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What changed in SIGNET JEWELERS LTD's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of SIGNET JEWELERS LTD's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+514 added−513 removedSource: 10-K (2023-03-16) vs 10-K (2022-03-17)

Top changes in SIGNET JEWELERS LTD's 2023 10-K

514 paragraphs added · 513 removed · 349 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

109 edited+53 added−37 removed37 unchanged
Biggest changeSome of these trademarks and trade names include the following: • Kay ® ; Kay Jewelers ® ; Kay Jewelers Outlet ® ; Jared ® ; Jared The Galleria Of Jewelry ® ; Jared Vault ® ; Jared Jewelry Boutique ® ; Every Kiss Begins with Kay ® ; Jared Eternity ® ; Celebrate Life Express Love ® ; Leo ® ; the Leo Diamond ® ; Hearts Desire ® ; Chosen ® ; Now and Forever ® ; Ever Us ® ; James Allen ® ; Long Live Love ® ; Dare to be Devoted ® ; Love + Be Loved ® ; Brilliant Moments ® ; Closer Together ® ; Luminous Cut™; Vibrant Shades™; Love’s Radiance ® ; Forever Connected™; Every Love™; Bold Reflections®; Diamonds Direct ® ; and Rocksbox ® . • Zales ® ; Zales Jewelers™; Zales the Diamond Store ® ; Zales Outlet ® ; Gordon’s Jewelers ® ; Peoples Jewellers ® ; Peoples the Diamond Store ® ; Peoples Outlet the Diamond Store ® ; Piercing Pagoda ® ; Banter™; Arctic Brilliance ® ; Arctic Brilliance Canadian Diamonds ® ; Brilliant Buy ® ; Brilliant Value ® ; Celebration Diamond ® ; Celebration Ideal™; From This Moment ® ; Let Love Shine ® ; The Celebration Diamond Collection ® ; Unstoppable Love ® ; Endless Brilliance ® ; Everything You Are ® ; Love’s Destiny ® ; Zales Private Collection™; and Elegant Reflections ® . • H.Samuel ® ; Ernest Jones ® ; Ernest Jones Outlet Collection TM ; Commitment ® ; Forever Diamonds ® ; The Kiss Collection ® ; Princessa Collection ® ; Radiance ® ; Secrets of the Sea ® ; Viva Colour ® ; It Feels Good To Gift TM ; With You Forever TM , The Eternal Diamond – Cut From The Stars ® ; H Samuel Style to Make You Smile ® ; and Celebrate Your Story ® .
Biggest changeOur Passion ® ; Rocksbox ® ; and Blue Nile ® . • Zales ® ; Zales Jewelers™; Zales the Diamond Store ® ; Zales Outlet ® ; Gordon’s Jewelers ® ; Peoples Jewellers ® ; Peoples the Diamond Store ® ; Peoples Outlet the Diamond Store ® ; Piercing Pagoda ® ; Banter™; Arctic Brilliance ® ; Arctic Brilliance Canadian Diamonds ® ; Celebration Diamond ® ; Celebration Ideal™; Celebration Infinite TM ; From This Moment ® ; Let Love Shine ® ; Live for Love TM ; The Celebration Diamond Collection ® ; Unstoppable Love ® ; Endless Brilliance ® ; Love’s Destiny ® ; Zales Private Collection™; and Elegant Reflections ® . • H.Samuel ® ; Ernest Jones ® ; Ernest Jones Outlet Collection TM ; Forever Diamonds ® ; Princessa Collection ® ; Secrets of the Sea ® ; It Feels Good To Gift TM ; The Eternal Diamond – Cut From The Stars ® ; H Samuel Style to Make You Smile ® ; and Celebrate Your Story ® .
International Banners The International segment operates primarily in the UK and Republic of Ireland. The International segment transacts mainly in British pounds, as sales and the majority of operating expenses are incurred in that currency. H.Samuel H.Samuel has 150 years of jewelry heritage, with a target customer focused on lower-price point fashion-trend oriented, everyday jewelry.
International Banners The International reportable segment operates primarily in the UK and Republic of Ireland. The International segment transacts mainly in British pounds, as sales and the majority of operating expenses are incurred in that currency. H.Samuel H.Samuel has 150 years of jewelry heritage, with a target customer focused on lower-price point fashion-trend oriented, everyday jewelry.
There is no limit to the number of sets that can be received every month and the $21 monthly membership fee can be applied as a credit towards the purchase of any piece from their set. Rocksbox accounted for less than 1% of Signet’s consolidated sales in Fiscal 2022.
There is no limit to the number of sets that can be received every month and the $21 monthly membership fee can be applied as a credit towards the purchase of any piece from their set. Rocksbox accounted for less than 1% of Signet’s consolidated sales in Fiscal 2023 and Fiscal 2022.
Adverse effects of climate change, such as extreme weather events, particularly over a prolonged period of time, could negatively impact the Company’s business and results of operations if such conditions limit our consumers ability to access our stores, cause our consumers to limit discretionary spending, or disrupt our supply chains or distribution channels.
Adverse effects of climate change, such as extreme weather events, particularly over a prolonged period of time, could negatively impact the Company’s business and results of operations if such conditions limit our consumers’ ability to access our stores, cause our consumers to limit discretionary spending, or disrupt our supply chains or distribution channels.
In North American markets, customers are offered revolving and promotional credit plans under Signet’s private label credit card programs, online payment options, a lease purchase option provided by Progressive Lease, and installment loan and split-payment options provided by Affirm, allowing Signet to offer payment options that meet each customer’s individual needs.
In North American markets, customers are offered revolving and promotional credit plans under Signet’s private label credit card programs, a lease purchase option provided by Progressive Lease, and installment loan and split-payment options provided by Affirm, allowing Signet to offer payment options that meet each customer’s individual needs.
In Fiscal 2022, this program was further enhanced with a newly created Digital In-Store Integration practice established to lead the integration of Digital into brick & mortar stores across Signet banners.
In Fiscal 2022, this program was further enhanced with a newly created Digital In-Store Integration practice established to lead the integration of digital into brick and mortar stores across Signet banners.
In addition to the core strengths noted above, Signet believes its competitive advantages include strong awareness for each banner, superior customer experience, branded differentiated and exclusive merchandise, data-driven marketing and advertising, diversified real estate portfolio, an efficient and flexible supply chain, and services including financing and lease purchase options, extended service plans, repair and customer design, and piercing, among others.
In addition to the core strengths noted above, Signet believes its competitive advantages include strong awareness for each banner, superior customer experience, branded differentiated and exclusive merchandise, data-driven marketing and advertising, a diversified real estate portfolio, an efficient and flexible supply chain, and services including financing and lease purchase options, extended service plans, repair and custom design, and piercing, among others.
Below is the summary of the goals within these strategies, as well as the progress and accomplishments toward those goals during Fiscal 2022. • Win in Big Businesses: Signet is investing in and keeping its largest businesses healthy and growing by differentiating and positioning Signet banners with the customers they serve best and by leading innovation that will help ensure they win.
Below is the summary of the goals within these strategies, as well as progress and accomplishments toward those goals during Fiscal 2023. • Win in Big Businesses: Signet is investing in and keeping its largest businesses healthy and growing by differentiating and positioning Signet banners with the customers they serve best and by leading innovation that will help ensure they win.
The strength of Signet’s culture has become a competitive advantage as it attracts top talent, enables high retention and low attrition rates, and inspires peak performance at every level of the organization, all of which are reflected in the Company’s strong business performance.
The strength of Signet’s culture has become a competitive advantage as it attracts top talent, enables high retention and lower attrition rates, and inspires peak performance at every level of the organization, all of which are reflected in the Company’s strong business performance.
Full-time hourly team members are eligible for health insurance, parental leave, paid time off, and tuition assistance. • We provide our team members with access to flexible and convenient medical benefits programs intended to meet their needs and the needs of their families.
Full-time team members are eligible for health insurance, parental leave, paid time off, and tuition and adoption assistance programs. • We provide our team members with access to flexible and convenient medical benefits programs intended to meet their needs and the needs of their families.
Certain Company activities are managed in the “Other” segment for financial reporting purposes, including the Company’s diamond sourcing function and its diamond polishing factory in Botswana. See Note 5 of Item 8 for additional information regarding the Company’s reportable segments. Competition and Signet Competitive Strengths Jewelry retailing is highly fragmented and competitive.
Samuel and Ernest Jones. Certain Company activities are managed in the “Other” segment for financial reporting purposes, including the Company’s diamond sourcing function and its diamond polishing factory in Botswana. See Note 5 of Item 8 for additional information regarding the Company’s reportable segments. Competition and Signet Competitive Strengths Jewelry retailing is highly fragmented and competitive.
Additionally, while the Company will maintain its strong presence during traditional time-based holidays (Valentine’s Day, Mother’s Day, and the Holiday Season), Signet will also expand capabilities to grow its share of personal gifting occasions such as birthdays and anniversaries, and continue its emphasis in “always on” bridal messaging.
Additionally, while the Company will 12 Table of Contents maintain its strong presence during traditional time-based holidays (Valentine’s Day, Mother’s Day, and the Holiday Season), Signet will also expand capabilities to grow its share of personal gifting occasions such as birthdays and anniversaries and continue its emphasis in “always on” bridal messaging.
Zales “The Diamond Store” is positioned as the style and self-expression fine jewelry authority, an emphasis on fashion oriented bridal, gifting and self-purchase consumers offering a broad range of bridal, diamond solitaire, fashion jewelry and watches. Zales accounted for 22% of Signet’s consolidated sales in Fiscal 2022 (Fiscal 2021: 22%).
Zales “The Diamond Store” is positioned as the style and self-expression fine jewelry authority, an emphasis on fashion-oriented bridal, gifting and self-purchase consumers offering a broad range of bridal, diamond solitaire, fashion jewelry and watches. Zales accounted for 18% of Signet’s consolidated sales in Fiscal 2023 (Fiscal 2022: 22%).
Servicing of these non-prime add-on receivables, including operational interfaces and customer 13 Table of Contents servicing, is provided by Genesis. As a result of the amended and restated agreements entered into with Comenity, Genesis, and the Investors during Fiscal 2022, Signet no longer retains any customer in-house finance receivables.
Servicing of these non-prime add-on receivables, including operational interfaces and customer servicing, is provided by Genesis. As a result of the amended and restated agreements entered into with Comenity, Genesis, and the Investors during Fiscal 2022, Signet no longer retains any customer in-house finance receivables.
Having already established its open-sourced Signet Responsible Sourcing Protocol which has become the industry standard for ethical and responsible sourcing, the Company now is committed to be the jewelry category leader in supply chain due diligence and reporting. The Company’s Corporate Sustainability Goals are aligned with the UN Sustainable Development Goals in areas where Signet can have the most impact.
Having already established its open-sourced Signet Responsible Sourcing Protocol which has become the industry standard for ethical and responsible sourcing, the Company now is committed to be the jewelry category leader in supply chain due diligence and reporting. 6 Table of Contents The Company’s Corporate Sustainability Goals are aligned with the UN Sustainable Development Goals in areas where Signet can have the most impact.
Banter opened 12 inline locations in Fiscal 2022 within shopping malls and outdoor lifestyle centers. The brand also offers virtual styling sessions, giving customers a new digital shopping experience. Banter has continued to expand its facial piercing offerings with the introduction of hollow needle piercing in select markets, seeing opportunity to leverage this growing trend.
Banter opened 16 inline locations in Fiscal 2023 within shopping malls and outdoor lifestyle centers. The brand also offers virtual styling sessions, giving customers a new digital shopping experience. Banter has continued to expand its facial piercing offerings with the introduction of hollow needle piercing in select markets, seeing opportunity to leverage this growing trend.
Signet’s Connected Commerce strategy will continue to focus on: • Investments in technologies and digital capabilities to enhance the customer journey. These include developing AI driven conversational commerce, the ability to virtually try on products, visual search tools, configuration capability, jewelry related services enhanced personalization / behavioral targeting, creative execution and brand differentiation.
Signet’s Connected Commerce strategy will continue to focus on: • Investments in technologies and digital capabilities to enhance the customer journey. These include developing AI driven conversational commerce, the ability to virtually try on products, visual search tools, configuration capability, alternative and flexible payment options, jewelry related services, enhanced personalization/behavioral targeting, creative execution and brand differentiation.
The jewelry category competes for customers’ share-of-wallet with other consumer sectors such as electronics, clothing and furniture, as well as travel and restaurants. This competition for consumers’ discretionary spending is particularly relevant to gift giving.
The jewelry category competes for customers’ share-of-wallet with other consumer sectors such as electronics, clothing and furniture, as well as experience-oriented categories such as travel and restaurants. This competition for consumers’ discretionary spending is particularly relevant to gift giving.
Through Signet’s partnerships, the Company is able to offer a range of financing, leasing, and payment opportunities across its banners. The Company continues to find and develop new options to meet its customer’s needs across the various merchandise price points.
Through Signet’s partnerships, the Company is able to offer a range of financing, leasing, and payment opportunities across most of its banners. The Company continues to source and develop new options to meet its customer’s needs across the various merchandise price points.
These offerings and partnerships allow the Company to focus on its core business of being the premier jewelry partner for its customers. Comenity Bank provides credit and services to the Kay, Jared, Zales and Banter banners. Genesis Financial Solutions (“Genesis”) provides a second look program for applicants declined by Comenity Bank.
These offerings and partnerships allow the Company to focus on its core business of being the premier jewelry partner for its customers. Comenity Bank and Comenity Capital Bank (collectively “Comenity”) provide credit and services to the Kay, Jared, Zales and Banter banners. Genesis Financial Solutions (“Genesis”) provides a second look program for applicants declined by Comenity.
