HAMILTON, Bermuda, Nov. 25 /PRNewswire-FirstCall/ -- Signet
Jewelers Ltd (NYSE and LSE: SIG), the world's largest specialty
retail jeweler, today announced its third quarter unaudited results
for the 13 and 39 weeks to November 1, 2008. These results are
prepared under US GAAP. Group In the 13 week period to November 1,
2008, Group total sales declined by 7.3% to $629.3 million (13
weeks to November 3, 2007: $678.7 million) and by 4.3% at constant
exchange rates (see note 11). Same store sales decreased by 6.6%.
Reflecting the broader retail and consumer environment net
operating loss was $14.2 million (13 weeks to November 3, 2007: net
operating income $10.1 million) and loss before income tax was
$23.6 million (13 weeks to November 3, 2007: income before income
tax $3.8 million). Net loss was $15.1 million (13 weeks to November
3, 2007: $2.5 million net income). Diluted loss per share was $0.18
(13 weeks to November 3, 2007: diluted earnings per share $0.03).
In the 39 week period, Group total sales decreased by 2.6% on a
reported basis to $2,220.7 million (39 weeks to November 3, 2007:
$2,280.5 million) and by 1.6% at constant exchange rates (see note
11). Same store sales were down by 4.3%. Net operating income was
$69.2 million (39 weeks to November 3, 2007: $133.8 million)
including items relating to the move in domicile of the Group of
$10.5 million (2007/08: nil). Income before income tax declined to
$47.1 million (39 weeks to November 3, 2007: $117.5 million). The
average exchange rate for the period was 1 pound Sterling/$1.92 (39
weeks to November 3, 2007: 1 pound/$2.00). Net income was $30.3
million (39 weeks to November 3, 2007: $76.8 million). Diluted
earnings per share were $0.35 (39 weeks to November 3, 2007:
$0.90). Diluted earnings per share before the items relating to the
move in domicile of the Group were $0.44 (see note 11). United
States (circa 75% of Group annual sales) In the 13 week period to
November 1, 2008, total sales decreased by 4.3% to $467.3 million
(13 weeks to November 3, 2007: $488.2 million). Same store sales
were down by 7.9%, with the last seven weeks of the quarter down by
about 11% reflecting heightened consumer uncertainty. A net
operating loss of $6.2 million was reported (13 weeks to November
3, 2007: net operating income $12.6 million) reflecting the impact
of the same store sales decline. In the 39 week period, total sales
declined by 1.8% to $1,674.0 million (39 weeks to November 3, 2007:
$1,705.1 million). Same store sales declined by 6.0%. US net
operating income was $90.7 million (39 weeks to November 3, 2007:
$142.5 million). The operating margin was 5.4% (39 weeks to
November 3, 2007: 8.4%). The net bad debt charge was 4.8% of total
sales (39 weeks to November 3, 2007: 3.3%), with the increased rate
somewhat offset by higher income earned on the receivables. As
expected the merchandise gross margin rate was up by 80 basis
points as a result of price increases which more than offset the
rise in commodity costs and increased promotional activity. The
division is on track to achieve a full year merchandise gross
margin rate somewhat ahead of last year's level. In a very
challenging marketplace, the quality of execution in all areas of
the business remained a priority and a tight control of costs and
inventory continued to be maintained. In merchandising, a number of
new exclusive ranges have been successfully tested and expanded.
