)
Income taxes 17.2 (3.8) 126.7 (2.3)
Net income (loss) (81.7) (36.1) (278.8) (46.1)
Dividends on redeemable convertible preferred shares (8.3) (8.2) (16.5) (16.4)
Net income (loss) attributable to common shareholders $ (90.0) $ (44.3) $ (295.3) $ (62.5)
Earnings (loss) per common share:        
Earnings per common share: basic (usd per share) $ (1.73) $ (0.86) $ (5.69) $ (1.21)
Earnings per common share: diluted (usd per share) $ (1.73) $ (0.86) $ (5.69) $ (1.21)
Weighted average common shares outstanding:        
Weighted average common shares outstanding: basic (shares) 52.0 51.7 51.9 51.6
Weighted average common shares outstanding: diluted (shares) 52.0 51.7 51.9 51.6
v3.20.2
Condensed Consolidated Statements Of Comprehensive Income (Loss) (Unaudited) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Aug. 01, 2020
Aug. 03, 2019
Aug. 01, 2020
Aug. 03, 2019
Pre-tax amount        
Foreign currency translation adjustments $ 18.4 $ (24.0) $ (8.3) $ (26.0)
Available-for-sale securities:        
Unrealized gain (loss) 0.1 0.0 0.4 0.3
Cash flow hedges:        
Unrealized gain (loss) 0.0 12.4 0.2 8.1
Reclassification adjustment for (gains) losses to net income (0.9) 0.0 (11.6) (0.5)
Pension plan:        
Reclassification adjustment to net income for amortization of actuarial (gains) losses 0.0 0.3 0.1 0.6
Reclassification adjustment to net income for amortization of net prior service credits 0.1 0.0 0.3 0.0
Total other comprehensive income (loss) 17.7 (11.3) (18.9) (17.5)
Tax (expense) benefit        
Foreign currency translation adjustments 0.0 0.0 0.0 0.0
Available-for-sale securities:        
Unrealized gain (loss) 0.0 (0.1) 0.0 (0.1)
Cash flow hedges:        
Unrealized gain (loss) 0.0 (3.0) 0.0 (1.9)
Reclassification adjustment for (gains) losses to net income 0.1 0.0 2.7 0.1
Pension plan:        
Reclassification adjustment to net income for amortization of actuarial (gains) losses 0.0 0.0 0.0 (0.1)
Reclassification adjustment to net income for amortization of net prior service credits 0.0 0.0 0.0 0.0
Total other comprehensive income (loss) 0.1 (3.1) 2.7 (2.0)
After-tax amount        
Net income (loss) (81.7) (36.1) (278.8) (46.1)
Foreign currency translation adjustments 18.4 (24.0) (8.3) (26.0)
Available-for-sale securities:        
Unrealized gain (loss) 0.1 (0.1) 0.4 0.2
Cash flow hedges:        
Unrealized gain (loss) 0.0 9.4 0.2 6.2
Reclassification adjustment for (gains) losses to net income (0.8) 0.0 (8.9) (0.4)
Pension plan:        
Reclassification adjustment to net income for amortization of actuarial (gains) losses 0.0 0.3 0.1 0.5
Reclassification adjustment to net income for amortization of net prior service credits 0.1 0.0 0.3 0.0
Total other comprehensive income (loss) 17.8 (14.4) (16.2) (19.5)
Total comprehensive income (loss) $ (63.9) $ (50.5) $ (295.0) $ (65.6)
v3.20.2
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Millions
Aug. 01, 2020
Feb. 01, 2020
Aug. 03, 2019
Current assets:      
Cash and cash equivalents $ 1,204.0 $ 374.5 $ 271.5
Accounts receivable, net 31.5 38.8 21.8
Other current assets 182.9 403.5 190.6
Income taxes 251.3 6.3 2.6
Inventories, net 2,193.1 2,331.7 2,272.1
Total current assets 3,862.8 3,154.8 2,758.6
Non-current assets:      
Property, plant and equipment, net of accumulated depreciation of $1,119.3, $1,064.7 and $1,338.3, respectively 645.8 741.9 750.2
Operating lease right-of-use assets 1,459.9 1,683.3 1,729.3
Goodwill 238.0 248.8 248.8
Intangible assets, net 179.0 263.8 264.3
Other assets 179.0 201.8 194.7
Deferred tax assets 13.6 4.7 19.7
Total assets 6,578.1 6,299.1 5,965.6
Current liabilities:      
Loans and overdrafts 4.6 95.6 54.2
Accounts payable 302.2 227.9 224.1
Accrued expenses and other current liabilities 442.0 697.0 418.0
Deferred revenue 330.9 266.2 265.4
Operating lease liabilities 391.0 338.2 324.8
Income taxes 28.7 27.7 25.1
Total current liabilities 1,499.4 1,652.6 1,311.6
Non-current liabilities:      
Long-term debt 1,336.1 515.9 628.2
Operating lease liabilities 1,263.3 1,437.7 1,499.0
Other liabilities 108.9 116.6 122.7
Deferred revenue 699.3 731.5 699.8
Deferred tax liabilities 129.1 5.2 0.0
Total liabilities 5,036.1 4,459.5 4,261.3
Commitments and contingencies
Series A redeemable convertible preferred shares of $.01 par value: authorized 500 shares, 0.625 shares outstanding (February 1, 2020 and August 3, 2019: 0.625 shares outstanding) 625.6 617.0 616.1
Shareholders’ equity:      