H.Samuel continues to focus on larger store formats in regional shopping centers. H.Samuel accounted for 3% of Signet’s consolidated sales in Fiscal 2022 (Fiscal 2021: 3%). 10 Table of Contents Ernest Jones Ernest Jones serves the upper middle market, with a target customer focused on high-quality, timeless jewelry.
H.Samuel continues to focus on larger store formats in regional shopping centers. H.Samuel accounted for 3% of Signet’s consolidated sales in Fiscal 2023 (Fiscal 2022: 3%). Ernest Jones Ernest Jones serves the upper middle market, with a target customer focused on high-quality, timeless jewelry. Ernest Jones accounted for 3% of Signet’s consolidated sales in Fiscal 2023 (Fiscal 2022: 3%).
Any stones deemed unsuitable for Signet’s needs are sold to third-parties on the open market. Marketing and advertising Marketing is one of Signet’s most critical investments. It generates customer awareness and purchase considerations, and over time strengthens its banners and drives share growth.
Any stones deemed unsuitable for Signet’s needs are sold to third-parties on the open market. Marketing and advertising Marketing is one of Signet’s most critical investments. It generates customer awareness, drives purchase considerations, and over time strengthens consumer lifetime value and drives share growth.
A full list of Signet’s goals is published on the Company’s corporate website and an annual progress report on the goals is included in the Company’s annual Corporate Citizenship and Sustainability report. Employees and demographics As of January 29, 2022, the number of global team members employed at Signet was 30,856 as compared to 26,749 at January 30, 2021.
A full list of Signet’s goals is published on the Company’s corporate website and an annual progress report on the goals is included in the Company’s annual Corporate Citizenship and Sustainability report. Employees and demographics As of January 28, 2023, the number of global team members employed at Signet was 29,660 as compared to 30,856 at January 29, 2022.
Now, through Inspiring Brilliance, the Company is positioning itself to win with connected commerce capabilities that transcend OmniChannel, enabling its banners to engage customers whenever, wherever and however they want to shop. No other jewelry retailer offers a comparable mix of stores and digital platforms to serve customers.
Now, through Inspiring Brilliance , the Company is positioning itself to win with connected commerce capabilities that enable Signet banners to engage with customers whenever, wherever and however they want to shop. No other jewelry retailer offers a comparable mix of stores and digital platforms to serve customers.
All of our product categories are to an extent dependent on the economic environment as customers can trade up or down price points depending on their available budget. Bridal represented 47% of Signet’s total merchandise sales and the fashion category represents 46% of Signet’s total merchandise sales during Fiscal 2022.
All of our product categories are to an extent dependent on the economic environment as customers can trade up or down price points depending on their available budget. Bridal represented 49% of Signet’s total merchandise sales and the fashion category represents 44% of Signet’s total merchandise sales during Fiscal 2023.
The Company operated 2,854 stores and kiosks as of January 29, 2022, which when combined with the Company’s digital capabilities under its Connected Commerce strategy, provides customers the opportunity to use both online and in-store experiences as part of their shopping journey.
The Company operated 2,808 stores and kiosks as of January 28, 2023, which when combined with the Company’s digital capabilities under its Connected Commerce strategy, provides customers the opportunity to use both online and in-store experiences as part of their shopping journey.
Two Board level committees at Signet are responsible for monitoring climate change risks (1) the Audit Committee supervises risks across the Company, and (2) the Corporate Citizenship and Sustainability Committee supervises enterprise-wide policy regarding Signet’s 2030 Corporate Sustainability Goals, including Signet’s goal to achieve net-zero greenhouse gas emissions by 2050.
Two Board level committees at Signet are responsible for monitoring climate change risks: (1) the Audit Committee oversees risks across the Company; and (2) the Corporate Citizenship and Sustainability Committee oversees enterprise-wide policy regarding Signet’s 2030 Corporate Sustainability Goals, including Signet’s aspiration to shift business operations to achieve net-zero greenhouse gas emissions by 2050.
These Design & Service Centers are staffed with skilled artisans who support the repair and custom business generated across all US banners. Signet’s custom jewelry sales use a proprietary computer selling system and in-store design capabilities. The North America segment sells extended service plans covering lifetime repair service for jewelry and jewelry replacement plans.
These Design & Service Centers are staffed with skilled artisans who support the repair and custom business generated in the Kay, Zales and Jared banners. Signet’s custom jewelry sales use a proprietary computer selling system and in-store design capabilities. The North America segment sells extended service plans covering lifetime repair service for jewelry and jewelry replacement plans in Banter.
In Fiscal 2022, nearly 20% of sales were completed online and 65% of customers reported that they used a banner website prior to completing their purchase, which indicates that Signet customers now use both online and in-store experiences as part of their shopping journey.
In Fiscal 2023, approximately 20% of sales were completed online and 75% of customers reported that they used a banner website prior to completing their purchase, which indicates that Signet customers now use both online and in-store experiences as part of their shopping journey.
Signet monitors changes in these laws to maintain compliance with applicable requirements. 17 Table of Contents CLIMATE CHANGE Signet recognizes that climate change poses a systemic risk to business operations.
Signet monitors changes in these laws to maintain compliance with applicable requirements. CLIMATE CHANGE Signet recognizes that climate change poses a systemic risk to business operations.
At the Company level, Signet formed the Climate Action and Sustainability Committee (“CASC”) in June 2021. CASC is a cross-functional committee with leaders across Signet’s business operations with the mandate of improving Signet’s data disclosures on climate and monitoring the progress of Signet’s climate-related Corporate Sustainability Goals.
At the Company level, Signet’s Climate Action and Sustainability Committee (“CASC”) is a cross-functional committee with leaders across Signet’s business operations with the mandate of improving Signet’s data disclosures on climate and monitoring the progress of Signet’s climate-related Corporate Sustainability Goals.
This team partners closely with IT and Operations to harmonize and enhance existing applications and systems and use next generation training techniques to provide the right level of training and support to the field team.
This team partners closely with the information technology (“IT”) and operations teams to harmonize and enhance existing applications and systems and use next generation training techniques to provide the right level of training and support to the field team.
(2) Includes mall-based kiosks for the Banter by Piercing Pagoda banner. (3) Includes 22 Diamonds Direct off-mall locations acquired as described in Note 4 of Item 8. Refer to Item 2 for additional information on the Company’s real estate portfolio.
(2) Includes mall-based kiosks for the Banter by Piercing Pagoda banner. (3) Includes 23 locations acquired from Blue Nile in Fiscal 2023 and 22 Diamonds Direct off-mall locations acquired in Fiscal 2022 as described in Note 4 of Item 8. Refer to Item 2 for additional information on the Company’s real estate portfolio.
Peoples Jewellers (“Peoples”) Peoples is Canada’s largest specialty jewelry retailer and is positioned as “Canada’s #1 Diamond Store” emphasizing its diamond business while also offering a wide selection of gold jewelry, gemstone jewelry and watches. Peoples operates primarily in shopping malls and online. Peoples accounted for 3% of Signet’s consolidated sales in Fiscal 2022 (Fiscal 2021: 3%).
Peoples Jewellers (“Peoples”) Peoples is Canada’s largest specialty jewelry retailer and is positioned as “Canada’s #1 Diamond Store” emphasizing its diamond business while also offering a wide selection of gold jewelry, gemstone jewelry and watches. Peoples operates primarily in shopping malls and online.
Our diversity, equity and inclusion efforts transcend all levels of our Company, from our retail store team members through our leadership team and Board of Directors (“Board”). Currently, 58 percent of our Board are gender or ethnically diverse, including five female Board members and two ethnically diverse Board members.
Our diversity, equity and inclusion efforts transcend all levels of our Company, from our retail store team members through our leadership team and Board of Directors (“Board”). Currently, our Board includes five female members, or 42%, two ethnically diverse Board members, or 17%.
Kay is positioned as the champion of modern love and gratitude, the #1 US jeweler for bridal and all occasion-based gifting offering a broad assortment of fine jewelry including bridal, diamond solitaire, fashion jewelry and watches. Kay accounted for 38% of Signet’s consolidated sales in Fiscal 2022 (Fiscal 2021: 38%).
Kay is positioned as the champion of modern love and gratitude, the #1 US jeweler for bridal and all occasion-based gifting offering a broad assortment of fine jewelry including bridal, diamond solitaire, fashion jewelry and watches.
Jared locations are normally free-standing sites with high visibility and traffic flow, positioned close to major roads within shopping developments. Jared stores primarily operate in retail centers that contain strong retail co-tenants, including big box, destination stores and some smaller specialty units.
Jared locations are typically free-standing sites with high visibility and traffic flow, positioned close to major roads within shopping developments. Jared stores primarily operate in retail centers that contain strong retail co-tenants, including big box, destination stores and some smaller specialty units. Jared accounted for 17% of Signet’s consolidated sales in Fiscal 2023 (Fiscal 2022: 17%).
Below is a summary of the payment participation rate in North America which reflects activity for in-house and outsourced credit program customers in North America, for Kay, Jared, Zales and Banter customers, as well as lease purchase customers: (dollars in millions) Fiscal 2022 Fiscal 2021 Total North America sales (1) $ 6,700.2 $ 4,539.4 Credit, lease and Affirm purchase sales $ 2,739.9 $ 1,888.9 Credit, lease and Affirm purchase sales as % of total eligible North America sales (1) 40.9 % 41.6 % (1) Excludes Diamonds Direct, James Allen, and Rocksbox, as these banners do not participate in the Company’s financing programs discussed above.
Below is a summary of the payment participation rate in North America which reflects activity for Signet’s outsourced credit program in North America, for Kay, Jared, Zales and Banter customers, as well as lease purchase customers: 13 Table of Contents (dollars in millions) Fiscal 2023 Fiscal 2022 Total North America sales (1) $ 6,189.8 $ 6,700.2 Credit, lease and Affirm purchase sales $ 2,734.2 $ 2,739.9 Credit, lease and Affirm purchase sales as % of total eligible North America sales (1) 44.2 % 40.9 % (1) Excludes Diamonds Direct, digital banners and Rocksbox, as these banners do not participate in the Company’s financing programs discussed above.
With its Path to Brilliance transformation now complete - and industry-leading growth in the first year of its Inspiring Brilliance growth journey - Signet is demonstrating that it has the strategies, strengths and talent to consistently outpace the market and deliver reliable, long-term sustainable growth. 2030 Corporate Sustainability Goals As a company with a Citizenship & Sustainability Committee focused on its Environmental, Social and Governance (“ESG”) strategy, and a purpose-inspired business strategy in Inspiring Brilliance described above, Signet is committed to ongoing leadership in ESG initiatives as an important growth driver that is critical to the health of our business.
Signet is demonstrating that it has the strategies, competitive advantages, and talent to consistently outpace the market and deliver reliable, long-term sustainable gro wth. 2030 Corporate Sustainability Goals As a company with a Board level Corporate Citizenship & Sustainability Committee focused on its corporate sustainability strategy, Environmental, Social and Governance (“ESG”) data disclosures, and a Purpose-inspired business strategy as described in the above Inspiring Brilliance section, Signet is committed to ongoing leadership in sustainability and ESG initiatives as an important growth driver that is critical to the health of our business.
Signet’s supplier relationships allow the Company to display suppliers’ inventories on the banner websites for sale to customers without holding the items in its inventory until the products are ordered by customers, which are referred to as “virtual inventory.” Virtual inventory expands the choice of merchandise available to customers both online and in-store and accounted for approximately 8% of North America sales and 49% of North America online sales in Fiscal 2022 (see further in the Products and merchandising section below).
Signet’s supplier relationships allow the Company to display suppliers’ inventories on the banner websites for sale to customers without holding the items in its inventory until the products are ordered by customers, which are referred to as “virtual inventory.” Virtual inventory expands the choice of merchandise available to customers both online and in-store.
In Fiscal 2022, approximately 69 percent of Signet’s new hires in North America were diverse candidates. We are committed to advancing diversity, equity, and inclusion in the workplace. In Fiscal 2022, we provided team members the opportunity to select a third nonbinary option in addition to male and female in our HRIS software.
In Fiscal 2023, approximately 46% of Signet’s new hires in North America were BIPOC candidates. 15 Table of Contents We are committed to advancing diversity, equity, and inclusion in the workplace. • We provide team members the opportunity to select a third nonbinary option in addition to male and female in our HRIS software.
Virtually all of Signet’s consignment inventory is held in the US. 11 Table of Contents Raw materials The Company’s costs, as with the jewelry industry as a whole, are generally affected by fluctuations in the price and supply of diamonds, gold and, to a much lesser extent, other precious and semi-precious metals and stones.
Raw materials The Company’s costs, as with the jewelry industry as a whole, are generally affected by fluctuations in the price and supply of diamonds, gold and, to a much lesser extent, other precious and semi-precious metals and stones.
The Board supported the introduction of our newly defined employee experience where team members are: invited to be their best selves; introduced to new ideas that grow their passion, not just their jobs; and are inspired to inspire more love in the world.
All team members are immersed in the Signet’s employee experience where team members are invited to be their best selves; introduced to new ideas that grow their passion, not just their jobs; and are inspired to inspire more love in the world.
Under the amended and restated agreements, The Bank of Missouri will be the issuer for the add-on receivables on these existing accounts and CarVal and Castlelake will purchase the receivables from The Bank of Missouri.
Under the amended and restated agreements, The Bank of Missouri will be the issuer for the add-on receivables on these existing accounts and CarVal and Castlelake will purchase the receivables from The Bank of Missouri. Refer to Note 13 of Item 8 for further information.
Having achieved or exceeded its Path to Brilliance goals, the Company launched its next phase of growth — “Inspiring Brilliance” — in Fiscal 2022, focused on four where-to-play strategies: Win in Big Businesses; Expand Accessible Luxury and Value; Accelerate Services ; and Lead Digital Commerce .