Advertising expenditure has been realigned with increased emphasis
on the more successful brands and media. For Kay, there will be a
similar level of expenditure on national television although the
number of impressions will be down mid single digits during the
holiday season. For Jared, there will be increased expenditure on
national television, with the level of impressions similar to last
year. In the year to date 40 stores have been refurbished and net
new space growth during 2008/09 is expected to be about 4%, with
Jared accounting for nearly all of the increase. In 2009/10, net
space is expected to be little changed. Given the focus on the core
business, nearer term initiatives, and the current volatility in
the rough diamond market, it has been decided to discontinue the
Group's rough diamond sourcing capability. United Kingdom (circa
25% of Group annual sales) In the 13 week period, the UK division's
total sales were down by 15.0% on a reported basis to $162.0
million (13 weeks to November 3, 2007: $190.5 million) and by 4.4%
at constant exchange rates (see note 11). Same store sales were
down by 2.4%, with the last three weeks of the quarter down by some
8%. The net operating loss was $3.9 million (13 weeks to November
3, 2007: net operating income $1.7 million) reflecting lower same
store sales. In the 39 week period, total sales decreased by 5.0%
on a reported basis to $546.7 million (39 weeks to November 3,
2007: $575.4 million) and by 1.0% at constant exchange rates (see
note 11). Same store sales were up by 0.8%. Net operating income
was $1.9 million (39 weeks to November 3, 2007: $4.3 million). The
average US dollar exchange rate for the period was 1 pound/$1.92
(39 weeks to November 3, 2007: 1 pound/$2.00). Gross merchandise
margin was up 50 basis points on last year due to price changes,
which more than offset higher commodity costs, mix changes and more
targeted promotional activity. The division remains on track to
achieve a full year gross merchandise margin rate similar to last
year. The division continues to benefit from a number of longer
term initiatives to improve customer service. Merchandise ranges
have been enhanced and an increased range of key volume lines have
been developed for Christmas, taking advantage of the division's
purchasing scale and supply chain expertise. A new television
advertisement for H.Samuel in the fourth quarter has produced
encouraging consumer test results. An increased emphasis on
customer relationship marketing has replaced the television
advertising test for Ernest Jones. This Christmas, 41 Ernest Jones
stores will trade from the enhanced format that was successfully
tested in 2007/08. Group Central Costs, Financing Items and
Taxation In the 13 week period, Group central costs were broadly
unchanged at $4.1 million (13 weeks to November 3, 2007: $4.2
million). In the 39 weeks, they were $23.4 million (39 weeks to
November 3, 2007: $13.0 million), including $10.5 million of costs
associated with the move of domicile. Net finance costs for the 13
weeks were $9.4 million (13 weeks to November 3, 2007: $6.3
million) and for the 39 weeks were $22.1 million (39 weeks to
November 3, 2007: $16.3 million), the increase reflecting a higher
level of net debt. The tax rate for the 39 weeks to November 1,
2008 was 35.7% (39 weeks to November 3, 2007: 34.6%). Net Debt and
Cash Flow Net debt at November 1, 2008 was $577.8 million (November
3, 2007: $524.8 million). The seasonal increase in net debt in the
39 weeks to November 1, 2008 of $203.2 million was considerably
below that of the corresponding period last year (39 weeks to
November 3, 2007: $291.6 million). Capital expenditure in 2008/09
is expected to be about $125.0 million (2007/08: $140.4 million)
reflecting a lower level of store investment in the US partly
offsetting increased spending on store refurbishments in the UK due
to the roll-out of the new Ernest Jones store format. This level is
about $15 million less than previously indicated. While plans for
2009/10 have not been finalized, Group capital expenditure is
anticipated to be in the region of $65 million. Cash outflow before
the impact of exchange rate movements for 2008/09 is expected to be
neutral to $40 million. In 2009/10 it is anticipated that the level
of net debt will be reduced reflecting lower capital expenditure, a
working capital inflow and reduced tax payments. Comment Terry
Burman, Group Chief Executive, commented: "While our third quarter
results are disappointing, they reflect the broader retail and
consumer environment. "We have a strong business which we continue
to manage cautiously in the current very difficult trading
conditions. We are focused on maximizing gross margin dollars,
managing costs and inventory tightly, as well as maintaining a
strong balance sheet. "As ever, the results for the year will
depend on the very important Holiday trading season, the vast
majority of which is still ahead of us." Enquiries: Terry Burman,
Group Chief Executive +1 441 296 5872 Walker Boyd, Group Finance
Director +1 441 296 5872 John Dudzinsky, Taylor Rafferty +1 212 889
4350 Jonathan Glass, Brunswick +44 (0) 20 7404 5959 Signet operated
1,991 specialty retail jewelry stores at November 1, 2008; these
included 1,431 stores in the US, where the Group trades as "Kay
Jewelers", "Jared The Galleria Of Jewelry" and under a number of
regional names. At that date Signet operated 560 stores in the UK,
where the Group trades as "H.Samuel", "Ernest Jones" and "Leslie
Davis". Further information on Signet is available at
http://www.signetjewelers.com/. See also http://www.kay.com/,
http://www.jared.com/, http://www.hsamuel.co.uk/ and
http://www.ernestjones.co.uk/. Investor Relations Program Details
There will be a conference call for all interested parties today at
9.00 a.m. EST (2.00 p.m. GMT and 6.00 a.m. Pacific Time) and a
simultaneous audio webcast available at
http://www.signetjewelers.com/. To help ensure the conference call
begins in a timely manner, could all participants please dial in
five minutes prior to the scheduled start time. The call details
are: US dial-in: +1 718 354 1388 US 48hr replay: +1 718 354 1112
Access code: 5540805# European dial-in: +44 (0) 20 7806 1957
European 48hr replay: +44 (0) 20 7806 1970 Access code: 5540805#
Christmas Trading Statement The Christmas Trading Statement is
expected to be released on Thursday, January 8, 2009 and will be
available at http://www.signetjewelers.com/. There will be a
conference call for all interested parties on that day at 9.00 a.m.
