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Signet Jewelers Limited Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended May 2, 2020 or ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to Commission file number 1-32349 SIGNET JEWELERS LIMITED (Exact name of Registrant as specified in its charter) Bermuda Not Applicable (State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.) Clarendon House 2 Church Street Hamilton HM11 Bermuda (441) 296 5872 (Address and telephone number including area code of principal executive offices) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol(s) Name of Each Exchange on which Registered Common Shares of $0.18 each SIG The New York Stock Exchange Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes x No o Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date. Common Shares, $0.18 par value, 52,322,840 shares as of June 26, 2020 EXPLANATORY NOTE As previously disclosed in the Current Report on Form 8-K filed by Signet Jewelers Limited (the “Company”) on June 11, 2020, and as permitted pursuant to the Order of the Securities and Exchange Commission (“SEC”) issued March 25, 2020, due to circumstances related to the global outbreak of novel coronavirus (“COVID-19”), the Company delayed its filing of Form 10-Q for the quarterly period ended May 2, 2020. Specifically, the Company relied on the Order to allow for additional time to complete its impairment review of long-lived assets necessitated by the COVID-19 pandemic. Refer to Note 13, Asset Impairments, for the impact of impairment of long-lived assets on the Company’s operations during the 13 weeks ended May 2, 2020, which has not changed from the preliminary earnings results released by the Company and furnished on Form 8-K on June 9, 2020. The Company has evaluated and determined additional events or transactions subsequent to May 2, 2020 for potential recognition or disclosure through the date the condensed consolidated interim financial statements were issued. On June 27, 2020, the Company entered into a settlement in principle for previously disclosed claims related to the securities litigation as further described in Note 21, Commitments and Contingencies, which resulted in the final earnings included in this Form 10-Q being different than the preliminary earnings for the 13 weeks ended May 2, 2020, as released by the Company on June 9, 2020. 1 Table of Contents SIGNET JEWELERS LIMITED TABLE OF CONTENTS PAGE PART I FINANCIAL INFORMATION ITEM 1. Financial Statements (Unaudited) Condensed Consolidated Statements of Operations 3 Condensed Consolidated Statements of Comprehensive Income (Loss) 4 Condensed Consolidated Balance Sheets 5 Condensed Consolidated Statements of Cash Flows 6 Condensed Consolidated Statements of Shareholders’ Equity 7 Notes to the Condensed Consolidated Financial Statements 8 ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 34 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 43 ITEM 4. Controls and Procedures 44 PART II OTHER INFORMATION ITEM 1. Legal Proceedings 45 ITEM 1A. Risk Factors 45 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 45 ITEM 6. Exhibits 47 2 Table of Contents PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SIGNET JEWELERS LIMITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) 13 weeks ended (in millions, except per share amounts) May 2, 2020 May 4, 2019 Notes Sales $ 852.1 $ 1,431.7 3 Cost of sales (648.3) (932.3) Restructuring charges - cost of sales 0.4 — 5 Gross margin 204.2 499.4 Selling, general and administrative expenses (358.4) (475.2) Restructuring charges (12.7) (26.8) 5 Asset impairments (136.3) — 13 Other operating income, net 3.6 — Operating income (loss) (299.6) (2.6) 4 Interest expense, net (7.1) (9.2) Other non-operating income, net 0.1 0.3 Income (loss) before income taxes (306.6) (11.5) Income taxes 109.5 1.5 10 Net income (loss) $ (197.1) $ (10.0) Dividends on