Having exceeded its overall Path to Brilliance goals, the Company launched its next phase of growth - Inspiring Brilliance - in Fiscal 2022 and continued in Fiscal 2023, focused on four “Where-to-Play” strategies: Win in Big Businesses; Expand Accessible Luxury and Value; Accelerate Services ; and Lead Digital Commerce .
Under the heading “Love for Our Team,” The Chief People Officer is responsible for fifteen goals in the areas of Employer of Choice, Community of Inclusiveness, and Purpose and Appreciation.
The Company’s goals provide a roadmap for Signet’s commitment to sustainability. Under the heading “Love for Our Team,” the Chief People Officer is responsible for fifteen critical goals in the areas of Employer of Choice, Community of Inclusiveness, and Purpose and Appreciation.
Merchandise Details of merchandise mix by major product category (excluding repairs, extended service plans and other miscellaneous sales) are shown below: North America International Consolidated Fiscal 2022 Bridal 47 % 47 % 47 % Fashion 48 % 20 % 46 % Watches 4 % 33 % 6 % Other 1 % — % 1 % 100 % 100 % 100 % Fiscal 2021 Bridal 51 % 34 % 49 % Fashion 43 % 26 % 42 % Watches 4 % 37 % 7 % Other 2 % 3 % 2 % 100 % 100 % 100 % The bridal category, which includes engagement, wedding and anniversary purchases, is predominantly diamond jewelry.
Merchandise Details of merchandise mix by major product category (excluding repairs, extended service plans, loose diamonds and other miscellaneous sales) are shown below: North America International Consolidated Fiscal 2023 Bridal 49 % 46 % 49 % Fashion 45 % 19 % 44 % Watches 4 % 35 % 5 % Other 2 % — % 2 % 100 % 100 % 100 % Fiscal 2022 Bridal 47 % 47 % 47 % Fashion 48 % 20 % 46 % Watches 4 % 33 % 6 % Other 1 % — % 1 % 100 % 100 % 100 % 11 Table of Contents The bridal category, which includes engagement, wedding and anniversary purchases, is predominantly diamond jewelry.
REGULATION As a company with both US and international operations, we are required to comply with numerous laws and regulations in the jurisdictions in which we operate, covering areas such as consumer protection, consumer privacy, data protection, consumer credit, consumer credit insurance, health and safety, waste disposal, supply chain integrity, truth in advertising and employment.
The “Holiday Season” consists of results for the months of November and December, with December being the highest volume month of the year. 17 Table of Contents REGULATION As a company with both US and international operations, we are required to comply with numerous laws and regulations in the jurisdictions in which we operate, covering areas such as consumer protection, consumer privacy, data protection, consumer credit, consumer credit insurance, health and safety, waste disposal, supply chain integrity, truth in advertising and employment.
Of team members surveyed, 91 percent of Signet team members responded, "People here are treated fairly regardless of race” and 93 percent of Signet team members responded, “People here are treated fairly regardless of sexual orientation.” Furthermore, we recognize our customer base's diversity and strive to have a workforce that is representative of such customers.
Of team members surveyed, 89% of Signet team members responded, "People here are treated fairly regardless of race” and 92% of Signet team members responded, “People here are treated fairly regardless of sexual orientation.” Furthermore, we recognize the diversity of our customers and strive to have a workforce that is representative of the communities where we live and work.
North America Banners The North America segment operates jewelry stores in malls, mall-based kiosks and off-mall locations throughout the US and Canada and online under national banners including Kay, Zales, Jared, Peoples, Banter by Piercing Pagoda and Diamonds Direct. Additionally, the Company operates online through JamesAllen.com and Rocksbox, as well as each of the individual banner websites.
North America Banners The North America reportable segment operates jewelry stores in malls, mall-based kiosks and off-mall locations throughout the US and Canada and online under national banners including Kay, Zales, Jared, Peoples, Banter by Piercing Pagoda and Diamonds Direct.
This strategy allowed us to attract and hire seasonal team members and meet all of our holiday sales goals. Competitive benefits are critical to our success in identifying, recruiting, retaining, and incentivizing our existing and prospective team members. • We design our benefit packages to be competitive in the marketplace and they meet or exceed local laws.
Compensation and benefits Competitive benefits are critical to our success in identifying, recruiting, retaining, and incentivizing our existing and prospective team members. • We design our benefit packages to be competitive in the marketplace and they meet or exceed local laws.
To that end, the Company released its 2030 Corporate Sustainability Goals in Fiscal 2022, further strengthening Signet’s Corporate Citizenship and Sustainability leadership in the industry.
To that end, the Company has integrated its 2030 Corporate Sustainability Goals into its business strategy, further strengthening Signet’s Corporate Citizenship and Sustainability leadership in the industry.
Our leadership traits are foundational to the success of each leader at Signet no matter the job title. We believe in “leadership at every level” and Brilliant University provides education and training for team members to learn more about what each trait looks like at different levels in the organization.
We believe in “leadership at every level” and Brilliant University provides education and training for team members to learn more about what each trait looks like at different levels in the organization.
The banners work with a portfolio of creative agencies and have built both internal and external data and media expertise. 12 Table of Contents Details of gross advertising (i.e. advertising before vendor contributions) by segment is shown below: Fiscal 2022 Fiscal 2021 Fiscal 2020 (in millions) Gross advertising spending as a % of segment sales Gross advertising spending as a % of segment sales Gross advertising spending as a % of segment sales North America $ 508.6 7.0 % $ 329.5 6.8 % $ 370.0 6.6 % International 18.4 3.7 % 13.5 3.8 % 18.9 3.6 % Signet $ 527.0 6.7 % $ 343.0 6.6 % $ 388.9 6.3 % Other sales and services The Company offers repair services to its customers that include both merchandise repairs and custom design services.
Details of gross advertising (i.e. advertising before vendor contributions) by segment is shown below: Fiscal 2023 Fiscal 2022 Fiscal 2021 (in millions) Gross advertising spending as a % of sales Gross advertising spending as a % of sales Gross advertising spending as a % of sales North America $ 536.4 7.4 % $ 508.6 7.0 % $ 329.5 6.8 % International 19.2 4.1 % 18.4 3.7 % 13.5 3.8 % Signet $ 555.6 7.1 % $ 527.0 6.7 % $ 343.0 6.6 % Other sales and services The Company offers repair services to its customers that include both merchandise repairs and custom design services.
In addition to standard medical coverage, we offer eligible team members dental and vision coverage, health savings, flexible spending accounts, paid time off, employee assistance programs, voluntary short-term and long-term disability insurance, term life insurance and a 401(k) Savings Plan in the US. • Signet provides health plan benefits for same-sex domestic partners/spouses and LGBTQ team members.
In addition to standard medical coverage, we offer eligible team members dental and vision coverage, health savings, flexible spending accounts, hospital indemnity and accident insurance, pet insurance, home and auto insurance, paid time off, employee assistance programs, short-term and long-term disability insurance, group term and voluntary life insurance for team members and their families and a 401(k) Savings Plan in the US.
In addition, the Company has partnerships with third-party providers who directly extend credit to its customers, and who also manage and service the customers’ accounts.
In addition, the Company has partnerships with third-party providers who directly extend financing to its customers, and who also manage and service the customers’ accounts. Refer to Note 13 of Item 8 for further information.
TRADEMARKS AND TRADE NAMES Signet is not dependent on any material patents or licenses in any of its segments. Signet has several well-established trademarks and trade names which are significant in maintaining its reputation and competitive position in the jewelry retailing industry.
Signet has several well-established trademarks and trade names which are significant in maintaining its reputation and competitive position in the jewelry retailing industry.
January 29, 2022 January 30, 2021 February 1, 2020 North America 27,162 23,700 28,835 UK 3,239 2,885 4,086 Other international 455 164 165 Total 30,856 26,749 33,086 14 Table of Contents North America (1) January 29, 2022 January 30, 2021 Full-time 15,395 14,800 Part-time 11,174 8,900 Total 26,569 23,700 By Gender Women 19,613 17,750 Men 6,601 5,822 Nonbinary or chose not to identify 355 128 By Race/Ethnicity Number of Black or African American employees 3,715 3,095 Number of American Indian and Alaska Native employees 212 152 Number of Asian employees 1,348 1,169 Number of Caucasian and White employees 13,094 12,200 Number of Hispanic and Latino employees 4,203 3,375 Number of Native Hawaiian and Other Pacific Islander employees 114 104 Number of employees of two or more races 976 822 Number of employees of unknown ethnicities 2,907 2,783 (1) Excludes Diamonds Direct Diversity, equity, and inclusion We value building a diverse workforce, embracing different perspectives, and fostering an inclusive, empowering work environment for our team members and customers.
Approximately 87% of the Company’s workforce was employed in North America. 14 Table of Contents January 28, 2023 January 29, 2022 January 30, 2021 North America 25,794 27,162 23,700 UK 3,205 3,239 2,885 Other international 661 455 164 Total 29,660 30,856 26,749 North America (1) January 28, 2023 January 29, 2022 Full-time 14,475 15,395 Part-time 10,704 11,174 Total 25,179 26,569 By Gender Women 18,367 19,613 Men 6,495 6,601 Nonbinary or chose not to identify 317 355 By Race/Ethnicity Number of Black or African American employees 3,344 3,715 Number of American Indian and Alaska Native employees 199 212 Number of Asian employees 1,409 1,348 Number of Caucasian and White employees 12,753 13,094 Number of Hispanic and Latino employees 3,833 4,203 Number of Native Hawaiian and Other Pacific Islander employees 117 114 Number of employees of two or more races 906 976 Number of employees of unknown ethnicities 2,618 2,907 (1) Excludes Blue Nile in Fiscal 2023 and Diamonds Direct in Fiscal 2022 Diversity, equity, and inclusion Inspired by our Purpose and by our core value of “People First,” we value building a diverse workforce, embracing different perspectives, and fostering an inclusive, empowering work environment for our team members and customers.
Zales Jewelers (“Zales”) Zales is the third largest specialty retail jewelry brand in the US, based on sales. Zales operates primarily in shopping malls, outlet malls, neighborhood power centers and online.
Kay accounted for 36% of Signet’s consolidated sales in Fiscal 2023 (Fiscal 2022: 38%). 9 Table of Contents Zales Jewelers (“Zales”) Zales is the third largest specialty retail jewelry brand in the US, based on sales. Zales operates primarily in shopping malls, outlet malls, neighborhood power centers and online.
The platform gives team members access to training modules from their very first day of employment. Investments in our people, such as training, allows us to recruit exceptional candidates from other retailers and industries and efficiently provide them with new skills and experiences regarding Signet values, leadership traits and jewelry knowledge.
Investments in our people, such as training, allows us to recruit exceptional candidates from other retailers and industries and efficiently provide them with new skills and experiences regarding Signet values, leadership traits and jewelry knowledge. Brilliant University empowers team members to invest in learning their job, building new skills and growing their career.
Signet is a member of the UN Global Compact and adheres to its principles-based approach to responsible business. Leaders throughout the Company are engaged in every aspect of the Company’s Sustainability efforts. Banner leaders as well as functional leaders in Corporate Communications, Finance, Human Resources, Supply Chain, IT and Merchandising are responsible for achieving short-term and long-term goals.
Leaders throughout the Company are engaged in the Company’s Sustainability efforts. Banner leaders as well as functional leaders in Corporate Communications & Sustainability, Finance, Human Resources, Supply Chain, IT and Merchandising are responsible for achieving short-term and long-term goals.
Suppliers In Fiscal 2022, the five largest suppliers collectively accounted for approximately 19.6% of total purchases, with the largest supplier comprising 5.1%. Signet transacts business with suppliers on a worldwide basis at various stages of the supply chain with third party diamond cutting and jewelry manufacturing being predominantly carried out in Asia.
Signet transacts business with suppliers on a worldwide basis at various stages of the supply chain with third party diamond cutting and jewelry manufacturing being predominantly carried out in Asia.
Diamonds Direct’s stores are typically located in desirable off-mall sites proximate to high-end, destination centers alongside strong performing upscale retailers. Diamonds Direct accounted for 2% of Signet’s consolidated sales in Fiscal 2022. Rocksbox On March 29, 2021, the Company acquired all of the outstanding shares of Rocksbox Inc. (“Rocksbox”), a jewelry rental subscription business.
Diamonds Direct’s stores are typically located in desirable off-mall sites proximate to high-end, destination centers alongside strong performing upscale retailers. Diamonds Direct accounted for 6% of Signet’s consolidated sales in Fiscal 2023 (Fiscal 2022: 2%).
Rocksbox is a jewelry rental membership that allows members to discover new looks, trends or add classic styles to their jewelry collection. Rocksbox is direct to consumer, acquiring members primarily through digital advertising. For $21 / month members receive three pieces of jewelry in a set mailed to their door.
Rocksbox is direct to customer, acquiring members primarily through digital advertising. For $21/month members receive three pieces of jewelry in a set mailed to their door.
SEASONALITY Signet’s business is seasonal, with the fourth quarter accounting for approximately 35-40% of annual sales, as well as accounts for a substantial portion of the annual operating profit. The “Holiday Season” consists of results for the months of November and December, with December being the highest volume month of the year.
SEASONALITY Signet’s business is seasonal, with the fourth quarter historically accounting for approximately 35-40% of annual sales, as well as for a substantial portion of the annual operating profit.
HUMAN CAPITAL MANAGEMENT Signet’s People First approach At Signet, our approach to Human Capital management starts with our core value of “People First” and creating a truly inclusive, innovative, and collaborative company culture. We believe that thriving and engaged team members are integral to Signet’s success.
HUMAN CAPITAL MANAGEMENT Signet’s People First approach At Signet, our approach to human capital management starts with our core value of “People First” and aims at creating a truly inclusive, innovative, and collaborative company culture. As a retail company, sales and customer relationships are at the core of our business model.