Common shares of $.18 par value: authorized 500 shares, 52.3 shares outstanding (February 1, 2020 and August 3, 2019: 52.3 outstanding) 12.6 12.6 12.6
Additional paid-in capital 250.8 245.4 236.3
Other reserves 0.4 0.4 0.4
Treasury shares at cost: 17.7 shares (February 1, 2020 and August 3, 2019: 17.7 shares) (981.1) (984.9) (993.0)
Retained earnings 1,943.7 2,242.9 2,154.2
Accumulated other comprehensive loss (310.0) (293.8) (322.3)
Total shareholders’ equity 916.4 1,222.6 1,088.2
Total liabilities, redeemable convertible preferred shares and shareholders’ equity $ 6,578.1 $ 6,299.1 $ 5,965.6
v3.20.2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
$ in Millions
Aug. 01, 2020
Feb. 01, 2020
Aug. 03, 2019
Accumulated depreciation $ 1,119.3 $ 1,064.7 $ 1,338.3
Common shares, par value (usd per share) $ 0.18 $ 0.18 $ 0.18
Common shares, authorized (shares) 500,000,000 500,000,000 500,000,000
Common shares, outstanding (shares) 52,300,000 52,300,000 52,300,000
Treasury shares, shares (shares) 17,700,000 17,700,000 17,700,000
Series A Redeemable Convertible Preferred Stock      
Preferred shares, par value (usd per share) $ 0.01 $ 0.01 $ 0.01
Preferred shares, authorized (shares) 500,000,000 500,000,000 500,000,000
Preferred shares, outstanding (shares) 625,000 625,000 625,000
v3.20.2
Condensed Consolidated Statements Of Cash Flows (Unaudited) - USD ($)
$ in Millions
6 Months Ended
Aug. 01, 2020
Aug. 03, 2019
Cash flows from operating activities    
Net income (loss) $ (278.8) $ (46.1)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Depreciation and amortization 84.8 85.8
Amortization of unfavorable leases and contracts (2.7) (2.7)
Share-based compensation 6.3 8.3
Deferred taxation 115.0 (0.4)
Asset impairments 156.6 47.7
Restructuring charges 11.5 14.0
Other non-cash movements 0.7 (0.4)
Changes in operating assets and liabilities:    
Decrease in accounts receivable 7.0 1.5
Decrease in other assets and other receivables 244.0 19.3
Decrease in inventories 135.3 96.8
Increase in accounts payable 65.5 74.7
Decrease in accrued expenses and other liabilities (241.1) (44.6)
Change in operating lease assets and liabilities 64.2 (1.9)
Increase (decrease) in deferred revenue 32.9 (1.1)
Changes in income tax receivable and payable (243.0) (1.1)
Pension plan contributions (2.1) (3.2)
Net cash provided by operating activities 156.1 246.6
Investing activities    
Purchase of property, plant and equipment (23.6) (52.2)
Purchase of available-for-sale securities 0.0 (11.7)
Proceeds from sale of available-for-sale securities 3.1 0.5
Net cash used in investing activities (20.5) (63.4)
Financing activities    
Dividends paid on common shares (19.3) (38.5)
Dividends paid on redeemable convertible preferred shares (7.8) (15.6)
Repayments of term loans 0.0 (17.9)
Proceeds from revolving credit facilities 900.0 0.0
Repayments of revolving credit facilities (80.0) 0.0
Decrease of bank overdrafts (86.8) (29.1)
Other financing activities (9.8) (0.6)
Net cash provided by (used in) financing activities 696.3 (101.7)
Cash and cash equivalents at beginning of period 374.5 195.4
Increase in cash and cash equivalents 831.9 81.5
Effect of exchange rate changes on cash and cash equivalents (2.4) (5.4)
Cash and cash equivalents at end of period $ 1,204.0 $ 271.5
v3.20.2
Condensed Consolidated Statements Of Shareholders' Equity (Unaudited) - USD ($)
$ in Millions
Total
Common shares at par value
Additional paid-in capital
Other reserves
Treasury shares
Retained earnings
Accumulated other comprehensive loss
Beginning Balance at Feb. 02, 2019 $ 1,201.6 $ 12.6 $ 236.5 $ 0.4 $ (1,027.3) $ 2,282.2 $ (302.8)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income (loss) (10.0)         (10.0)  
Other comprehensive income (loss) (5.1)           (5.1)
Dividends declared: Common shares (19.3)         (19.3)  
Dividends declared: Preferred shares (8.2)         (8.2)  
Net settlement of equity-based awards (1.6)   (7.8)   27.5 (21.3)  
Share-based compensation expense 4.0   4.0        
Ending Balance at May. 04, 2019 1,161.4 12.6 232.7 0.4 (999.8) 2,223.4 (307.9)
Beginning Balance at Feb. 02, 2019 1,201.6 12.6 236.5 0.4 (1,027.3) 2,282.2 (302.8)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income (loss) (46.1)            
Other comprehensive income (loss) (19.5)            
Dividends declared: Common shares (38.6)            
Ending Balance at Aug. 03, 2019 1,088.2 12.6 236.3 0.4 (993.0) 2,154.2 (322.3)