redeemable convertible preferred shares (8.2) (8.2) 7 Net income (loss) attributable to common shareholders $ (205.3) $ (18.2) Earnings (loss) per common share: Basic $ (3.96) $ (0.35) 8 Diluted $ (3.96) $ (0.35) 8 Weighted average common shares outstanding: Basic 51.8 51.6 8 Diluted 51.8 51.6 8 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents SIGNET JEWELERS LIMITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) 13 weeks ended May 2, 2020 May 4, 2019 Tax Tax Pre-tax (expense) After-tax Pre-tax (expense) After-tax (in millions) amount benefit amount amount benefit amount Net income (loss) $ (197.1) $ (10.0) Other comprehensive income (loss): Foreign currency translation adjustments (26.7) — (26.7) (2.0) — (2.0) Available-for-sale securities: Unrealized gain (loss) 0.3 — 0.3 0.3 — 0.3 Cash flow hedges: Unrealized gain (loss) 0.2 — 0.2 (4.3) 1.1 (3.2) Reclassification adjustment for (gains) losses to net income (10.7) 2.6 (8.1) (0.5) 0.1 (0.4) Pension plan: Reclassification adjustment to net income for amortization of actuarial (gains) losses 0.1 — 0.1 0.3 (0.1) 0.2 Reclassification adjustment to net income for amortization of net prior service credits 0.2 — 0.2 — — — Total other comprehensive income (loss) $ (36.6) $ 2.6 $ (34.0) $ (6.2) $ 1.1 $ (5.1) Total comprehensive income (loss) $ (231.1) $ (15.1) The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents SIGNET JEWELERS LIMITED CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) February 1, (in millions, except par value per share amount) May 2, 2020 2020 May 4, 2019 Notes Assets Current assets: Cash and cash equivalents $ 1,066.6 $ 374.5 $ 195.1 Accounts receivable 29.8 38.8 23.1 11 Other current assets 327.7 403.5 205.5 Income taxes 199.2 6.3 4.8 Inventories, net 2,392.2 2,331.7 2,394.2 12 Total current assets 4,015.5 3,154.8 2,822.7 Non-current assets: Property, plant and equipment, net of accumulated depreciation of $1,092.6, $1,064.7 and $1,319.6, respectively 687.1 741.9 776.1 Operating lease right-of-use assets 1,541.4 1,683.3 1,822.8 14 Goodwill 238.0 248.8 296.4 15 Intangible assets, net 178.7 263.8 264.1 15 Other assets 204.9 201.8 189.2 Deferred tax assets 12.1 4.7 22.0 Total assets $ 6,877.7 $ 6,299.1 $ 6,193.3 Liabilities, Redeemable convertible preferred shares, and Shareholders’ equity Current liabilities: Loans and overdrafts $ 22.2 $ 95.6 $ 43.7 18 Accounts payable 329.1 227.9 238.3 Accrued expenses and other current liabilities 636.1 697.0 420.2 Deferred revenue 271.2 266.2 277.0 3 Operating lease liabilities 390.3 338.2 358.9 14 Income taxes 27.8 27.7 24.1 Total current liabilities 1,676.7 1,652.6 1,362.2 Non-current liabilities: Long-term debt 1,336.0 515.9 639.0 18 Operating lease liabilities 1,334.8 1,437.7 1,589.4 14 Other liabilities 113.3 116.6 126.0 Deferred revenue 719.8 731.5 699.6 3 Deferred tax liabilities 95.9 5.2 — Total liabilities 5,276.5 4,459.5 4,416.2 Commitments and contingencies 21 Series A redeemable convertible preferred shares of $.01 par value: authorized 500 shares, 0.625 shares outstanding (February 1, 2020 and May 4, 2019: 0.625 shares outstanding) 617.4 617.0 615.7 6 Shareholders’ equity: Common shares of $0.18 par value: authorized 500 shares, 52.3 shares outstanding (February 1, 2020: 52.3 outstanding; May 4, 2019: 52.2 outstanding) 12.6 12.6 12.6 Additional paid-in capital 246.4 245.4 232.7 Other reserves 0.4 0.4 0.4 Treasury shares at cost: 17.7 shares (February 1, 2020: 17.7 shares; May 4, 2019: 17.8 shares) (985.2) (984.9) (999.8) Retained earnings 2,037.4 2,242.9 2,223.4 Accumulated other comprehensive loss (327.8) (293.8) (307.9) 9 Total shareholders’ equity 983.8 1,222.6 1,161.4 Total liabilities, redeemable convertible preferred shares and shareholders’ equity $ 6,877.7 $ 6,299.1 $ 6,193.3 The accompanying notes are an integral part of these condensed consolidated financial statements.
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