Due to this dynamic, customers often invest time on Signet websites, through conversational commerce and on social media to experience the merchandise assortments prior to visiting brick-and-mortar stores to execute a purchase transaction. Particularly related to high value transactions, customers will supplement their online experience with an in-store visit prior to finalizing a purchase.
Due to this dynamic experience, customers often invest time on Signet websites, through conversational commerce and on social media to experience the merchandise assortments prior to visiting brick-and-mortar stores to execute a purchase transaction. Approximately 75% of our in-store purchasers use digital channels to assist in their purchase journey.
For eligible jewelry consultants in the US, our total average hourly wage is $20.55. In Fiscal 2022, Signet was again named a Great Place to Work-Certified™ Company for the second consecutive year which reflects the pride, engagement, and enthusiasm of our employees throughout our organization.
In Fiscal 2023, Signet was again named a Great Place to Work-Certified™ Company for the third consecutive year which reflects the pride, engagement, and enthusiasm of our team members throughout our organization.
Board oversight activities in this area include review of CEO and executive officer succession planning, review of diversity and other employee metrics, employee experience, and review of the Company's annual employee engagement survey results.
The full Board has worked closely with the executive management team, particularly the Chief People Officer, in helping shape the succession plans and leadership development agenda. Board oversight activities in this area include review of CEO and executive officer succession planning, review of diversity and other employee metrics, employee experience, and review of the Company's employee engagement survey results.
Brilliant University empowers team members to invest in learning their job, building new skills and growing their career. The Signet team member training experience is defined by Signet’s seven leadership traits (1) Vision and purpose (2) Critical thinking (3) 15 Table of Contents Customer obsession (4) Employee Experience (5) Diversity, Equity & Inclusion (6) Innovative Action and (7) Performance Excellence.
The Signet team member training experience is defined by Signet’s seven leadership traits: (1) Vision and Purpose; (2) Critical Thinking; (3) Customer Obsession; (4) Employee Experience; (5) Diversity, Equity & Inclusion; (6) Innovative Action; and (7) Performance Excellence. Our leadership traits are foundational to the success of each leader at Signet no matter the job title.
This minimizes exposure to changes in fashion trends and provides the flexibility to return non-performing merchandise.
This minimizes exposure to changes in fashion trends and provides the flexibility for the Company to return non-performing merchandise to vendors. The bulk of Signet’s consignment inventory is held in the US.
Signet has specific operating and financial criteria that must be satisfied before investing in new stores or renewing leases on existing stores, including evaluation of the mall/trade area and market potential. The Company reduced its store fleet by roughly 20% since beginning its transformation in Fiscal 2019, driving nearly 500 basis points of gross margin leverage over that time.
Signet has specific operating and financial criteria that must be satisfied before investing in new stores or renewing leases on existing stores, including evaluation of the mall/trade area and market potential.
Kay Jewelers (“Kay”) Kay is the largest specialty retail jewelry brand in the US based on sales. Kay operates in shopping malls, off-mall centers, outlet malls and online.
Additionally, the Company operates online through its digital banners, James Allen and Blue Nile, and through the jewelry subscription business Rocksbox, as well as each of the individual banner websites. Kay Jewelers (“Kay”) Kay is the largest specialty retail jewelry brand in the US based on sales. Kay operates in shopping malls, off-mall centers, outlet malls and online.
Substantially all of the stores operated by Signet are leased. Signet continues to reposition its store portfolio in a manner that it believes will drive greater store productivity.
The Company has reduced its store fleet by approximately 20% since beginning its transformation in Fiscal 2019, driving more than 400 basis points of gross margin leverage over that time. Substantially all the stores operated by Signet are leased. Signet continues to reposition its store portfolio in a manner that it believes will drive greater store productivity.
In Fiscal 2019, Signet implemented a multi-phase Voice of the Customer program utilizing the Net Promoter System as a component of its Path to Brilliance transformation plan and customer first initiatives. The first phase focused on setting up the technology, establishing stable measurements throughout the shopping ecosystem for key customer journeys, and discovering how to effectively operationalize customer feedback.
The first phase focused on setting up the technology, establishing stable measurements throughout the shopping ecosystem for key customer journeys, and discovering how to effectively operationalize customer feedback.
Signet’s greenhouse gas emission data is published in our annual Sustainability report, which is available on the Company’s website. Signet is also in the process of instituting the policies and procedures required to disclose financial grade greenhouse gas emissions data.
Signet’s greenhouse gas emission data is published in our annual Corporate Citizenship & Sustainability report, which is available on the Company’s website.
The core objectives of “Inspiring Brilliance” are to grow operating margin and gain market share while driving annual revenues toward its longer-term goal of $9 billion. Inspiring Brilliance As described above, the foundations of “Inspiring Brilliance” are focused on four where-to-play strategies: Win in Big Businesses; Expand Accessible Luxury and Value; Accelerate Services; and Lead Digital Commerce.
Inspiring Brilliance As described above, the foundations of Inspiring Brilliance are focused on four “Where-to-Play” strategies: Win in Big Businesses; Expand Accessible Luxury and Value; Accelerate Services; and Lead Digital Commerce.
The Company has already achieved three of its Corporate Sustainability Goals while continuing to make steady progress towards its remaining goals.
Signet released its first annual update on its goals it its Fiscal 2022 Corporate Citizenship and Sustainability report published in June 2022. The Company has already achieved three of its forty-four Corporate Sustainability Goals while continuing to make steady progress towards its remaining goals.
Further refinements were pursued in Fiscal 2022 to continue to equip jewelry consultants, digital, and banner personnel with robust customer feedback to enhance their customer offerings and experiences. Banner operations As noted above, the Company operates eight banners in North America and two banners in the UK, with the majority operating through both online and brick and mortar retail operations.
Banner operations As noted above, the Company operates nine banners in North America and two banners in the UK, with the majority operating through both online and brick and mortar retail operations.
Customer experience Signet is committed to delivering an inspiring, innovative, full service, seamlessly connected customer experience for our clients regardless of their channel of choice. The Company considers this an essential element and competitive advantage in the success of its business. The ability to recruit, develop and retain qualified jewelry consultants is an important capability to deliver customer satisfaction.
The Company considers this an essential element and competitive advantage in the success of its business. The ability to recruit, develop and retain qualified jewelry consultants is an important capability to deliver customer satisfaction. Signet has comprehensive recruitment, training and incentive programs in place, including annual training conferences in the spring and fall.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeTherefore, there is limited ability for Signet to compensate for shortfalls in fourth quarter sales or earnings by changes in its operations and strategies in other quarters, or to recover from any extensive disruption, for example, due to sudden adverse changes in consumer confidence, consumer spending ability, economic conditions, unexpected trends in merchandise demand, significant competitive and promotional activity by other retailers, inclement weather conditions having an impact on a significant number of stores in the last few days immediately before Christmas Day or disruption to warehousing and store replenishment systems. 23 Table of Contents Additionally, in anticipation of increased sales activity in the Holiday Season, Signet incurs certain significant incremental expenses prior to and during peak selling seasons, including advertising and costs associated with hiring a substantial number of temporary employees to supplement the Company’s existing workforce.
Biggest changeTherefore, there is limited ability for Signet to compensate for shortfalls in fourth quarter sales or earnings by changes in its operations and strategies in other quarters, or to recover from any extensive disruption, for example, due to sudden adverse changes in consumer confidence, consumer spending ability, economic conditions, unexpected trends in merchandise demand, significant competitive and promotional activity by other retailers, inclement weather conditions having an impact on a significant number of stores in the last few days immediately before Christmas Day, such as Winter Storm Elliott that impacted stores in December 2022, or disruption to warehousing and store replenishment systems.
Risks Related to Global and Economic Conditions The outbreak of COVID-19 has had a significant adverse impact on our business, and this outbreak, as well as other public health crises or disease outbreaks, epidemics or pandemics, has and could continue to adversely impact our business, financial condition, results of operations and cash flows and could continue to exacerbate other risk factors.
RISK FACTORS Risks Related to Global and Economic Conditions The outbreak of COVID-19 has had a significant adverse impact on our business, and this outbreak, as well as other public health crises or disease outbreaks, epidemics or pandemics, has and could continue to adversely impact our business, financial condition, results of operations and cash flows and could continue to exacerbate other risk factors.
Also, if future responses to verification requests by suppliers of any of the materials used in Signet’s products are inadequate or adverse, Signet’s ability to obtain merchandise may be impaired and its compliance costs may increase. It is possible that other minerals, such as diamonds, could be subject to similar disclosure requirements or rules.
Also, if future responses to verification requests by suppliers of any of the materials used in Signet’s products are inadequate or adverse, Signet’s ability to obtain merchandise may be impaired and its compliance costs may increase. It is possible that other minerals, such as diamonds, could be subject to similar disclosure requirements or rules in the future.
In addition, other retail categories and other forms of expenditure, such as electronics, entertainment and travel, also compete for consumers’ discretionary spending, particularly during the Holiday shopping season. Therefore, the price of jewelry relative to other products influences the proportion of consumers’ expenditures that are spent on jewelry.
In addition, other retail categories and other forms of expenditure, such as electronics, entertainment and travel, also compete for consumers’ discretionary spending, particularly during the Holiday Season. Therefore, the price of jewelry relative to other products influences the proportion of consumers’ expenditures that are spent on jewelry.
Other factors that could affect the Company’s inventory management and planning team’s ability to accurately forecast customer demand for its products include: • a substantial increase or decrease in demand for products of Signet’s competitors; • failure to accurately forecast trends and customer acceptance for new products; • new product introductions, promotions or pricing strategies by competitors, particularly during holiday periods; • changes in the Company’s product offerings including seasonal items and the Company’s ability to replenish these items in a timely manner; • changes to the Company’s overall seasonal promotional cadence and the number and timing of promotional events and clearance sales; • more limited historical store sales information for stores in newer markets; • weakening of economic conditions or consumer confidence in the future, which could reduce demand for discretionary items, such as jewelry; and • acts or threats of war or terrorism or epidemics, which could adversely affect consumer confidence and spending or interrupt production and distribution of Signet’s products and raw materials.
Other factors that could affect the Company’s inventory management and planning team’s ability to accurately forecast customer demand for its products include: • a substantial increase or decrease in demand for products of Signet’s competitors; 23 Table of Contents • failure to accurately forecast trends and customer acceptance for new products; • new product introductions, promotions or pricing strategies by competitors, particularly during holiday periods; • changes in the Company’s product offerings including seasonal items and the Company’s ability to replenish these items in a timely manner; • changes to the Company’s overall seasonal promotional cadence and the number and timing of promotional events and clearance sales; • more limited historical store sales information for stores in newer markets; • weakening of economic conditions or consumer confidence in the future, which could reduce demand for discretionary items, such as jewelry; and • acts or threats of war or terrorism or epidemics, which could adversely affect consumer confidence and spending or interrupt production and distribution of Signet’s products and raw materials.
While the Company does not believe that the recently enacted tariffs will materially impact its business, the imposition of additional or increased tariffs on jewelry or other items imported by it from China or other countries, or the Company’s inability to successfully manage inventory from China, could require the Company to increase prices to its customers or, if unable to do so, result in lowering its gross margin on products sold.
While the Company does not believe that tariffs will materially impact its business, the imposition of additional or increased tariffs on jewelry or other items imported by it from China or other countries, or the Company’s inability to successfully manage inventory from China or other countries, could require the Company to increase prices to its customers or, if unable to do so, result in lowering its gross margin on products sold.
If Signet’s brands do not offer the same or similar item at the lowest price, or if competitors offer a better and more user-friendly website experience than Signet, or financing that is easier to access or provides better terms, consumers may purchase their jewelry from competitors, which would adversely impact the Company’s sales and results of operations.
If Signet’s brands do not offer the same or a similar item at the lowest price, or if competitors offer a better and more user-friendly website experience than Signet, or financing that is easier to access or provides better terms, consumers may purchase their jewelry from competitors, which would adversely impact the Company’s sales, results of operations and market share.
Furthermore, we believe government economic stimulus measures have a positive impact on our sales and as it is removed it is uncertain if or how long associated benefits may last. Jewelry purchases are discretionary and are dependent on the above factors relating to discretionary consumer spending, particularly as jewelry is often perceived to be a luxury purchase.
Furthermore, we believe government economic stimulus measures have had a positive impact on our sales and it is uncertain if or how long associated benefits may last. Jewelry purchases are discretionary and are dependent on the above factors relating to discretionary consumer spending, particularly as jewelry is often perceived to be a luxury purchase.
However, government requirements regarding sources of commodities, such as those required by the Dodd-Frank Act or sanctions on Alrosa or its management, could result in Signet choosing to terminate relationships with suppliers in the future due to a change in a supplier’s sourcing practices or Signet’s compliance with laws and internal policies.
However, government requirements regarding sources of commodities, such as those required by the Dodd-Frank Act or sanctions on Alrosa or its management, has and could continue to result in Signet choosing to terminate relationships with suppliers in the future due to a change in a supplier’s sourcing practices or Signet’s compliance with laws and internal policies.
Terrorism, armed conflict, and acts of war (or the expectation of such events), both in the US and abroad, could also have a significant impact on Signet’s business and the worldwide economy. At times throughout the past several years, volatile conditions have characterized financial markets.
Terrorism, armed conflict, and acts of war (or the expectation of such events), both in the US and abroad, could also have a significant impact on Signet’s business and the worldwide economy. At times throughout the past several years, volatile conditions have impacted the financial markets.
Particularly sharp increases in commodity costs may result in a time lag before increased commodity costs are fully reflected in retail prices or have an impact to our results of operations. As we use an average cost inventory methodology, volatility in our commodity costs may also result in a time lag before cost increases are reflected in retail prices.