Beginning Balance at May. 04, 2019 1,161.4 12.6 232.7 0.4 (999.8) 2,223.4 (307.9)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income (loss) (36.1)         (36.1)  
Other comprehensive income (loss) (14.4)           (14.4)
Dividends declared: Common shares (19.3)         (19.3)  
Dividends declared: Preferred shares (8.2)         (8.2)  
Net settlement of equity-based awards 0.5   (0.7)   6.8 (5.6)  
Share-based compensation expense 4.3   4.3        
Ending Balance at Aug. 03, 2019 1,088.2 12.6 236.3 0.4 (993.0) 2,154.2 (322.3)
Beginning Balance at Feb. 01, 2020 1,222.6 12.6 245.4 0.4 (984.9) 2,242.9 (293.8)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income (loss) (197.1)         (197.1)  
Other comprehensive income (loss) (34.0)           (34.0)
Dividends declared: Common shares 0.0            
Dividends declared: Preferred shares (8.2)         (8.2)  
Net settlement of equity-based awards (0.9)   (0.4)   (0.3) (0.2)  
Share-based compensation expense 1.4   1.4        
Ending Balance at May. 02, 2020 983.8 12.6 246.4 0.4 (985.2) 2,037.4 (327.8)
Beginning Balance at Feb. 01, 2020 1,222.6 12.6 245.4 0.4 (984.9) 2,242.9 (293.8)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income (loss) (278.8)            
Other comprehensive income (loss) (16.2)            
Dividends declared: Common shares 0.0            
Ending Balance at Aug. 01, 2020 916.4 12.6 250.8 0.4 (981.1) 1,943.7 (310.0)
Beginning Balance at May. 02, 2020 983.8 12.6 246.4 0.4 (985.2) 2,037.4 (327.8)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income (loss) (81.7)         (81.7)  
Other comprehensive income (loss) 17.8           17.8
Dividends declared: Common shares 0.0            
Dividends declared: Preferred shares (8.3)         (8.3)  
Net settlement of equity-based awards (0.1)   (0.5)   4.1 (3.7)  
Share-based compensation expense 4.9   4.9        
Ending Balance at Aug. 01, 2020 $ 916.4 $ 12.6 $ 250.8 $ 0.4 $ (981.1) $ 1,943.7 $ (310.0)
v3.20.2
Condensed Consolidated Statements Of Shareholders' Equity (Unaudited) - Parenthetical - $ / shares
3 Months Ended 6 Months Ended
Aug. 01, 2020
May 02, 2020
Aug. 03, 2019
May 04, 2019
Aug. 01, 2020
Aug. 03, 2019
Statement of Stockholders' Equity [Abstract]            
Common stock, dividends (usd per share) $ 0.00 $ 0.00 $ 0.37 $ 0.37 $ 0.00 $ 0.74
Preferred stock, dividends (usd per share) $ 12.66 $ 12.50 $ 12.50 $ 12.50 $ 25.16 $ 25.00
v3.20.2
Organization and principal accounting policies
6 Months Ended
Aug. 01, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and principal accounting policies Organization and principal accounting policies
Signet Jewelers Limited (“Signet” or the “Company”), a holding company incorporated in Bermuda, is the world’s largest retailer of diamond jewelry. The Company operates through its 100% owned subsidiaries with sales primarily in the United States (“US”), United Kingdom (“UK”) and Canada. Signet manages its business as three reportable segments: North America, International, and Other. The “Other” reportable segment consists of subsidiaries involved in the purchasing and conversion of rough diamonds to polished stones. See Note 4 for additional discussion of the Company’s segments.
Signet’s sales are seasonal, with the fourth quarter accounting for approximately 35-40% of annual sales, with December being the highest volume month of the year. The “Holiday Season” consists of results for the months of November and December. As a result of our strategic credit outsourcing and transformation initiatives, we anticipate our operating profit will be almost entirely generated in the fourth quarter.
The Company has evaluated and determined that there were no additional events or transactions subsequent to August 1, 2020 for potential recognition or disclosure through the date the condensed consolidated interim financial statements were issued.
Risks and Uncertainties - COVID-19
In December 2019, a novel coronavirus (“COVID-19”) was identified in Wuhan, China. In March 2020, the World Health Organization declared COVID-19 a global pandemic as a result of the further spread of the virus into all regions of the world, including those regions where the Company’s primary operations occur in North America and the UK. COVID-19 has significantly impacted consumer traffic and the Company’s retail sales, based on the perceived public health risk and government-imposed quarantines and restrictions of public gatherings and commercial activity to contain spread of the virus.