EST (2.00 p.m. GMT and 6.00 a.m. Pacific Time) and a simultaneous
audio webcast available at http://www.signetjewelers.com/. Telsey
Advisory Group (TAG) Consumer Conference, Tuesday, January 27, 2009
Signet will be taking part in the TAG Consumer Conference on
Tuesday, January 27, 2009 at the Westin New York. Present will be
Terry Burman, Group Chief Executive and Walker Boyd, Group Finance
Director. Deutsche Bank's 11th Annual Store Tour, January 28 to
January 30, 2009 Signet will also be taking part in Deutsche Bank's
11th Annual Store Tour on Thursday, January 29, 2009 in Glasgow,
UK. Signet will be represented by Rob Anderson, Chief Executive of
Signet's UK division and Tim Jackson, Investor Relations Director.
This release includes statements which are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements, based upon management's
beliefs as well as on assumptions made by and data currently
available to management, appear in a number of places throughout
this release and include statements regarding, among other things,
our results of operation, financial condition, liquidity,
prospects, growth, strategies and the industry in which the Group
operates. Our use of the words "expects," "intends," "anticipates,"
"estimates," "may," "forecast," "objective," "plan" or "target,"
and other similar expressions are intended to identify
forward-looking statements. These forward-looking statements are
not guarantees of future performance and are subject to a number of
risks and uncertainties, including but not limited to general
economic conditions, the merchandising, pricing and inventory
policies followed by the Group, the reputation of the Group, the
level of competition in the jewelry sector, the price and
availability of diamonds, gold and other precious metals,
seasonality of the Group's business and financial market risk. For
a discussion of these and other risks and uncertainties which could
cause actual results to differ materially, see the "Risk and Other
Factors" section of the Annual Report & Accounts of Signet
Group plc furnished as an exhibit to its Report on Form 6-K
furnished with the U.S. Securities and Exchange Commission on May
1, 2008 and other filings made by the Company with the Commission.
Actual results may differ materially from those anticipated in such
forward-looking statements even if experience or future changes
make it clear that any projected results expressed or implied
therein may not be realized. The Company undertakes no obligation
to update or revise any forward-looking statements to reflect
subsequent events or circumstances. Unaudited condensed
consolidated income statements for the 39 weeks ended November 1,
2008 13 weeks 13 weeks 39 weeks 39 weeks ended ended ended ended
November November November November 1, 2008 3, 2007 1, 2008 3, 2007
$m $m $m $m Notes Sales 629.3 678.7 2,220.7 2,280.5 2 Cost of sales
(454.5) (483.5) (1,519.1) (1,565.4) Gross margin 174.8 195.2 701.6
715.1 Selling, general and administrative expenses (217.3) (211.0)
(719.4) (660.6) Other operating income, net 28.3 25.9 87.0 79.3
Operating (loss)/income (14.2) 10.1 69.2 133.8 2 Interest income
0.6 0.7 3.1 4.7 Interest expense (10.0) (7.0) (25.2) (21.0)
(Loss)/income before income taxes (23.6) 3.8 47.1 117.5 Income
taxes 8.5 (1.3) (16.8) (40.7) 4 Net (loss)/income (15.1) 2.5 30.3
76.8 (Loss)/earnings per share - basic (restated) $(0.18) $0.03
$0.35 $0.90 5 - diluted (restated) $(0.18) $0.03 $0.35 $0.90 5 All
of the above relate to continuing activities attributable to equity
shareholders. The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements. Unaudited
condensed consolidated balance sheets at November 1, 2008 November
November February 1, 2008 3, 2007 2, 2008 $m $m $m Notes Assets
Current assets: Cash and cash equivalents 35.5 42.8 41.7 Accounts
receivable, net 718.6 693.9 848.2 Other receivables 25.8 31.7 40.5
Other current assets 44.4 61.8 38.8 Deferred tax assets 0.3 1.6 - 4
Inventories 1,552.7 1,664.4 1,453.6 7 Total current assets 2,377.3
2,496.2 2,422.8 Non-current assets: Property, plant and equipment,
net of accumulated depreciation of $579.8 million, $628.6 million
and $642.8 million, respectively 477.7 501.4 489.2 Goodwill 529.6
564.2 556.0 Other intangible assets, net 23.1 20.0 22.0 Other