Particularly sharp increases in commodity costs may result in a time lag before increased commodity costs are fully reflected in retail prices or have an impact on our results of operations. As we use an average cost inventory methodology, volatility in our commodity costs may also result in a time lag before cost increases are reflected in retail prices.
As discussed further in Note 13 to the consolidated financial statements, Signet has outsourced its third-party credit programs, however, if any of those third-party credit providers were to terminate, Signet may need to enter into other arrangements with other third-parties.
As discussed further in Note 13 to the consolidated financial statements in Item 8, Signet has outsourced its third-party credit programs, however, if any of those third-party credit providers were to terminate, Signet may need to enter into other arrangements with other third-parties.
Risks Related to Our Operations and Seasonality Fluctuations in the pricing and availability of commodities, particularly polished diamonds and gold, which account for the majority of Signet’s merchandise costs, could adversely impact its earnings and cash availability.
Risks Related to Our Operations and Seasonality Fluctuations in the pricing and availability of commodities, particularly polished diamonds and gold, which account for the majority of Signet’s merchandise costs, could adversely impact its earnings, inventory valuations and cash availability.
The occurrence of any of these events could compromise Signet’s or the third-party’s networks and the information stored there, including personal, 27 Table of Contents proprietary or confidential information about Signet, its customers or its third-party vendors, and personally identifiable information of Signet’s customers and employees could be accessed, manipulated, publicly disclosed, lost or stolen, exposing its customers to the risk of identity theft and exposing Signet or its third-party vendors to a risk of loss or misuse of this information.
The occurrence of any of these events could compromise Signet’s or the third-party’s networks and the information stored there, including personal, proprietary or confidential information about Signet, its customers or its third-party vendors, and personally identifiable information of Signet’s customers and employees could be accessed, manipulated, publicly disclosed, lost or stolen, exposing its customers to the risk of identity theft and exposing Signet or its third-party vendors to a risk of loss or misuse of this information.
When evaluating and making such changes, there can be no assurances that the Company will successfully implement such changes, that significant additional investments will not be required beyond the project budget, that such changes will occur without disruptions to its operations or maintenance of its internal control compliance programs or that the new or upgraded systems will achieve the desired business objectives.
When evaluating 25 Table of Contents and making such changes, there can be no assurances that the Company will successfully implement such changes, that significant additional investments will not be required beyond the project budget, that such changes will occur without disruptions to its operations or maintenance of its internal control compliance programs or that the new or upgraded systems will achieve the desired business objectives.
Because a large portion of its financing is asset-based and secured, the Company’s ability to draw funds is dependent on maintaining a sufficient borrowing base and it is subject to the risk of loss of such assets to foreclosure or sale to satisfy its debt obligations. Signet’s borrowing agreements include various financial and other covenants.
Because a large portion of its financing is asset-based and secured, the Company’s ability to draw funds is dependent on 29 Table of Contents maintaining a sufficient borrowing base and it is subject to the risk of loss of such assets to foreclosure or sale to satisfy its debt obligations. Signet’s borrowing agreements include various financial and other covenants.
The monthly average exchange rates are used to prepare the income statement and are calculated based on the daily exchange rates experienced by the International segment and the Canadian subsidiaries of the North America segment in the fiscal month.
The monthly average exchange rates are used to prepare the statement of operations and are calculated based on the daily exchange rates experienced by the International segment and the Canadian subsidiaries of the North America segment in the fiscal month.
In addition to the Kimberley Process, the supply of diamonds to the US is also impacted by governmental trade sanctions, such as those imposed on Zimbabwe.
In addition to the Kimberley Process, the supply of diamonds to the US is also impacted by governmental trade sanctions, such as those imposed on Zimbabwe and Russia.
The regulatory environment related to information security, data collection and privacy is becoming increasingly demanding, with new and changing requirements applicable to Signet’s business, including the General Data Protection Regulation and the California Consumer Privacy Act, and compliance with those requirements could result in additional costs, such as costs related to organizational changes, implementing additional protection technologies, training employees and engaging consultants.
The regulatory environment related to information security, data collection and privacy is becoming increasingly demanding, with new and changing requirements applicable to Signet’s business, including the General Data Protection Regulation and the California Consumer Privacy Act, and compliance with those requirements could result in additional costs, such as costs related to organizational 26 Table of Contents changes, implementing additional protection technologies, training employees and engaging consultants.
Such guidance is comprised of forward-looking statements subject to the risks and uncertainties described in this report and in Signet’s other public filings and public statements. Signet’s actual results may be below the provided guidance or the expectations of Signet’s investors and analysts, especially in times of economic uncertainty.
Such guidance consists of forward-looking statements subject to the risks and uncertainties described in this report and in Signet’s other public filings and public statements. Signet’s actual results may be below the provided guidance or the expectations of Signet’s investors and analysts, especially in times of economic uncertainty.
A significant transaction could also disrupt the operation of our current activities and divert 24 Table of Contents significant management time and resources. If we are unable to execute or integrate an acquisition, business combination, a major business or strategic initiative or a transformation plan, this could have a significant adverse effect on our results of operations.
A significant transaction could also disrupt the operation of our current activities and divert significant management time and resources. If we are unable to execute or integrate an acquisition, major business or strategic initiative or a transformation plan, this could have a significant adverse effect on our results of operations.
At January 29, 2022, Signet held approximately 90% of its total assets in entities whose functional currency is the US dollar and generated approximately 91% of its sales in US dollars for the fiscal year then ended. All the remaining assets and sales are primarily in British pounds and Canadian dollars.
At January 28, 2023, Signet held approximately 90% of its total assets in entities whose functional currency is the US dollar and generated approximately 91% of its sales in US dollars for the fiscal year then ended. All the remaining assets and sales are primarily in British pounds and Canadian dollars.
For instance, the Russia-Ukraine conflict could adversely impact, among other things, certain of our local markets and suppliers, global and local macroeconomic conditions, foreign exchange rates and financial markets, raw material, energy and transportation costs, and cause further supply chain disruptions.
For instance, the Russia-Ukraine conflict has adversely impacted and could continue to adversely impact, among other things, certain of our local markets and suppliers, global and local macroeconomic conditions, foreign exchange rates and financial markets, raw material, energy and transportation costs, and cause further supply chain disruptions.
In addition, if Signet 25 Table of Contents loses the distribution rights to an important branded jewelry range or is committed to continue to carry a brand that is no longer viewed as on trend, it could adversely impact sales and earnings.
In addition, if Signet loses the distribution rights to an important branded jewelry range or is committed to continue to carry a brand that is no longer viewed as on trend, it could adversely impact sales and earnings.
Many Signet stores are located within shopping malls or shopping centers and benefit from heavy consumer traffic in such locations. Due to the increase in online shopping, there has been a substantial decline in shopping mall and shopping center traffic.
Many Signet stores are located within shopping malls or shopping centers and benefit from heavy consumer traffic in such locations. Due to the increase in online shopping as well as COVID-19, there has been a substantial decline in shopping mall and shopping center traffic.
Further, even if price increases are implemented, there is no certainty that such increases will be sustainable or acceptable to consumers. These factors may cause decreases in gross and 20 Table of Contents operating margins and earnings.
Further, even if price increases are implemented, there is no certainty that such increases will be sustainable or acceptable to consumers. These factors may cause decreases in gross and operating margins and earnings.
The harm may be immediate without affording the Company an 26 Table of Contents opportunity for redress or correction, and it is challenging to monitor and anticipate developments on social media in order to respond in an effective and timely manner.
The harm may be immediate without affording the Company an opportunity for redress or correction, and it is challenging to monitor and anticipate developments on social media in order to respond in an effective and timely manner.
In addition, any sustained increases in the cost of commodities could result in the need to fund a higher level of inventory or changes in the merchandise available to the customer, which could increase costs and disrupt Signet’s sales levels. Alrosa supplies more than 30% of the world’s diamonds.
In addition, any sustained increases in the cost of commodities could result in the need to fund a higher level of inventory or changes in the merchandise available to the customer, which could increase costs and disrupt Signet’s sales levels. Alrosa, a Russian diamond mining and distribution company, supplies more than 30% of the world’s diamonds.
These outcomes could have a material adverse effect on the Company’s brand image, sales, gross margins, cash flow, competitive advantage and profitability. Any difficulty or delay in executing or integrating an acquisition, a business combination or a major business or strategic initiative may result in expected returns and other projected benefits from such an exercise not being realized.
These outcomes could have a material adverse effect on the Company’s brand image, sales, gross margins, cash flow, competitive advantage and profitability. Any difficulty or delay in executing or integrating an acquisition, a business combination or a major business or strategic initiative could have a material adverse impact on expected returns and other projected benefits from such an exercise.
There is always the potential for difficulty or delay in execution and integration of an acquisition, a business combination, a major business or strategic initiative including our direct diamond sourcing capabilities, or a strategic plan, such as our Inspiring Brilliance plan, that may prevent us from realizing expected returns and other projected benefits from such exercises during the anticipated timeframe or at all.
Likewise, there is always the potential for difficulty or delay in execution of a strategic initiative including our direct diamond sourcing capabilities, or a strategic plan, such as our Inspiring Brilliance plan, that may prevent us from realizing expected returns and other projected benefits from such exercises during the anticipated timeframe or at all.
As a consequence, the diamond business is subject to various sovereign risks beyond Signet’s control, such as changes in laws and policies affecting foreign trade and investment.
As a consequence, the diamond business is subject to various sovereign risks beyond Signet’s 22 Table of Contents control, such as changes in laws and policies affecting foreign trade and investment.
In addition, these covenants, in some cases, limit the Company’s flexibility to adapt its operations to changing conditions. The Company’s credit agreement terms also include exposure to variable interest rate debt and volatility in benchmark interest rates could adversely impact the Company’s financial results.
In addition, these covenants, in some cases, limit the Company’s flexibility to adapt its operations to changing conditions. Terms under the Company’s asset-based credit facility include exposure to variable interest rate debt and volatility in benchmark interest rates could adversely impact the Company’s financial results.
Further, as the COVID-19 pandemic subsides, the pace of the economic recovery and shifts in consumer discretionary spending and gifting to other categories such as travel and restaurants may negatively impact our results of operations or cash flows.
Further, as the COVID-19 pandemic subsides, the pace of the economic recovery and shifts in consumer discretionary spending and gifting to other categories such as travel and restaurants have negatively impacted and may continue to negatively impact our results of operations or cash flows to the same or a greater degree.
Commodities are subject to price volatility which can be caused by commodity market fluctuations, changes in currency exchange rates, imbalances between supply and demand, and government programs and policies among other factors. Volatile fuel costs translate into unpredictable costs for the products and services we 21 Table of Contents receive from our third-party providers.
Commodities, such as diamonds and precious metals, are subject to price volatility which can be caused by commodity market fluctuations, changes in currency exchange rates, imbalances between supply and demand, and government programs, policies and sanctions among other factors. Volatile fuel costs translate into unpredictable costs for the products and services we receive from our third-party providers.
Consumer spending may be affected by many factors outside of our control, including general economic conditions; consumer disposable income; consumer confidence; wage and unemployment levels; unexpected trends in merchandise demand; significant competitive and promotional activity by other retailers; the availability, cost and level of consumer debt; inflationary pressures; the increase in general price levels; domestic and global supply chain issues; the costs of basic necessities and other goods; effects of weather and natural disasters, whether caused by climate change or otherwise; epidemics, contagious disease outbreaks, pandemics and other public health concerns, including those related to COVID-19 (including variants such as the Omicron variant); or lockdowns of our stores, support centers or distribution centers due to governmental mandates or social unrest.
Consumer spending may be significantly affected by many factors outside of our control, including general economic conditions; consumer disposable income; consumer confidence; wage and unemployment levels; unexpected trends in merchandise demand; a decline in engagement or marriage rates in the regions in which we operate; significant competitive and promotional activity by other retailers; the availability, cost and level of consumer debt; inflationary pressures; the increase in general price levels; domestic and global supply chain issues; the costs of basic necessities and other goods; effects of weather and natural disasters, whether caused by 19 Table of Contents climate change or otherwise; epidemics, contagious disease outbreaks, pandemics and other public health concerns, including those related to COVID-19 (including variants); or lockdowns of our stores, support centers or distribution centers due to governmental mandates, the Russia-Ukraine war or social unrest.
Any significant deterioration in general economic conditions or increase in consumer debt levels may inhibit consumers’ use of credit and decrease consumers’ ability to satisfy Signet’s requirements for access to customer finance, which could in turn have an adverse effect on the Company’s sales.
Any significant deterioration in general economic conditions, including a potential recession, or increase in consumer debt levels may inhibit consumers’ use of credit and decrease consumers’ ability to satisfy requirements for access to customer financing or payment options, which could in turn have an adverse effect on the Company’s sales.
Signet depends on manufacturers and suppliers to provide it with sufficient quantities of quality products timely. Ultimate delivery of Signet’s merchandise is substantially dependent upon third-party manufacturers and suppliers. In Fiscal 2022, the five largest suppliers collectively accounted for 19.6% of total purchases, with the largest supplier comprising 5.1%.
Signet depends on manufacturers and suppliers to timely provide it with sufficient quantities of quality products. Ultimate delivery of Signet’s merchandise is substantially dependent upon third-party manufacturers and suppliers. In Fiscal 2023, the five largest suppliers collectively accounted for 15.3% of total purchases, with the largest supplier comprising 3.8%.
Labor regulation and the negotiation of new or existing collective bargaining agreements could lead to higher wage and benefit costs, changes in work rules that raise operating expenses, legal costs and limitations on the Company’s ability to take cost-saving measures during economic downturns.