Effective March 23, 2020, the Company temporarily closed all of its stores in North America, its diamond operations in New York and its support centers in the US. Additionally, effective March 24, 2020, the Company temporarily closed all of its stores in the UK. The COVID-19 pandemic has also disrupted the Company’s global supply chain, including the temporary closure of the Company’s diamond polishing operations in Botswana, and may cause additional disruptions to operations if employees of the Company become sick, are quarantined, or are otherwise limited in their ability to work at Company locations or travel for business. The Company has continued to fill e-commerce orders during the temporary closure period of the stores. During the second quarter, the Company began re-opening its stores, and as of the date of this report, has re-opened substantially all of its stores in both North America and the UK.
In addition, as a result of the uncertainty surrounding the impacts of COVID-19, beginning in March 2020, there was a significant decline in all major domestic and global financial market indicators. The Company’s share price and market capitalization have significantly declined during the first half of Fiscal 2021 and while there has been some recovery, the future rate of recovery is unpredictable in light of the current economic conditions.
The full extent and duration of the impact of COVID-19 on the Company’s operations and financial performance is currently unknown and depends on future developments that are uncertain and unpredictable, including the duration and possible resurgence of the pandemic, its impact on capital and financial markets on a macro-scale and the actions to contain the virus or mitigate its impact, among others. While the full extent of the impact of COVID-19 is currently unknown, it has had a significant impact on Signet’s results of operations and cash flows. However, management currently believes that it has adequate liquidity and business plans to continue to operate the business and mitigate the risks associated with COVID-19 for the 12 months following the date of this report.
As a result of the potential risks identified related to COVID-19 on its condensed consolidated financial statements, the Company considered and performed the following assessments during Fiscal 2021: impairment assessments for goodwill, indefinite-lived intangible assets and store level long-lived assets (including property and equipment and operating lease right-of-use assets); assessment of rent concessions, including deferrals or other lease modifications; assessment of the effectiveness of certain foreign currency and commodity derivative financial instruments; assessment of the realizability of the Company’s deferred tax assets; and assessment of the impacts of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) enacted on March 27, 2020.
Basis of preparation
The condensed consolidated financial statements of Signet are prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with US generally accepted accounting principles (“US GAAP”) have been condensed or omitted from this report, as is permitted by such rules and regulations. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated
financial statements and notes included in Signet’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020 filed with the SEC on March 26, 2020.
Use of estimates
The preparation of these condensed consolidated financial statements, in conformity with US GAAP and SEC regulations for interim reporting, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and as a result of the above noted risks associated with COVID-19, it is reasonably possible that those estimates will change in the near term and the effect could be material. Estimates and assumptions are primarily made in relation to the valuation of accounts receivables, inventories, deferred revenue, derivatives, employee benefits, income taxes, contingencies, leases, asset impairments for goodwill, indefinite-lived intangible and long-lived assets, and the depreciation and amortization of long-lived assets, as well as accounting for business combinations.
Fiscal year
The Company’s fiscal year ends on the Saturday nearest to January 31st. Fiscal 2021 and Fiscal 2020 refer to the 52 week periods ending January 30, 2021 and February 1, 2020, respectively. Within these condensed consolidated financial statements, the second quarter of the relevant fiscal years 2021 and 2020 refer to the 13 weeks ended August 1, 2020 and August 3, 2019, respectively.
Foreign currency translation
The financial position and operating results of certain foreign operations, including certain subsidiaries operating in the UK as part of the International segment and Canada as part of the North America segment, are consolidated using the local currency as the functional currency. Assets and liabilities are translated at the rates of exchange on the balance sheet date, and revenues and expenses are translated at the monthly average rates of exchange during the period. Resulting translation gains or losses are included in the accompanying condensed consolidated statements of shareholders’ equity as a component of accumulated other comprehensive income (loss) (“AOCI”). Gains or losses resulting from foreign currency transactions are included in other operating income, net within the condensed consolidated statements of operations.
See Note 9 for additional information regarding the Company’s foreign currency translation.
v3.20.2
New accounting pronouncements
6 Months Ended
Aug. 01, 2020
Accounting Policies [Abstract]  
New accounting pronouncements New accounting pronouncements
The following section provides a description of new accounting pronouncements ("Accounting Standard Update" or "ASU") issued by the Financial Accounting Standards Board ("FASB") that are applicable to the Company.

New accounting pronouncements recently adopted

The following ASU’s were adopted as of February 2, 2020. The impact on the Company's consolidated financial statements is described within the table below.
StandardDescription
ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, issued July 2018.
Aligns the requirements for capitalizing implementation costs in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The adoption of this ASU did not have a material impact on the Company’s financial position or results of operations.
ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, issued August 2018.
Modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans and clarifies the disclosure requirements regarding projected benefit obligations and accumulated benefit obligations. The ASU is effective for fiscal years ending after December 15, 2020, with early adoption permitted. The new guidance does not affect the existing recognition or measurement guidance, and therefore had no impact on the Company’s financial condition or results of operations.
ASU No. 2018-13, Fair Value Measurements (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, issued August 2018.
Modifies the disclosure requirements on fair value measurements in Topic 820 and eliminates ‘at a minimum’ from the phrase ‘an entity shall disclose at a minimum’ to promote the appropriate exercise of discretion by entities when considering fair value disclosures and to clarify that materiality is an appropriate consideration. The adoption of this ASU did not have a material impact on the Company’s financial position or results of operations.

ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, issued June 2016.
Requires entities to measure and recognize expected credit losses for financial assets measured at amortized cost basis. The estimate of expected credit losses should consider historical information, current information, and reasonable and supportable forecasts of expected losses over the remaining contractual life that affect collectability. The adoption of this ASU did not have a material impact on the Company’s financial position or results of operations upon adoption; however, this ASU will impact the accounting for expected credit losses on the Company’s non-prime customer in-house finance receivables beginning in the second quarter of Fiscal 2021 (as discussed in Note 11).
New accounting pronouncements issued but not yet adopted
There are no new accounting pronouncements issued that are expected to be applicable to the Company in future periods.
v3.20.2
Revenue recognition
6 Months Ended
Aug. 01, 2020
Revenue from Contract with Customer [Abstract]  
Revenue recognition Revenue recognition
The following tables provide the Company’s revenue, disaggregated by banner, major product and channel, for the 13 and 26 weeks ended August 1, 2020 and August 3, 2019:
13 weeks ended August 1, 202013 weeks ended August 3, 2019
(in millions)North AmericaInternationalOtherConsolidatedNorth AmericaInternationalOtherConsolidated
Sales by banner:
Kay
$325.0 $ $ $325.0 $532.5 $ $ $532.5 
Zales
185.1   185.1 279.7   279.7 
Jared
168.5   168.5 254.6   254.6 
Piercing Pagoda
59.3   59.3 74.2   74.2 
James Allen
64.3   64.3 53.6   53.6 
Peoples
20.8   20.8 46.4   46.4 
International segment
 61.0  61.0  113.9  113.9 
Other(1)
  4.0 4.0   9.5 9.5 
Total sales
$823.0 $61.0 $4.0 $888.0 $1,241.0 $113.9 $9.5 $1,364.4 
26 weeks ended August 1, 202026 weeks ended August 3, 2019
(in millions)North AmericaInternationalOtherConsolidatedNorth AmericaInternationalOtherConsolidated
Sales by banner:
Kay
$658.5 $ $ $658.5 $1,111.8 $ $ $1,111.8 
Zales
367.4   367.4 568.5   568.5 
Jared
313.9   313.9 509.6   509.6 
Piercing Pagoda
110.7   110.7 156.8   156.8 
James Allen
108.1   108.1 105.6   105.6 
Peoples
45.5   45.5 89.0   89.0 
International segment
 125.9  125.9  225.4  225.4 
Other(1)
  10.1 10.1   29.4 29.4 
Total sales
$1,604.1 $125.9 $10.1 $1,740.1 $2,541.3 $225.4 $29.4 $2,796.1 

(1)  Includes sales from Signet’s diamond sourcing initiative.
13 weeks ended August 1, 202013 weeks ended August 3, 2019
(in millions)North AmericaInternationalOtherConsolidatedNorth AmericaInternationalOtherConsolidated
Sales by product:
Bridal
$417.1 $28.8 $ $445.9 $560.3 $47.3 $ $607.6 
Fashion
294.5 12.7  307.2 435.4 21.2  456.6 
Watches
23.7 22.4  46.1 53.0 39.3  92.3 
Other(1)
87.7 (2.9)4.0 88.8 192.3 6.1 9.5 207.9 
Total sales
$823.0 $61.0 $4.0 $888.0 $1,241.0 $113.9 $9.5 $1,364.4 
26 weeks ended August 1, 202026 weeks ended August 3, 2019
(in millions)North AmericaInternationalOtherConsolidatedNorth AmericaInternationalOtherConsolidated
Sales by product:
Bridal
$731.2 $56.9 $ $788.1 $1,155.0 $95.9 $ $1,250.9 
Fashion
592.4 25.3  617.7 902.8 43.6  946.4 
Watches
48.3 39.9  88.2 101.2 73.3  174.5 
Other(1)
232.2 3.8 10.1 246.1 382.3 12.6 29.4 424.3 
Total sales
$1,604.1 $125.9 $10.1 $1,740.1 $2,541.3 $225.4 $29.4 $2,796.1 
(1)  Other revenue primarily includes gift, beads and other miscellaneous jewelry sales, repairs, service plan and other miscellaneous non-jewelry sales.