assets 41.4 34.3 34.8 Retirement benefit asset - 8.0 - Deferred tax
assets 68.0 58.6 74.6 4 Total assets 3,517.1 3,682.7 3,599.4 2
Liabilities and Shareholders' equity: Current liabilities: Loans
and overdrafts 233.3 187.6 36.3 Accounts payable 121.5 232.2 89.3
Accrued expenses and other current liabilities 235.3 233.7 268.2
Deferred revenue 103.6 101.6 125.3 8 Deferred tax liabilities 49.2
27.8 47.9 4 Income taxes payable 32.6 50.8 79.5 Total current
liabilities 775.5 833.7 646.5 Non-current liabilities: Long-term
debt 380.0 380.0 380.0 Other liabilities 111.3 107.2 96.4 Deferred
revenue 130.4 129.1 149.7 8 Retirement benefit obligation 2.8 - 5.6
Total liabilities 1,400.0 1,450.0 1,278.2 Commitments and
contingencies (note 9) Shareholders' equity: Common stock of $0.18
par value: authorized 500 million shares, 85.3 million shares
issued and outstanding (November 3, 2007: 0.9c par value,
authorized 5,929.9 million shares, 1,705.4 million shares issued
and outstanding; 2008: 0.9c par value, 1,705.5 million shares
issued and outstanding) 15.3 15.3 15.3 Deferred stock, 1 pound par
value: authorized 50,000, issued and outstanding 50,000 shares 0.1
0.1 0.1 Additional paid-in capital 164.2 158.2 162.5 Other reserves
235.2 235.2 235.2 Retained earnings 1,841.3 1,794.2 1,918.4
Treasury stock - 0.1 million shares, 2.0 million shares and 1.7
million shares, respectively (10.8) (11.4) (10.8) Accumulated other
comprehensive income (128.2) 41.1 0.5 Total liabilities and
shareholders' equity 3,517.1 3,682.7 3,599.4 The accompanying notes
are an integral part of these unaudited condensed consolidated
financial statements. Unaudited condensed consolidated statements
of cash flows for the 39 weeks ended November 1, 2008 13 weeks 13
weeks 39 weeks 39 weeks ended ended ended ended November November
November November 1, 2008 3, 2007 1, 2008 3, 2007 $m $m $m $m Cash
flows from operating activities: Net (loss)/income (15.1) 2.5 30.3
76.8 Adjustments to reconcile net income to cash flows provided by
operations: Depreciation of property, plant and equipment 27.7 25.7
80.3 75.5 Amortization of other intangible assets 1.4 1.0 4.2 3.3
Pension expense/(credit) 0.3 (0.6) 0.8 (1.4) Stock-based
compensation expense 0.1 (0.2) 0.8 (1.4) Deferred taxation 6.6 -
5.1 - Other non-cash movements 1.4 (0.6) (1.4) (1.9) Loss on
disposal of property, plant and equipment - - 0.1 - Changes in
operating assets and liabilities: Increase in inventories (156.9)
(282.8) (147.5) (288.2) Decrease in accounts receivable 43.1 28.9
129.1 98.6 Decrease/(increase) in other receivables 1.8 4.9 (5.2)
5.4 Increase in other current assets (4.5) (13.8) (1.8) (24.3)
Increase in accounts payable 55.8 145.4 43.0 114.0 Decrease in
accrued expense and other liabilities (7.4) (20.6) (52.4) (70.0)
Decrease in income taxes payable (28.1) (13.6) (44.2) (49.5) Net
cash provided by operating activities (73.8) (123.8) 41.2 (63.1)
Investing activities: Purchase of property, plant and equipment
(28.0) (47.2) (91.1) (99.1) Purchase of other intangible assets
(2.7) (1.1) (6.3) (7.3) Proceeds from sale of property, plant and
equipment - - 1.0 - Net cash flows used in investing activities
(30.7) (48.3) (96.4) (106.4) Financing activities: Dividends paid -
- (107.4) (107.6) Proceeds from issue of stock - - - 5.5 Purchase
of own stock - - - (29.0) Proceeds from short-term borrowings 116.0
159.1 199.7 181.1 Net cash flows used in financing activities 116.0
159.1 92.3 50.0 Cash and cash equivalents at beginning of period
66.9 51.8 41.7 152.3 Increase/(decrease) in cash and cash
equivalents 11.5 (13.0) 37.1 (119.5) Effect of exchange rate
changes on cash and cash equivalents (42.9) 4.0 (43.3) 10.0 Cash
and cash equivalents at end of period 35.5 42.8 35.5 42.8 The
accompanying notes are an integral part of these unaudited
condensed consolidated financial statements. Unaudited condensed
consolidated statement of shareholders' equity for the 39 weeks
ended November 1, 2008 Common Deferred Addi- Other Treasury
Retained Accumulated Total Stock Stock tional reserves stock
earnings other share- at at paid comprehensive holders' par par in
income/ equity value value capital (loss) $m $m $m $m $m $m $m $m
Balance at February 2, 2008 15.3 0.1 162.5 235.2 (10.8) 1,918.4 0.5
2,321.2 Net income - - - - - 30.3 - 30.3 Foreign currency