Labor regulation and the negotiation of new or existing collective bargaining agreements could lead to higher wage and benefit costs, changes in work rules that raise operating expenses, legal costs and limitations on the Company’s ability to take cost-saving measures during economic downturns. Any of these cost increases and constraints on Signet’s operations could adversely impact its results of operations.
Signet’s direct purchases from Alrosa and its sourcing arrangement in Russia do not represent a significant part of its operations.
Signet’s direct purchases from Alrosa and its sourcing arrangement in Russia ceased in February 2022 and did not represent a significant part of its operations.
If the Company does not appropriately and adequately identify the use of the substitute products in its jewelry, its reputation and results could be adversely impacted. New tariffs, if imposed on goods that the Company imports, could have an adverse effect on the Company’s results of operations.
If the Company does not appropriately and adequately identify the use of the substitute products in its jewelry, its reputation and results could be adversely impacted. 24 Table of Contents New tariffs, trade embargoes, sanctions or other restrictions on foreign trade, if imposed on goods that the Company imports, could have an adverse effect on the Company’s results of operations.
Our current borrowing agreements place certain limited constraints on our ability to make an acquisition or enter into a business combination, and future borrowing agreements could place tighter constraints on such actions.
Our current borrowing agreements place certain limited constraints on our ability to make an acquisition, and future borrowing agreements could place tighter constraints on such actions.
Such factors include the operating performance and cash flows of the Company’s stores, lower than anticipated consumer traffic, changes in customer behavior post-pandemic, changes in discount rates, changes in the Company’s real estate strategy or other key business initiatives.
Such factors include the operating performance and cash flows of the Company’s stores, lower than anticipated consumer traffic, changes in customer spending behavior, macroeconomic factors such as inflation and rising interest rates, changes in the Company’s real estate strategy or other key business initiatives.
Signet is involved in legal proceedings incidental to its business. Litigation is inherently unpredictable. Any actual or potential claims against us, whether meritorious or not, or regulatory or other investigations, could be time consuming, result in costly litigation or litigation settlements, require significant amounts of management time, negatively impact Signet’s reputation and result in the diversion of significant operational resources.
Any actual or potential claims against us, whether meritorious or not, or regulatory or other investigations, could be time consuming, result in costly litigation or litigation settlements, require significant amounts of management time, negatively impact Signet’s reputation and result in the diversion of significant operational resources.
If we are unable to fully offset such cost increases, our financial results could be materially adversely affected. Signet’s business could be adversely affected by extreme weather conditions, natural disasters, or terrorism and acts of war. Extreme weather conditions in the areas in which the Company’s stores are located could negatively affect the Company’s business and results of operations.
If we are unable to fully offset such cost increases, our financial results could be materially adversely affected. Signet’s business could be adversely affected by extreme weather conditions, natural disasters, or terrorism and acts of war.
Social distancing protocols, government mandated occupancy limitations and general consumer behaviors due to COVID-19 may negatively impact store traffic, which may negatively impact our sales. Such negative impacts may be exacerbated during peak traffic times such as the Holiday shopping season.
General consumer behaviors due to COVID-19 may negatively impact store traffic, which may negatively impact our sales. Such negative impacts may be exacerbated during peak traffic times such as the Holiday Season.
An inability to effectively address a rapid and significant increase in consumer acceptance of lab-created diamonds, as well as a negative change in consumer attitudes toward jewelry, could adversely impact Signet’s sales and earnings. In addition, transparency regarding substitute products such as lab-created diamonds is important to maintaining consumer confidence.
A negative change in consumer attitudes toward jewelry could adversely impact Signet’s sales and earnings. In addition, transparency regarding substitute products such as lab-created diamonds is important to maintaining consumer confidence.
Any new regulatory initiatives or investigations by the Bureau of Consumer Financial Protection (“CFPB”) or other state authority, or ongoing compliance with the Consent Order entered into on January 16, 2019 with the CFPB and the Attorney General for the State of New York relating to the Company’s in-store credit practices, promotions, and payment protection products could impose additional costs and/or restrictions on credit practices of the North America segment, which could have an adverse effect on the conduct of its business.
Any new regulatory initiatives or investigations by the Bureau of Consumer Financial Protection (“CFPB”) or other state authority, or ongoing compliance with the Consent Order entered into on January 16, 2019 with the CFPB and the Attorney General for the State of New York relating to the Company’s in-store credit practices, promotions, and payment protection products could impose additional costs and/or restrictions on credit practices of the North America segment, which could have an adverse effect on the conduct of Signet’s business. 20 Table of Contents Because of the highly seasonal nature of Signet’s sales, any one of these factors that occurs during the Holiday Season would have an increased adverse impact.
In addition, the ability to recruit and retain staff could be harmed. These consequences could adversely affect the Company’s business. The Company’s ability to comply with laws and regulations and adapt to changes thereto could adversely affect its business. Signet’s policies and procedures are designed to comply with applicable laws and regulations.
The Company’s ability to comply with laws and regulations and adapt to changes thereto could adversely affect its business. Signet’s policies and procedures are designed to comply with applicable laws and regulations.
In addition, the Company could be subject to claims, fines, penalties or other liabilities for a failure to comply. Failure to manage these risks could have a material adverse effect on Signet’s results of operations, financial condition and cash flow. Risks Related to Asset Management The Company’s inability to optimize its real estate footprint could adversely impact sales and earnings.
In addition, the Company could be subject to claims, fines, penalties or other liabilities for a failure to comply. Failure to manage these risks could have a material adverse effect on Signet’s results of operations, financial condition and cash flow.
Additionally, any COVID-19 vaccine mandates by local or federal governments could negatively impact our ability to attract and retain team members. If we are unable to continue to recruit and retain quality team members, including store and distribution center personnel, it could hinder our long-term strategies and success, and negatively impact our growth and profitability.
If we are unable to continue to recruit and retain quality team members, including store and distribution center personnel, it could hinder our long-term strategies and success, and negatively impact our growth and profitability.
The shutdown of our New York diamond operations disrupted, to some extent, the growth of our eCommerce business. Our business may be further impacted if the economy deteriorates due to the ongoing COVID-19 pandemic, or if additional federal or state mandates order the shutdown of our stores, support centers or distribution centers.
Our business may be further impacted if the economy deteriorates due to the long-term effects of COVID-19 pandemic, or if additional federal or state mandates order the shutdown of our stores, support centers or distribution centers.
We have experienced theft in the past and loss by theft may continue or increase in the future. In addition, the security measures we take may not be effective in reducing losses.
In addition, products held by us for repair or service are also subject to risk of loss or theft. We have experienced theft in the past and loss by theft may continue or increase in the future. In addition, the security measures we take may not be effective in reducing losses.
The uncertainty around the duration of business disruptions; the possibility of additional periods of increases or spikes in the number of COVID-19 cases; the impact of vaccines across the globe; and the extent of the spread of the virus in the US and other areas of the world, could continue to adversely impact the national or global economy and negatively impact consumer spending, particularly discretionary spending, and our stock price.
In addition, there could be further adverse impacts if our employees become sick, or are otherwise limited in their ability to work at Company locations or travel. 18 Table of Contents The uncertainty around the duration of business disruptions; the possibility of additional periods of increases or spikes in the number of COVID-19 cases; the impact of vaccines across the globe; and the extent of the spread of the virus in the US and other areas of the world, could continue to adversely impact the national or global economy and negatively impact consumer spending, particularly discretionary spending, and our stock price.
The jewelry industry generally is affected by fluctuations in the price and supply of natural diamonds, gold and, to a lesser extent, other precious and semi-precious metals and stones. In Fiscal 2022, prices for the assortment of polished diamonds utilized by Signet decreased slightly compared to prior years.
The jewelry industry generally is affected by fluctuations in the price and supply of natural diamonds, gold and, to a lesser extent, other precious and semi-precious metals and stones.
While jewelry manufacturing is the major final demand for gold, management believes that the cost of gold is predominantly impacted by investment transactions, which have resulted in significant volatility in the gold price in recent years.
While jewelry manufacturing is the major final demand for gold, management believes that the cost of gold is predominantly impacted by investment transactions, which have resulted in significant volatility of gold prices in recent years. Signet’s cost of merchandise and potentially its earnings may be adversely impacted by investment market considerations that cause the price of gold to significantly escalate.
If these tax laws, treaties or regulations were to change or any tax authority were to successfully challenge Signet’s assessment of the effects of such laws, treaties and regulations in any country, this could result in a higher effective tax rate on the Company’s taxable earnings, which could have a material adverse effect on the Company’s results of operations. 31 Table of Contents In addition, the Organization for Economic Co-Operation and Development (“OECD”) has published an action plan seeking multilateral cooperation to reform the taxation of multinational companies.
If these tax laws, treaties or regulations were to change or any tax authority were to successfully challenge Signet’s assessment of the effects of such laws, treaties and regulations in any country, this could result in a higher effective tax rate on the Company’s taxable earnings, which could have a material adverse effect on the Company’s results of operations.
In a distressed economic and retail environment, in which many of the Company’s competitors continue to engage in aggressive promotional activities, any failure on Signet’s part to react appropriately to changing consumer preferences and fashion trends, including the failure to plan in advance and invest in marketing and advertising campaigns, could have an adverse impact on sales.
In a distressed economic and retail environment, in which many of the Company’s competitors continue to engage in aggressive promotional activities, any failure on Signet’s part to react appropriately to changing consumer preferences and fashion trends, including the failure to plan in advance and invest in marketing and advertising campaigns, could have an adverse impact on sales. 27 Table of Contents In addition, adverse or inaccurate information concerning the Company or its brands may be posted on social media platforms at any time, and such information can quickly reach a wide audience.
These actions have a significant effect on macroeconomic conditions, give rise to regional instability and result in heightened economic sanctions from the US and the international community in a manner that adversely affects our business, and on an individual level, may impact the Company’s ability to manufacture and ship its merchandise for sale to customers.
These actions have a significant effect on macroeconomic conditions, give rise to regional instability and result in heightened economic sanctions from the US and the international community in a manner that adversely affects our business, and on an individual level, may impact the Company’s ability to manufacture and ship its merchandise for sale to customers. 21 Table of Contents Given that Signet’s control over such issues, including both weather disasters and large-scale violence, is extremely limited, the Company may not have the ability to mitigate the impacts of such occurrences on its business and operations.
Adverse changes in the economy and periods when discretionary spending by consumers may be under pressure could unfavorably impact sales and earnings. We may respond by increasing discounts or initiating marketing promotions to reduce excess inventory, which could also have a material adverse effect on our margins and operating results.
We have responded in the past and may continue to respond in the future by increasing discounts or initiating marketing promotions to reduce excess inventory, which could also have a material adverse effect on our margins and operating results.
As our sales are highly seasonal, a change in any one of these economic conditions during the Holiday shopping season could have an increased adverse impact on our sales.
As our sales are highly seasonal, a change in any one of these economic conditions during the Holiday Season could have an increased adverse impact on our sales. While Signet has a broad-based customer demographic, our largest banners primarily operate in the mid-market for jewelry.
Accordingly, any decrease in the weighted average value of the British pound or Canadian dollar against the US dollar, including due to Brexit as discussed above, would decrease reported sales and operating income.
Therefore, the Company’s results of operations and balance sheet are subject to fluctuations in the exchange rates between the US dollar and both the British pound and Canadian dollar. Accordingly, any decrease in the weighted average value of the British pound or Canadian dollar against the US dollar, including due to Brexit, would decrease reported sales and operating income.
The rate of store footprint optimization is dependent on a number of factors including obtaining suitable real estate, the capital resources of Signet, the availability of appropriate staff and management, estimated sales transference rate and the level of the financial return on investment required by management. 28 Table of Contents The Company’s ability to protect our physical assets or intellectual property could have a material adverse impact on our brands, reputation and operating results.
The rate of store footprint optimization is dependent on a number of factors including obtaining suitable real estate, the capital resources of Signet, the availability of appropriate staff and management, estimated sales transference rate and the level of the financial return on investment required by management.
To the extent that COVID-19 has affected and continues to adversely affect the US and global economy, our business, results of operations, cash flows, or financial condition, it has heightened, and may continue to heighten, other risks described within the “Risk Factors” section in our annual report on Form 10-K for the year ended January 30, 2021.
To the extent that COVID-19 has affected and continues to adversely affect the US and global economy, our business, results of operations, cash flows, or financial condition, it has heightened, and may continue to heighten, other risks described herein. See the COVID-19 Update within Part I, Item 2.
Long-term changes in consumer attitudes toward jewelry could be unfavorable and harm jewelry sales. Consumer attitudes toward diamonds, gold and other precious metals and gemstones influence Signet’s sales.
Consumer attitudes toward diamonds, gold and other precious metals and gemstones influence Signet’s sales.
Any of these cost increases and constraints on Signet’s operations could adversely impact its results of operations. 30 Table of Contents Risks Related to Compliance The Company’s exposure to legal proceedings, tax matters, and/or regulatory or other investigations could reduce earnings and cash, as well as negatively impact debt covenants, leverage ratios and its reputation and divert management attention.
Risks Related to Compliance The Company’s exposure to legal proceedings, tax matters, and/or regulatory or other investigations could reduce earnings and cash, as well as negatively impact debt covenants, leverage ratios and its reputation and divert management attention. Signet is involved in legal proceedings incidental to its business. Litigation is inherently unpredictable.
Some initiatives may require us to devote significant management, financial and other resources and may expose us to new and unforeseen risks and challenges. We may also incur significant asset impairment and other charges in connection with any such initiative. The acquisition of companies with operating margins lower than ours may cause an overall lower operating margin.
Some initiatives may require us to devote significant management, financial and other resources and may expose us to new and unforeseen risks and challenges. We may also incur significant asset impairment and other charges in connection with any such initiative or an acquisition. Long-term changes in consumer attitudes toward jewelry could be unfavorable and harm jewelry sales.