13 weeks ended August 1, 202013 weeks ended August 3, 2019
(in millions)North AmericaInternationalOtherConsolidatedNorth AmericaInternationalOtherConsolidated
Sales by channel:
Store
$574.6 $39.3 $ $613.9 $1,097.2 $100.8 $ $1,198.0 
E-commerce
248.4 21.7  270.1 143.8 13.1  156.9 
Other
  4.0 4.0   9.5 9.5 
Total sales
$823.0 $61.0 $4.0 $888.0 $1,241.0 $113.9 $9.5 $1,364.4 
26 weeks ended August 1, 202026 weeks ended August 3, 2019
(in millions)North AmericaInternationalOtherConsolidatedNorth AmericaInternationalOtherConsolidated
Sales by channel:
Store
$1,206.5 $88.7 $ $1,295.2 $2,254.5 $201.0 $ $2,455.5 
E-commerce
397.6 37.2  434.8 286.8 24.4  311.2 
Other
  10.1 10.1   29.4 29.4 
Total sales
$1,604.1 $125.9 $10.1 $1,740.1 $2,541.3 $225.4 $29.4 $2,796.1 
The Company recognizes revenues when control of the promised goods and services are transferred to customers, in an amount that reflects the consideration expected to be received in exchange for those goods. Transfer of control generally occurs at the time merchandise is taken from a store, or upon receipt of the merchandise by a customer for an e-commerce shipment. The Company excludes all taxes assessed by government authorities and collected from a customer from its reported sales. The Company’s revenue streams and their respective accounting treatments are further discussed below.
Merchandise sales and repairs
Store sales are recognized when the customer receives and pays for the merchandise at the store with cash, in-house customer finance, private label credit card programs, a third-party credit card or a lease purchase option. For online sales shipped to customers, sales are recognized at the estimated time the customer has received the merchandise. Amounts related to shipping and handling that are billed to customers are reflected in sales and the related costs are reflected in cost of sales. Revenues on the sale of merchandise are reported net of anticipated returns and sales tax collected. Returns are estimated based on previous return rates experienced. Any deposits received from a customer for merchandise are deferred and recognized as revenue when the customer receives the merchandise. Revenues derived from providing replacement merchandise on behalf of insurance organizations are recognized upon receipt of the merchandise by the customer. Revenues on repair of merchandise are recognized when the service is complete and the customer collects the merchandise at the store.
Extended service plans and lifetime warranty agreements (“ESP”)
The Company recognizes revenue related to ESP sales in proportion to when the expected costs will be incurred. The deferral period for ESP sales is determined from patterns of claims costs, including estimates of future claims costs expected to be incurred. Management reviews the trends in claims to assess whether changes are required to the revenue and cost recognition rates utilized. A significant change in estimates related to the time period or pattern in which warranty-related costs are expected to be incurred could materially impact revenues. All direct costs associated with the sale of these plans are deferred and amortized in proportion to the revenue recognized and disclosed as either other current assets or other assets in the condensed consolidated balance sheets. These direct costs primarily include sales commissions and credit card fees. Amortization of deferred selling costs related to the Company’s warranty programs is included within selling, general and administrative expenses in the condensed consolidated statements of operations. Amortization of deferred selling costs was $3.3 million and $7.6 million during the 13 and 26 weeks ended August 1, 2020, and $9.9 million and $17.4 million during the 13 and 26 weeks ended August 3, 2019, respectively.
Unamortized deferred selling costs as of August 1, 2020, February 1, 2020 and August 3, 2019 were as follows:
(in millions)August 1, 2020February 1, 2020August 3, 2019
Other current assets$30.2 $23.6 $20.6 
Other assets76.4 80.0 76.5 
Total deferred selling costs$106.6 $103.6 $97.1 
The North America segment sells ESP, subject to certain conditions, to perform repair work over the life of the product. Customers generally pay for ESP at the store at the time of merchandise sale. Revenue from the sale of the lifetime ESP is recognized consistent with the estimated pattern of claim costs expected to be incurred by the Company in connection with performing under the ESP obligations. Lifetime ESP revenue is deferred and recognized over a maximum period of 17 years after the sale of the warranty contract. Although claims experience varies between the Company’s national banners, thereby resulting in different recognition rates, approximately 55% of revenue is recognized within the first two years on a weighted average basis.
The North America segment also sells a Jewelry Replacement Plan (“JRP”). The JRP is designed to protect customers from damage or defects of purchased merchandise for a period of three years. If the purchased merchandise is defective or becomes damaged under normal use in that time period, the item will be replaced. JRP revenue is deferred and recognized on a straight-line basis over the period of expected claims costs.
Signet also sells warranty agreements in the capacity of an agent on behalf of a third-party. The commission that Signet receives from the third-party is recognized at the time of sale less an estimate of cancellations based on historical experience.
Sale vouchers
Certain promotional offers award sale vouchers to customers who make purchases above a certain value, which grant a fixed discount on a future purchase within a stated time frame. The Company accounts for such vouchers by allocating the fair value of the voucher between the initial purchase and the future purchase using the relative-selling-price method. Sale vouchers are not sold on a stand-alone basis. The fair value of the voucher is determined based on the average sales transactions in which the vouchers were issued, when the vouchers are expected to be redeemed and the estimated voucher redemption rate. The fair value allocated to the future purchase is recorded as deferred revenue.