translation adjustments - - - - - - (117.3) (117.3) Changes in fair
value of derivative instruments, net - - - - - - (13.1) (13.1)
Actuarial gains and losses on pension plan, net - - - - - - 1.7 1.7
Dividends - - - - - (107.4) - (107.4) Stock based compensation
expense - - 1.7 - - - - 1.7 Balance at November 1, 2008 15.3 0.1
164.2 235.2 (10.8) 1,841.3 (128.2) 2,117.1 The accompanying notes
are an integral part of these unaudited condensed consolidated
financial statements. Unaudited condensed consolidated statements
of comprehensive income for the 39 weeks ended November 1, 2008 13
weeks 13 weeks 39 weeks 39 weeks ended ended ended ended November
November November November 1, 2008 3, 2007 1, 2008 3, 2007 $m $m $m
$m Net (loss)/income (15.1) 2.5 30.3 76.8 Foreign currency
translation (117.3) 14.1 (117.3) 37.4 Changes in fair value of
derivative instruments (17.5) 7.5 (15.1) 2.7 Actuarial loss 0.5 0.7
1.5 2.0 Prior service cost 0.3 - 0.9 - Deferred tax on items
recognized in equity 4.6 (0.7) 1.4 0.9 Comprehensive (loss)/income
(144.5) 24.1 (98.3) 119.8 The accompanying notes are an integral
part of these unaudited condensed consolidated financial
statements. Notes to the condensed consolidated financial
statements (unaudited) for the 39 weeks ended November 1, 2008 1.
Principal accounting policies and basis of preparation Signet
Jewelers Limited (the "Company") and its subsidiary undertakings
(collectively, the "Group") is a leading retailer of jewelry,
watches and associated services. The Group manages its business as
two geographical segments, being the United Kingdom (the "UK") and
the United States of America (the "US"). The US segment operates
retail stores under brands including Kay Jewelers, Jared the
Galleria of Jewelry and various regional brands while the UK
segment's retail stores operate under brands including H.Samuel and
Ernest Jones. On September 11, 2008 the Company, which is domiciled
in Bermuda, was introduced as parent company of the Group in
accordance with a Scheme of Arrangement. Signet Group plc, the
previous parent company, became a wholly and directly owned
subsidiary of the Company. As part of the implementation of the
Scheme, the Company's shares were consolidated via a one for 20
share consolidation. The Company also changed its primary listing
from the London Stock Exchange ("LSE") to the New York Stock
Exchange, retaining a secondary listing on the LSE. In conjunction
with the change in primary listing the Group has changed from
reporting under IFRS to US GAAP and all prior period information
has been restated. These quarterly financial statements should be
read in conjunction with the consolidated financial statements and
accompanying notes included in the Group's Annual Report on Form
20-F for the year ended February 2, 2008 and the accounting
policies set out in the 'Prospectus for Signet Jewelers' which can
be found on the Group's website. These quarterly financial
statements of the Group are unaudited. They have been prepared in
accordance with accounting principles generally accepted in the
United States of America ("US GAAP"). Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with US GAAP have been condensed or omitted
from these quarterly financial statements. However, these quarterly
financial statements include all adjustments that are, in the
opinion of management, necessary to fairly state the results of the
quarterly periods. Use of estimates in quarterly financial
statements The preparation of quarterly financial statements, in
conformity with US GAAP for quarterly 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 consolidated
quarterly financial statements and reported amounts of sales and
expenses during the reporting period. Actual results could differ
from those estimates. Estimates and assumptions are primarily made
in relation to valuation of intangible assets, valuation of
inventory, depreciation, valuation of employee benefits, income
taxes and contingencies. Seasonality The Group's business is highly
seasonal with a very significant proportion of its sales and
operating profit generated during its fourth quarter, which
includes the Christmas season. The Group expects to continue to
experience a seasonal fluctuation in sales and net income.