Additionally, there is significant uncertainty around our customers’ willingness to continue to visit retail stores, particularly if the community transmission rates or health implications of new COVID-19 variants, such as the Omicron variant, create heightened risks.
Further, due to COVID-19, we have recorded and may continue to record non-cash asset impairment charges, which may affect our operating results under US GAAP. Additionally, there is significant uncertainty around our customers’ willingness to continue to visit retail stores, particularly if the community transmission rates or health implications of new COVID-19 variants create heightened risks.
Further, even if price increases are implemented, there is no certainty that such increases will be sustainable. These factors may cause decreases in gross margins and earnings.
As Signet uses an average cost inventory methodology, volatility in its commodity costs may also result in a time lag before cost increases are reflected in retail prices. Further, even if price increases are implemented, there is no certainty that such increases will be sustainable. These factors may cause decreases in gross margins and earnings.
Because of the highly seasonal nature of Signet’s sales, any one of these factors that occurs during the Holiday Season would have an increased adverse impact. Fluctuations in foreign exchange rates could adversely impact the Company’s results of operations and financial condition. Signet publishes its consolidated annual financial statements in US dollars.
Fluctuations in foreign exchange rates could adversely impact the Company’s results of operations and financial condition. Signet publishes its consolidated annual financial statements in US dollars.
Conditions in the Eurozone have a significant impact on the UK economy even though the UK is not a member of the Eurozone, which together with uncertainty regarding the final terms of the withdrawal of the UK from the European Union, could adversely impact trading in the International segment, as well as adversely impact the US economy.
Conditions in the Eurozone have a significant impact on the UK economy even though the UK is not a member of the Eurozone, which could adversely impact trading in the International segment, as well as adversely impact the US economy. The success of our operations depends to a significant extent upon a number of factors relating to discretionary consumer spending.
The Company has a significant amount of debt and redeemable preferred securities, and its ability to borrow is necessary to sustain its operations, particularly given the seasonal fluctuations in inventory and staffing requirements and the concentration of sales in the fourth quarter. This debt requires maintaining sufficient cash flow to make continuing payment obligations.
The Company holds obligations under its 4.70% Senior Unsecured Notes and its redeemable Series A Convertible Preference Shares. The Company’s ability to borrow and maintain adequate cash flow is necessary to sustain its operations, particularly given the seasonal fluctuations in inventory and staffing requirements and the concentration of sales in the fourth quarter.
Particularly sharp increases in commodity costs may result in a time lag before increased commodity costs are fully reflected in retail prices. As Signet uses an average cost inventory methodology, volatility in its commodity costs may also result in a time lag before cost increases are reflected in retail prices.
An inability to increase retail prices to reflect higher commodity costs would result in lower profitability. Particularly sharp increases in commodity costs may result in a time lag before increased commodity costs are fully reflected in retail prices.
Some examples of these laws include requirements related to minimum wage, sick pay, overtime pay, paid time off, workers’ compensation rates, and healthcare reform. These laws and regulations change frequently, and the ultimate cost of compliance cannot be precisely estimated. Failure by Signet to comply with labor regulations could result in fines and legal actions.
Failure to comply with labor regulations could adversely affect the Company’s business. Various state, federal and global laws and regulations govern Signet’s relationship with its employees. Some examples of these laws include requirements related to minimum wage, sick pay, overtime pay, paid time off, workers’ compensation rates, and healthcare reform.
The escalation of trade tensions could have a significant, adverse effect on world trade and the world economy.
The imposition of additional tariffs by the US, UK or Canada could result in the adoption of additional tariffs by other countries as well. The escalation of trade tensions could have a significant, adverse effect on world trade and the world economy.
In addition, if the analysts that regularly follow the Company’s stock lower their rating or lower their projections for future growth and financial performance, the Company’s stock price could decline . 29 Table of Contents The Company’s ability to borrow is important to its operations and financial covenants, credit ratings and interest rate volatility could all impact the availability of such debt and could adversely impact the Company’s financial results.
In addition, if the analysts that regularly follow the Company’s stock lower their rating or lower their projections for future growth and financial performance, the Company’s stock price could decline .
Signet’s success is dependent on the strength and effectiveness of its relationships with its various stakeholders whose behavior may be affected by its management of social, ethical and environmental risks. Social, ethical and environmental matters influence Signet’s reputation, demand for merchandise by consumers, the ability to recruit staff, relations with suppliers and standing in the financial markets.
Signet’s success is dependent on the strength and effectiveness of its relationships with its various stakeholders whose behavior may be affected by its management of our 2030 Corporate Sustainability Goals as well as increased demand for environmental, social and governance (“ESG”) disclosures which could result in additional costs or risks.
Brexit could result in significant volatility in currency exchange rate fluctuations and increase Signet’s exposure to foreign currency rate exchange risks and reduce its ability to effectively use certain derivative instruments as a way to hedge risks. 19 Table of Contents A decline in consumer spending may unfavorably impact Signet’s future sales and earnings, particularly if such decline occurs during the Holiday shopping season.
Signet uses foreign currency derivative instruments to hedge certain exposures to currency exchange rate risks. Market conditions, particularly in the UK and Canada could result in significant volatility in currency exchange rate fluctuations and increase Signet’s exposure to foreign currency rate exchange risks and reduce its ability to effectively use certain derivative instruments to hedge risks.
The COVID-19 pandemic also has disrupted our 18 Table of Contents global supply chain, and may cause additional disruptions to operations, including increased costs of production and distribution. In addition, there could be further adverse impacts if our employees become sick, continue to be quarantined, or are otherwise limited in their ability to work at Company locations or travel.
The COVID-19 pandemic also has disrupted our global supply chain, and may cause additional disruptions to operations, including increased costs of production and distribution.
Such actions may not resolve supply constraints or result in the expected returns and other projected benefits anticipated by management. 22 Table of Contents Additionally, a material increase in the supply of gem quality lab-created diamonds, combined with increased consumer acceptance thereof, could impact the supply and pricing in the natural diamond supply chain, as well as retail pricing.
Additionally, a material increase in the supply of gem quality lab-created diamonds, combined with a material increase in consumer acceptance and demand thereof, has impacted and could continue to impact the cost and retail pricing of lab-created diamonds, and it may also impact the supply, cost and retail pricing of natural diamonds.
See the COVID-19 Update within Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the potential impact of COVID-19 on our business operations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the potential impact of COVID-19 on our business operations. A decline in consumer spending may unfavorably impact Signet’s future sales and earnings, particularly if such decline occurs during the Holiday Season.

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Item 2. Properties

Properties — owned and leased real estate

16 edited+1 added−1 removed3 unchanged
Biggest changePROPERTIES The following table provides the location, use and size of Signet’s corporate, distribution, and other non-retail facilities required to support the Company’s global operations as of January 29, 2022: Location Function Approximate square footage Lease or Own Lease expiration Akron, Ohio Corporate and distribution 460,000 Lease 2048 Akron, Ohio Credit (1) 86,000 Lease 2048 Akron, Ohio Training facility 11,000 Lease 2032 Akron, Ohio Repair facility 38,000 Own N/A Barberton, Ohio Non-merchandise fulfillment 135,000 Lease 2032 Charlotte, North Carolina Corporate and administrative 8,900 Lease 2023 Dallas, Texas Repair facility (2) 31,000 Lease 2029 Dallas, Texas Administrative 190,000 Lease 2029 Frederick, Maryland Customer service 7,716 Lease 2022 New York City, New York Administrative 17,000 Lease 2023 New York City, New York Administrative 8,000 Lease 2027 New York City, New York Distribution and fulfillment 1,819 Lease 2024 San Francisco, California Administrative 6,178 Lease 2024 Markham, Ontario (Canada) Distribution and fulfillment 31,000 Lease 2026 Birmingham, UK Corporate, distribution and eCommerce fulfillment 235,000 Own N/A Watford, UK Administrative 20,500 Lease 2037 Gaborone, Botswana Diamond polishing 34,200 Own N/A Mumbai, India Diamond liaison 3,000 Lease 2026 Ramat-Gan, Israel Technology center 1,000 Lease 2023 Herzelia, Israel Technology center 12,700 Lease 2023 (1) The indicated property has been partially subleased to a third party service provider in conjunction with the Company’s outsourced credit program.
Biggest changePROPERTIES The following table provides the location, use and size of Signet’s corporate, distribution, and other non-retail facilities required to support the Company’s global operations as of January 28, 2023: Location Function Approximate square footage Lease or Own Lease expiration Akron, Ohio Corporate and distribution 546,000 Lease 2048 Akron, Ohio Training facility 11,000 Lease 2032 Akron, Ohio Repair facility 38,000 Own N/A Barberton, Ohio Non-merchandise fulfillment 135,000 Lease 2032 Charlotte, North Carolina Corporate and administrative 14,200 Lease 2033 Dallas, Texas Repair facility 31,000 Lease 2029 Dallas, Texas Administrative 190,000 Lease 2029 Frederick, Maryland Customer service 7,716 Lease 2026 New York City, New York Administrative and fulfillment 17,000 Lease 2023 New York City, New York Administrative and fulfillment 65,837 Lease 2032 New York City, New York Manufacturing and distribution 10,580 Lease 2027 New York City, New York Distribution and fulfillment 1,819 Lease 2024 San Francisco, California Administrative 6,178 Lease 2024 Bellevue, Washington Corporate and administrative 22,600 Lease 2024 Seattle, Washington Photo studio 11,000 Lease 2027 Kent, Washington Customer service, Virtual studios 10,500 Lease 2029 Seattle, Washington Distribution and fulfillment 27,500 Lease 2030 Markham, Ontario (Canada) Distribution and fulfillment 31,000 Lease 2026 Birmingham, UK Corporate, distribution and eCommerce fulfillment 235,000 Own N/A Watford, UK Administrative 20,500 Lease 2037 Gaborone, Botswana Diamond polishing 34,200 Own N/A Mumbai, India Diamond liaison 3,000 Lease 2026 Ramat-Gan, Israel Technology center 1,000 Lease 2023 Herzelia, Israel Technology center 12,400 Lease 2023 Herzelia, Israel Technology center 5,400 Lease 2028 Tel-Aviv, Israel Technology center 1,700 Lease 2023 Dubai, UAE Distribution 630 Lease 2023 Blanchardstown, Ireland Distribution and fulfillment 5,200 Lease 2023 Shanghai, China Customer service 8,000 Lease 2023 Sufficient distribution exists in all geographies to meet the respective needs of the Company’s operations. 33 Table of Contents Global retail property Signet attributes great importance to the location and appearance of its stores.
Where the Company is uncertain whether the location will meet its required return on investment, but the store is profitable, the leases may be renewed for one to two years, during which time the store’s performance is further evaluated. The Company not only monitors the stores’ performance but also monitors other factors such as trade area and mall grade.
Where the Company is uncertain whether the location will meet its required return on investment, but the store is profitable, the lease may be renewed for one to two years, during which time the store’s performance is further evaluated. The Company not only monitors the stores’ performance but also monitors other factors such as trade area and mall grade.
The International segment has no relationship with any lessor relating to 10% or more of its store locations. ITEM 3. LEGAL PROCEEDINGS See discussion of legal proceedings in Note 28 of Item 8. ITEM 4. MINE SAFETY DISCLOSURE Not applicable. 34 Table of Contents PART II
The International segment has no relationship with any lessor relating to 10% or more of its store locations. ITEM 3. LEGAL PROCEEDINGS See discussion of legal proceedings in Note 28 of Item 8. ITEM 4. MINE SAFETY DISCLOSURE Not applicable. 35 Table of Contents PART II
In addition to a minimum annual rent cost, the majority of mall stores are also liable to pay rent based on sales above a specified base level. In Fiscal 2022, the majority of the mall stores and kiosks only made base rental payments.
In addition to a minimum annual rent cost, the majority of mall stores are also liable to pay rent based on sales above a specified base level. In Fiscal 2023, the majority of the mall stores and kiosks only made base rental payments.
Accordingly, in each of Signet’s divisions, investment decisions on selecting sites and refurbishing stores are made centrally, and strict real estate and investment criteria are applied.
Accordingly, in each of Signet’s banners, investment decisions on selecting sites and refurbishing stores are made centrally, and strict real estate and investment criteria are applied.
At January 29, 2022, the average unexpired lease term of International premises was six years, and a majority of leases had either break clauses or terms expiring within five years. Rents are usually subject to upward review every five years if market conditions so warrant.
At January 28, 2023, the average unexpired lease term of International premises was four years, and a majority of leases had either break clauses or terms expiring within five years. Rents are usually subject to upward review every five years if market conditions so warrant.
The cost of remodels and refurbishments can vary greatly by location and age of store. In the US, the North America segment collectively leases approximately 17% of store and kiosk locations from a single lessor. In Canada, it leases approximately 50% of its store locations from four lessors, with no individual lessor relationship exceeding 15% of its store locations.
The cost of remodels and refurbishments can vary greatly by location and age of store. In the US, the North America segment collectively leases approximately 30% of store and kiosk locations from two lessors. In Canada, it leases approximately 66% of its store locations from five lessors, with no individual lessor relationship exceeding 15% of its store locations.
The cost of a new Jared store is typically between $2.1 million and $3.3 million. The cost of a new Diamonds Direct store is approximately $1.5 million to $2.8 million. The cost of a new Banter kiosk is approximately $0.1 million, and the cost of a Banter Inline location is approximately $0.4 million.
The cost of a new Diamonds Direct store is typically between $1.5 million and $2.8 million. The cost of a new Blue Nile showroom is typically between $1.4 million and $1.9 million. The cost of a new Banter kiosk is approximately $0.1 million, and the cost of a Banter Inline location is approximately $0.4 million.