Consignment inventory sales
Sales of consignment inventory are accounted for on a gross sales basis as the Company maintains control of the merchandise through the point of sale as well as provides independent advice, guidance and after-sales service to customers. The products sold from consignment inventory are indistinguishable from other products that are sold to customers and are sold on the same terms. Supplier products are selected at the discretion of the Company. The Company is responsible for determining the selling price and physical security of the products.
Deferred revenue
Deferred revenue is comprised primarily of ESP and voucher promotions as follows:
(in millions)August 1, 2020February 1, 2020August 3, 2019
ESP deferred revenue$990.5 $960.0 $930.2 
Voucher promotions and other39.7 37.7 35.0 
Total deferred revenue
$1,030.2 $997.7 $965.2 
Disclosed as:
Current liabilities$330.9 $266.2 $265.4 
Non-current liabilities699.3 731.5 699.8 
Total deferred revenue$1,030.2 $997.7 $965.2 
13 weeks ended26 weeks ended
(in millions)August 1, 2020August 3, 2019August 1, 2020August 3, 2019
ESP deferred revenue, beginning of period$961.0 $931.3 $960.0 $927.6 
Plans sold(1)
55.7 90.5 109.4 186.5 
Revenue recognized(2)
(26.2)(91.6)(78.9)(183.9)
ESP deferred revenue, end of period$990.5 $930.2 $990.5 $930.2 
(1) Includes impact of foreign exchange translation.
(2) During the 13 and 26 weeks ended August 1, 2020, the Company recognized sales of $9.7 million and $54.2 million, respectively, related to deferred revenue that existed at February 1, 2020 in respect to ESP. Additionally, no ESP revenue was recognized beginning on March 23, 2020 due to the temporary closure of the Company’s stores and service centers as a result of COVID-19. As the Company began reopening stores and service centers during the second quarter of Fiscal 2021, the Company partially resumed recognizing service revenue as it fulfilled its performance obligations under the ESP.
v3.20.2
Segment information
6 Months Ended
Aug. 01, 2020
Segment Reporting [Abstract]  
Segment information Segment information
Financial information for each of Signet’s reportable segments is presented in the tables below. Signet’s chief operating decision maker utilizes segment sales and operating income, after the elimination of any inter-segment transactions, to determine resource allocations and performance assessment measures. Signet manages its business as three reportable segments: North America, International, and Other. Signet’s sales are derived from the retailing of jewelry, watches, other products and services as generated through the management of its reportable segments. The Company allocates certain support center costs between operating segments, and the remainder of the unallocated costs are included with the corporate and unallocated expenses presented. In addition, beginning in Fiscal 2021, the Company allocates restructuring costs (further described in Note 5) to the operating segment where these charges were incurred, and the presentation of such costs has been reflected consistently in all periods presented.
The North America reportable segment operates across the US and Canada. Its US stores operate nationally in malls and off-mall locations principally as Kay (Kay Jewelers and Kay Jewelers Outlet), Zales (Zales Jewelers and Zales Outlet), Jared (Jared The Galleria Of Jewelry and Jared Vault), James Allen and Piercing Pagoda, which operates through mall-based kiosks. Its Canadian stores operate as the Peoples Jewellers store banner. The segment also operates a variety of mall-based regional banners.
The International reportable segment operates stores in the UK, Republic of Ireland and Channel Islands. Its stores operate in shopping malls and off-mall locations (i.e. high street) principally as H.Samuel and Ernest Jones.
The Other reportable segment consists of subsidiaries involved in the purchasing and conversion of rough diamonds to polished stones.
13 weeks ended26 weeks ended
(in millions)August 1, 2020August 3, 2019August 1, 2020August 3, 2019
Sales:
North America segment
$823.0 $1,241.0 $1,604.1 $2,541.3 
International segment
61.0 113.9 125.9 225.4 
Other segment
4.0 9.5 10.1 29.4 
Total sales
$888.0 $1,364.4 $1,740.1 $2,796.1 
Operating income (loss):
North America segment (1)
$(57.0)$11.8 $(291.2)$40.1 
International segment (2)
(15.6)(1.6)(54.2)(10.6)
Other segment (3)
(0.2)(9.1)(0.5)(12.9)
Corporate and unallocated expenses (4)
(16.9)(23.5)(43.4)(41.6)
Total operating income (loss)
(89.7)(22.4)(389.3)(25.0)
Interest expense
(9.4)(10.1)(16.5)(19.3)
Other non-operating income, net
0.2 0.2 0.3 0.5 
Income (loss) before income taxes
$(98.9)$(32.3)$(405.5)$(43.8)

(1) Operating income (loss) during the 13 and 26 weeks ended August 1, 2020 includes a $0.2 million and $0.6 million benefit, respectively, recognized due to a change in inventory reserves previously recognized as part of the Company’s restructuring activities. Additionally, operating income (loss) during the 13 and 26 weeks ended August 1, 2020 includes charges of $27.7 million and $36.6 million, respectively, primarily related to severance, professional fees and store closure costs recorded in conjunction with the Company’s restructuring activities. Operating income (loss) during the 13 and 26 weeks ended August 1, 2020 also includes asset impairment charges of $17.5 million and $135.4 million, respectively. Operating income (loss) during the 13 and 26 weeks ended August 3, 2019 includes a $47.7 million out-of-period goodwill adjustment. In addition, operating income (loss) during the 13 and 26 weeks ended August 3, 2019 includes $1.7 million and $1.2 million, respectively, related to inventory charges recorded in conjunction with the Company’s restructuring activities. Operating income (loss) during the 13 and 26 weeks ended August 3, 2019 includes charges of $12.4 million and $32.2 million, respectively, primarily related to severance, professional fees and store closure costs recorded in conjunction with the Company’s restructuring activities. See Note 5, Note 13, and Note 15 for additional information.