Accounting pronouncements adopted during the period Statement of
Financial Accounting Standard ("SFAS") No. 159 On February 15, 2007
the Financial Accounting Standards Board ("FASB") issued SFAS No.
159, "The Fair Value Option for Financial Assets and Financial
Liabilities - Including an Amendment of FASB Statement No. 115"
("SFAS 159"). This standard permits an entity to choose to measure
many financial instruments and certain other items at fair value.
The unrealized gains and losses on items for which the fair value
option has been elected will be reported in earnings at each
subsequent reporting date. The fair value option: (a) may be
applied instrument by instrument, with a few exceptions, such as
investments otherwise accounted for by the equity method; (b) is
irrevocable (unless a new election date occurs); and (c) is applied
only to entire instruments and not to portions of instruments. The
Group adopted SFAS 159 on February 3, 2008. The Group has elected,
however, not to use the fair value option for any of its existing
financial assets and liabilities and, consequently, adoption had no
impact. SFAS No. 157 In September 2006 the FASB issued SFAS No.
157, "Fair Value Measurements" ("SFAS 157"), which provides a
single definition of fair value, establishes a framework for the
measurement of fair value and expands disclosure about the use of
fair value to measure assets and liabilities. SFAS 157 is effective
for fiscal years beginning after November 15, 2007, and for
quarterly periods within those fiscal years. In November 2007, the
FASB agreed to defer the effective date of Statement 157 for all
non financial assets and liabilities by one year. The Group adopted
the effective provisions of SFAS 157 as of February 3, 2008. There
was no impact to the condensed consolidated quarterly financial
statements upon adoption. New accounting pronouncements to be
adopted in future periods SFAS No. 160 In December 2007, the FASB
issued SFAS No. 160, "Non-controlling Interests in Consolidated
Financial Statements - An Amendment of ARB No. 51" ("SFAS 160").
SFAS 160 establishes new accounting and reporting standards for the
non-controlling interest in a subsidiary and for the
deconsolidation of a subsidiary. Specifically, this statement
requires the recognition of a non-controlling interest (minority
interest) as equity in the consolidated financial statements,
separate from the parent's equity. The amount of net income
attributable to the non-controlling interest will be included in
consolidated net income on the face of the income statement. SFAS
160 also includes expanded disclosure requirements regarding the
interests of the parent and its non-controlling interest. SFAS 160
is effective for fiscal years and quarterly periods beginning after
December 15, 2008. Currently, the Group does not have any
non-controlling interests in its subsidiaries. SFAS No. 141(R) In
December 2007, the FASB issued SFAS No. 141 (Revised 2007),
"Business Combinations" ("SFAS 141(R)"). SFAS 141(R) will
significantly change the accounting for business combinations.
Under SFAS 141(R), an acquiring entity will be required to
recognize all the assets acquired and liabilities assumed in a
transaction at the acquisition-date fair value with limited
exceptions. It also amends the accounting treatment for certain
specific items including acquisition costs and non-controlling
minority interests and includes a substantial number of new
disclosure requirements. SFAS 141(R) applies prospectively to
business combinations for which the acquisition date is on or after
December 15, 2008. SFAS No. 161 In March 2008, the FASB issued FASB
Statement No. 161, "Disclosures about Derivative Instruments and
Hedging Activities" ("SFAS 161"), which amends FASB Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities"
("Statement 133"). The Statement requires companies with derivative
instruments to disclose information that should enable financial
statements users to understand how and why a company uses
derivative instruments, how derivative instruments and related
hedged items are accounted for under Statement 133 and how
derivative instruments and related hedged items affect a company's
financial position, financial performance and cash flows. The
required disclosures include the fair value of derivative
instruments and their gains or losses in tabular format,
information about credit risk related contingent features in
derivative agreements, counterparty credit risk and a company's
strategies and objectives for using derivative instruments. SFAS
161 expands the current disclosure framework in Statement 133 and
is effective prospectively for periods beginning on or after
November 15, 2008. 2. Segmental information The Group's sales are
derived from the retailing of jewelry, watches and associated
services. The Group is managed as two geographical operating
segments, being the US and UK divisions. These segments represent
channels of distribution that offer similar merchandise and service
and have similar marketing and distribution strategies. Both
divisions are managed by executive committees, which report through
the Group Chief Executive to the Group Board. Each divisional
executive committee is responsible for operating decisions within
guidelines set by the Group Board. The performance of each segment
is regularly evaluated based on sales and operating income. The
operating segments do not include income taxes or certain Group
costs, and there are no material transactions between the operating
segments. The accounting policies of the segments are the same as
those used by the Group to report under US GAAP. 13 weeks 13 weeks
39 weeks 39 weeks ended ended ended ended November November
November November 1, 2008 3, 2007 1, 2008 3, 2007 $m $m $m $m
Sales: US 467.3 488.2 1,674.0 1,705.1 UK 162.0 190.5 546.7 575.4
Consolidated total 629.3 678.7 2,220.7 2,280.5 Operating
(loss)/income: US (6.2) 12.6 90.7 142.5 UK (3.9) 1.7 1.9 4.3
Unallocated(1) (4.1) (4.2) (23.4) (13.0) Consolidated total (14.2)
10.1 69.2 133.8 November November February 1, 2008 3, 2007 2, 2008
$m $m $m Total assets: US 2,658.1 2,709.0 2,737.3 UK 617.2 740.8
632.9 Unallocated(1) 241.8 232.9 229.2 Consolidated total 3,517.1
3,682.7 3,599.4 (1) Unallocated principally relates to Group costs
and assets and in the 39 weeks ended November 1, 2008 includes
$10.5m of costs relating to the move in listing. 3. Exchange rates
The exchange rates used for the translation of UK pound sterling
transactions and balances in these quarterly statements are as
follows: November November February 1, 2008 3, 2007 2, 2008 Income
statement (average rate) 1.92 2.00 2.00 Balance sheet (closing
rate) 1.62 2.08 1.97 4. Taxation As reported in the Group's Annual
Report on Form 20-F for the year ended February 2, 2008, on
February 4, 2007 the Group adopted FIN 48, "Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement
no. 109" ("FIN 48"). The provisions of FIN 48 were applied to all
tax positions on adoption of this interpretation. There was no
cumulative effect adjustment to the opening balance of retained
earnings arising as a result of the adoption of FIN 48 and no
adjustments were made to other components of shareholders' equity
in the balance sheet. The Group has business activity in all states
within the US and files income tax returns for the US federal
jurisdiction and all applicable states. The Group also files income
tax returns in the UK and certain other foreign jurisdictions. The
Group is subject to US federal and state examinations by tax
authorities for tax years after November 2, 2002 and is subject to
examination by the UK tax authority for tax years after 31 January
2004. The total amount of unrecognized tax benefits in respect of
uncertain tax positions as of February 2, 2008 was $23.0 million,
all of which would favorably affect the effective tax rate if
resolved in the Group's favor. These unrecognized tax benefits
relate to financing arrangements and intra-group charges which are
subject to different and changing interpretations of tax law. There
has been no material change in the amount of unrecognized tax
benefits in respect of uncertain tax positions during the 39 weeks
ended November 1, 2008. Over the next twelve months management
believes that it is reasonably possible that there could be a
reduction of substantially all of the unrecognized tax benefits as
of February 2, 2008, due to settlement of the uncertain tax
positions with the tax authorities. The Group recognizes accrued
interest and penalties related to unrecognized tax benefits within
income tax expense. As of February 2, 2008 the Group had accrued
interest and penalties of $3.8 million. 5. Earnings per share 13
weeks 13 weeks 39 weeks 39 weeks ended ended ended ended November
November November November 1, 2008 3, 2007 1, 2008 3, 2007
(restated) (restated) Net (loss)/income ($ million) (15.1) 2.5 30.3
76.8 Basic weighted average number of shares in issue (million)
85.2 85.2 85.2 85.2 Dilutive effect of share options (million) 0.3
0.2 0.3 0.3 Diluted weighted average number of shares in issue
(million) 85.5 85.4 85.5 85.5 (Loss)/earnings per share - basic
$(0.18) $0.03 $0.35 $0.90 (Loss)/earnings per share - diluted
$(0.18) $0.03 $0.35 $0.90 Earnings per share for the comparative
periods have been restated for the 1 for 20 share consolidation
undertaken as part of the move of the primary listing of the parent
company's shares, effective September 11, 2008. The basic weighted
average number of shares excludes shares held by the ESOT as such
shares are not considered outstanding and do not qualify for
dividends. The effect of this is to reduce the average number of
shares in the 13 and 39 week periods ended November 1, 2008 by
83,130 (13 week period ended November 3, 2007 (restated): 101,066;
39 week period ended November 3, 2007 (restated): 112,289). The
calculation of fully diluted EPS for the 13 and 39 week periods
ended November 1, 2008 excludes options to purchase 3,364,134 and
3,107,698 shares respectively (13 week period ended November 3,
2007 (restated): 1,977,786 share options; 39 week period ended
November 3, 2007 (restated): 1,557,614 share options) on the basis
that their effect on EPS was anti-dilutive. 6. Dividends 13 weeks
13 weeks 39 weeks 39 weeks ended ended ended ended November
November November November 1, 2008 3, 2007 1, 2008 3, 2007 $m $m $m
$m Final dividend paid of 6.317c per share - - 107.4 107.6 7.