(2) Operating income (loss) during the 13 and 26 weeks ended August 1, 2020 includes charges of $1.0 million and $4.6 million, respectively, related to severance and store closure costs recorded in conjunction with the Company’s restructuring activities. Additionally, operating income (loss) during the 13 and 26 weeks ended August 1, 2020 includes asset impairment charges of $2.8 million and $21.2 million, respectively. Operating income (loss) during the 13 and 26 weeks ended August 3, 2019 includes charges of $0.6 million and $1.6 million, respectively, related to severance and store closure costs recorded in conjunction with the Company’s restructuring activities. See Note 5, Note 13, and Note 15 for additional information.
(3) Operating income (loss) during the 13 and 26 weeks ended August 3, 2019 include charges of $2.7 million and $3.2 million, respectively, related to charges recorded in conjunction with the Company’s restructuring activities including inventory charges. See Note 5 for additional information.
(4) Operating income (loss) during the 13 and 26 weeks ended August 1, 2020 includes a credit of $1.0 million and a net charge of $7.5 million, respectively, related to the settlement of previously disclosed shareholder litigation matters, inclusive of expected insurance proceeds. Operating income (loss) during the 13 and 26 weeks ended August 1, 2020 includes charges of $0.2 million and $0.4 million, respectively, primarily related to severance and professional services recorded in conjunction with the Company’s restructuring activities. Operating income (loss) during the 13 and 26 weeks ended August 3, 2019 include charges of $10.4 million and $16.4 million, respectively, related to charges recorded in conjunction with the Company’s restructuring activities. See Note 5 and Note 21 for additional information.
v3.20.2
Restructuring Plans
6 Months Ended
Aug. 01, 2020
Restructuring and Related Activities [Abstract]  
Restructuring Plans Restructuring Plans
Signet Path to Brilliance Plan
During the first quarter of Fiscal 2019, Signet launched a three-year comprehensive transformation plan, the “Signet Path to Brilliance” plan (the “Plan”), to reposition the Company to be a share-gaining, OmniChannel jewelry category leader. The Plan was originally expected to result in pre-tax charges in the range of $200 million - $220 million over the duration of the plan of which $105 million - $115 million were expected to be cash charges. To date the Company has incurred $246 million under the Plan, of which $122.3 million is non-cash charges, which have exceeded the original estimates of the Plan based primarily on certain accelerated and enhanced actions which have taken place in the first half of Fiscal 2021, specifically as it relates to the optimization of its real estate footprint and the right-sizing of staffing at its stores and support centers. The Company is currently evaluating its initiatives under the Plan and its future costs in light of COVID-19; however, the Company currently expects to incur an additional $15 million - $20 million of costs related to the Plan during the remainder of Fiscal 2021, of which $14 million - $18 million are expected to be cash charges.
Restructuring charges and other Plan related costs of $28.7 million and $41.0 million were recognized in the 13 and 26 weeks ended August 1, 2020, respectively, primarily related to store closure costs (including non-cash accelerated depreciation on property and equipment), severance costs and professional fees for legal and consulting services.
Restructuring charges and other Plan related costs are classified in the condensed consolidated statements of operations as follows:
13 weeks ended26 weeks ended
(in millions)Statement of operations captionAugust 1, 2020August 3, 2019August 1, 2020August 3, 2019
Inventory charges
Restructuring charges - cost of sales
$(0.2)$4.4 $(0.6)$4.4 
Other Plan related expensesRestructuring charges28.9 23.4 41.6 50.2 
Total Signet Path to Brilliance Plan expenses$28.7 $27.8 $41.0 $54.6 

The composition of the restructuring charges the Company incurred during the 13 and 26 weeks ended August 1, 2020, as well as the cumulative amount incurred under the Plan through August 1, 2020, were as follows:
13 weeks ended26 weeks endedCumulative amount
(in millions)August 1, 2020August 1, 2020August 1, 2020
Inventory charges$(0.2)$(0.6)$70.8 
Termination benefits20.2 23.1 48.9 
Store closure and other costs8.7