Inventories November November February 1, 2008 3, 2007 2,2008 $m $m
$m Raw materials 32.9 30.5 16.7 Finished goods 1,519.8 1,633.9
1,436.9 Total inventory 1,552.7 1,664.4 1,453.6 8. Warranty
deferred revenue 13 weeks 13 weeks 39 weeks 39 weeks ended ended
ended ended November November November November 1, 2008 3, 2007 1,
2008 3, 2007 $m $m $m $m Deferred revenue, beginning of period
242.0 235.1 246.6 232.7 Warranties sold 26.4 27.6 97.7 101.9
Revenues recognized (37.0) (35.5) (112.9) (107.4) Deferred revenue,
end of period 231.4 227.2 231.4 227.2 Total deferred revenue
includes both income under extended service warranty agreements and
income from voucher promotions. 9. Commitments and contingencies
Litigation The Group is not party to any legal proceedings
considered to be material to the financial statements. Furthermore,
no director, officer or affiliate of the Group or any associate of
any such director has been a party adverse to the Group or any of
its subsidiaries or has a material interest adverse to the Group or
any of its subsidiaries. A class lawsuit for an unspecified amount
has been filed against Sterling Jewelers Inc, a subsidiary of
Signet Jewelers Limited, in the New York federal court. The lawsuit
alleges that US store-level employment practices are discriminatory
as to compensation and promotional activities. The Group denies
these allegations and intends to defend them vigorously. 10. Stock
options The Group recorded share-based compensation expense of $0.8
million and credit of $1.4 million for the thirty-nine weeks ended
November 1, 2008 and November 3, 2007, of which $2.1 million credit
and $3.3 million credit related to the change in fair value during
the period of awards with an inflation condition accounted for as
liability awards under SFAS No. 123(R) "Share-Based Payment". 11.
Impact of constant exchange rates and re-listing costs The Group
has historically used constant exchange rates to compare
period-to-period changes in certain financial data. This is
referred to as 'at constant exchange rates' throughout this
release. The Group considers this a useful measure for analyzing
and explaining changes and trends in the Group's results. The
impact of the re-calculation of sales at constant exchange rates,
including a reconciliation to the Group's GAAP results, is analyzed
below. 13 weeks 13 weeks Growth Impact At Growth ended ended at of
constant at November November actual exchange exchange constant 1,
2008 3, 2007 exchange rate rates exchange rates movement (non-GAAP)
rates (non-GAAP) $m $m % $m $m % Sales by origin and destination
UK, Channel Islands & Republic of Ireland 162.0 190.5 -15.0%
(21.1) 169.4 -4.4% US 467.3 488.2 -4.3% - 488.2 -4.3% 629.3 678.7
-7.3% (21.1) 657.6 -4.3% 39 weeks 39 weeks Growth Impact At Growth
ended ended at of constant at November November actual exchange
exchange constant 1, 2008 3, 2007 exchange rate rates exchange
rates movement (non-GAAP) rates (non-GAAP) $m $m % $m $m % Sales by
origin and destination UK, Channel Islands & Republic of
Ireland 546.7 575.4 -5.0% (23.0) 552.4 -1.0% US 1,674.0 1,705.1
-1.8% - 1,705.1 -1.8% 2,220.7 2,280.5 -2.6% (23.0) 2,257.5 -1.6%
The underlying performance of the business excluding the impact of
the costs of moving listing is detailed below. 39 weeks ended As
reported Excluding November re-listing 1, 2008 costs $m $m Income
before income taxes 47.1 57.6 Tax rate 35.7% 34.4% Tax charge
(16.8) (19.8) Net income 30.3 37.8 Weighted average number of
shares in issue (million) 85.5 85.5 Diluted earnings per share
$0.35 $0.44 DATASOURCE: Signet Jewelers Ltd CONTACT: Terry Burman,
Group Chief Executive, +1-441-296-5872, or Walker Boyd, Group
Finance Director, +1-441-296-5872, both of Signet Jewelers Ltd;
John Dudzinsky of Taylor Rafferty, +1-212-889-4350, or Jonathan
Glass of Brunswick, +44(0)20-7404-5959, both for Signet Jewelers
Ltd Web Site: http://www.signetjewelers.com/
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