Diamonds Direct had on average eight years remaining. Banter average lease term remaining is one year and all but two of these leases had terms expiring within five years. The cost of a new Kay or Zales mall store is typically between $0.1 million and $0.8 million.
Banter average lease term remaining is one year and all but three of these leases had terms expiring within five years. The cost of a new Kay or Zales mall store is typically between $0.1 million and $1.1 million. The cost of a new Jared store is typically between $2.2 million and $3.2 million.
As current leases expire, Signet believes that it will be able to renew leases, if desired, for present store locations or to obtain leases in equivalent or improved locations in the same general area. Signet has not experienced difficulty in securing leases for suitable locations for its International stores. No store lease is individually material to Signet’s operations.
As current leases expire, Signet believes that it will be able to renew leases, if desired, for present store locations or to obtain leases in equivalent or improved locations in the same general area. Signet has not 34 Table of Contents experienced difficulty in securing leases for suitable locations for its International stores.
Jared and Diamonds Direct stores are normally opened with lease terms ranging from ten to twenty years with options to extend the lease, and rents are not sales related.
Jared and Diamonds Direct stores are normally opened with lease terms ranging from ten to twenty years with options to extend the lease, and rents are not tied to sales levels. Blue Nile showrooms are normally opened with lease terms ranging from five to ten years with options to extend the lease.
Below is a summary of property details by geography for Signet’s retail operations as of January 29, 2022: North America segment International segment Signet US 2,412 — 2,412 Canada 94 — 94 UK — 335 335 Republic of Ireland — 10 10 Channel Islands — 3 3 Total 2,506 348 2,854 North America retail property Signet’s North America segment operates stores and kiosks in the US and Canada, with substantially all of the locations being leased.
Below is a summary of property details by geography for Signet’s retail operations as of January 28, 2023: North America segment International segment Signet US 2,382 — 2,382 Canada 93 — 93 UK — 322 322 Republic of Ireland — 10 10 Channel Islands — 1 1 Total 2,475 333 2,808 North America retail property Signet’s North America segment operates stores and kiosks in the US and Canada, with substantially all of the locations being leased.
New Banter locations generally have leases with terms ranging from three to five years. Towards the end of a lease, Signet evaluates whether to renew a lease and refit the store, using similar operational and investment criteria as for a new store.
Towards the end of a lease, Signet evaluates whether to renew a lease and refit the store, using similar operational and investment criteria as for a new store.
A typical International segment store undergoes a remodel or refurbishment every 5-10 years. It is intended that these investments will be financed by cash from operating activities. The cost of remodeling a regular store is typically between $0.4 million and $0.8 million for both H. Samuel and Ernest Jones, while remodels in prestigious locations could exceed these amounts.
No store lease is individually material to Signet’s operations. A typical International segment store undergoes a remodel or refurbishment every five to ten years. The cost of remodeling a regular store is typically between $0.4 million and $0.8 million for both H. Samuel and Ernest Jones, while remodels in prestigious locations could exceed these amounts.
At January 29, 2022, the average unexpired lease term of leased premises for the North America segment was approximately two years for Kay and Zales mall locations and four years for off-mall Kay and Zales locations. Jared locations on average had five years remaining. Approximately 85% of leases for these banners had terms expiring within five years.
At January 28, 2023, the average unexpired lease term of leased premises for the North America segment was approximately two years for Kay and Zales mall locations and three years for off-mall Kay and Zales locations. Jared locations on average had five years remaining. Diamonds Direct had on average nine years remaining. Blue Nile had on average seven years remaining.
Under the terms of a typical lease, the Company is required to conform and maintain its usage to agreed standards, and is responsible for its proportionate share of expenses associated with common area maintenance, utilities and taxes of the mall. 33 Table of Contents The initial term of a mall and off-mall store leases, excluding Jared and Diamonds Direct, are generally five years for North America, with off-mall leases also including various options for extension or renewal.
Under the terms of a typical lease, the Company is required to conform and maintain its usage to agreed standards, and is responsible for its proportionate share of expenses associated with common area maintenance, utilities and taxes of the mall.
Removed
See Note 13 of Item 8 for further details. (2) The indicated property has a sublease option. Sufficient distribution exists in all geographies to meet the respective needs of the Company’s operations. Global retail property Signet attributes great importance to the location and appearance of its stores.
Added
The initial term of mall and off-mall store leases, excluding Jared, Diamonds Direct and Blue Nile, are generally five years, with off-mall leases also including various options for extension or renewal. New Banter locations generally have leases with terms ranging from three to five years.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−6 removed5 unchanged
Biggest changeIn March 2022, the Company received an additional 0.8 million shares for the final settlement of the ASR. 35 Table of Contents Performance graph The following performance graph and related information shall not be deemed “soliciting material” or to be filed with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that Signet specifically incorporates it by reference into such filing.
Biggest changeRepurchases of equity securities The following table contains the Company’s repurchases of common shares in the fourth quarter of Fiscal 2023: Period Total number of shares purchased Average price paid per share (2) Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs October 30, 2022 to November 26, 2022 379,970 $ 63.22 379,970 $578,151,662 November 27, 2022 to December 24, 2022 495,039 $ 66.42 495,039 $545,272,642 December 25, 2022 to January 28, 2023 118,306 $ 67.69 118,306 $537,264,890 Total 993,315 $ 65.34 993,315 $537,264,890 (1) The average price paid per share excludes commissions paid of $17,880 in connection with the repurchases made under the 2017 Share Repurchase Program (the “2017 Program”). 36 Table of Contents Performance graph The following performance graph and related information shall not be deemed “soliciting material” or to be filed with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that Signet specifically incorporates it by reference into such filing.
Under existing Bermuda law, there is no Bermuda income or withholding tax on dividends paid by the Parent Company to its shareholders. Furthermore, under existing Bermuda law, no Bermuda tax is levied on the sale or transfer of Signet common shares. ITEM 6. [RESERVED] 36 Table of Contents
Under existing Bermuda law, there is no Bermuda income or withholding tax on dividends paid by the Parent Company to its shareholders. Furthermore, under existing Bermuda law, no Bermuda tax is levied on the sale or transfer of Signet common shares. ITEM 6. [RESERVED] 37 Table of Contents
Historical share price performance should not be relied upon as an indication of future share price performance. The following graph compares the cumulative total return to holders of Signet’s common shares against the cumulative total return of the S&P 500 Index and the S&P 500 Specialty Retail Index for the five year period ended January 29, 2022.
Historical share price performance should not be relied upon as an indication of future share price performance. The following graph compares the cumulative total return to holders of Signet’s common shares against the cumulative total return of the S&P 500 Index and the S&P 500 Specialty Retail Index for the five year period ended January 28, 2023.
The comparison of the cumulative total returns for each investment assumes that $100 was invested in Signet’s common shares and the respective indices on January 28, 2017 through January 29, 2022. Related Shareholder Matters Signet Jewelers Limited (the “Parent Company”) is classified by the Bermuda Monetary Authority as a non-resident of Bermuda for exchange control purposes.
The comparison of the cumulative total returns for each investment assumes that $100 was invested in Signet’s common shares and the respective indices on February 3, 2018 through January 28, 2023. Related Shareholder Matters Signet Jewelers Limited (the “Parent Company”) is classified by the Bermuda Monetary Authority as a non-resident of Bermuda for exchange control purposes.
Number of common shareholders As of March 11, 2022, there were approximately 6,734 shareholders of record of the Company’s common shares.
Number of common shareholders As of March 10, 2023, there were approximately 6,610 shareholders of record of the Company’s common shares.
Removed
Repurchases of equity securities The following table contains the Company’s repurchases of common shares in the fourth quarter of Fiscal 2022: Period Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (2) Approximate dollar value of shares that may yet be purchased under the plans or programs October 31, 2021 to November 27, 2021 — $ — — $183,922,862 November 28, 2021 to December 25, 2021 — $ — — $183,922,862 December 26, 2021 to January 29, 2022 2,758,878 $ 79.99 2,758,644 $463,263,330 Total 2,758,878 $ 79.99 2,758,644 $463,263,330 (1) Includes 234 shares delivered to Signet by employees to satisfy minimum tax withholding obligations due upon the vesting or payment of stock awards under share-based compensation programs.
Removed
These are not repurchased in connection with any publicly announced share repurchase programs. (2) In June 2017, the Board authorized the repurchase of up to $600.0 million of Signet’s common shares (the “2017 Program”). The 2017 Program may be suspended or discontinued at any time without notice.
Removed
In August 2021, the Board authorized the increase the remaining share repurchase under the 2017 Program of up to $225.0 million, and in January 2022, the Board further authorized an additional $500.0 million.
Removed
On January 21, 2022, the Company entered into an accelerated share repurchase agreement (“ASR”) with a large financial institution to repurchase $250 million of the Company’s common shares.
Removed
In January 2022, the Company made a payment of $250 million and took delivery of 2.5 million shares based on a price of $80 per share, which is 80% of the total repurchase amount.
Removed
The ASR provides for an additional delivery at the final settlement of the ASR such that the Company receives a total number of shares equal to $250 million divided by the per share purchase price determined under the ASR’s valuation provisions. The amount repurchased in Fiscal 2022 excludes $50 million related to the forward purchase contract of the ASR.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

127 edited+73 added−83 removed55 unchanged
Biggest changeFiscal 2021 includes: 1) charges of $7.5 million related to the settlement of previously disclosed shareholder litigation matters, net of expected insurance proceeds; and 2) $0.5 million related to charges recorded in conjunction with the Company’s restructuring activities. nm Not meaningful. 43 Table of Contents Fourth Quarter Fiscal 2022 Fourth Quarter Fiscal 2021 (in millions) $ % of sales $ % of sales North America segment (1) $ 408.3 15.7 % 296.2 14.4 % International segment (2) 18.4 10.0 % 9.3 7.6 % Other segment 1.2 nm (1.1) nm Corporate and unallocated expenses (3) (25.5) nm (12.5) nm Operating income (loss) $ 402.4 14.3 % $ 291.9 13.4 % (1) Fiscal 2021 includes: 1) $1.3 million benefit recognized due to changes in severance and store closure liabilities recorded in conjunction with the Company’s restructuring activities; and 2) $0.2 million net gains on terminations or modifications of leases resulting from previously recorded impairments of the right of use assets in Fiscal 2021.
Biggest changeSignet’s operating income (loss) by segment for the fourth quarter is as follows: Fourth Quarter Fiscal 2023 Fourth Quarter Fiscal 2022 (in millions) $ % of sales $ % of sales North America segment (1) $ 372.9 14.9 % 408.3 15.7 % International segment (2) 14.7 9.6 % 18.4 10.0 % Other segment (2.1) nm 1.2 nm Corporate and unallocated expenses (16.0) nm (25.5) nm Operating income (loss) $ 369.5 13.9 % $ 402.4 14.3 % (1) Fiscal 2023 includes: 1) $1.8 million credit to cost of sales associated with the fair value adjustment of inventory acquired in the Blue Nile acquisition; 2) $7.4 million of acquisition and integration-related expenses in connection with the Blue Nile acquisition, primarily related to professional fees and severance costs; 3) $13.8 million related to pre-tax litigation charges; and 4) net asset impairment charges of $18.1 million.
Management does not, nor does it suggest investors should, consider such non-GAAP measures in isolation from, or in substitution for, financial information prepared in accordance with GAAP. 1. Net cash (debt) Net cash (debt) is a non-GAAP measure defined as the total of cash and cash equivalents less loans, overdrafts and long-term debt.
Management does not, nor does it suggest investors should, consider such non-GAAP measures in isolation from, or in substitution for, financial information prepared in accordance with GAAP. 1. Net cash Net cash is a non-GAAP measure defined as the total of cash and cash equivalents less loans, overdrafts and long-term debt.
Additionally, if events or conditions were to indicate the carrying value of a reporting unit or an indefinite-lived intangible asset may be greater than its fair value, the Company would evaluate the asset for impairment at that time. Impairment testing compares the carrying amount of the reporting unit or other intangible assets with its fair value.
Additionally, if events or conditions were to indicate the carrying value of a reporting unit or an indefinite-lived intangible asset may be greater than its fair value, the Company would evaluate the reporting unit or asset for impairment at that time. Impairment testing compares the carrying amount of the reporting unit or other intangible assets with its fair value.
The Company believes that cash on hand, cash flows from operations and available borrowings under the ABL Revolving Facility will be sufficient to meet its ongoing business requirements for at least the 12 months following the date of this report, including funding working capital needs, projected investments in the business (including capital expenditures), debt service, and returns to shareholders through dividends or share repurchases.
The Company believes that cash on hand, cash flows from operations and available borrowings under the ABL Revolving Facility will be sufficient to meet its ongoing business requirements for at least the 12 months following the date of this report, including funding working capital needs, projected investments in the business (including capital expenditures), debt service, and returns to shareholders through either dividends or share repurchases.
Amortization of deferred ESP selling costs is included within selling, general and administrative expenses in the consolidated statements of operations. 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 or online at the time of merchandise sale.
Amortization of deferred ESP selling costs is included within selling, general and administrative expenses in the consolidated statements of operations. The North America reportable 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 or online at the time of merchandise sale.
The Company periodically refreshes its analysis of the claims pattern on at least an annual basis, or more often if circumstances dictate such a review is required (such as occurred as a result of the disruption from COVID-19).
The Company refreshes its analysis of the claims pattern on at least an annual basis, or more often if circumstances dictate such a review is required (such as occurred as a result of the disruption from COVID-19).
A court might take these actions if it found, among other things, that when the Guarantors incurred the debt evidenced by their Guarantee (i) they received less than reasonably equivalent value or fair consideration for the incurrence of the debt and (ii) any one of the following conditions was satisfied: 54 Table of Contents • the Guarantor entity was insolvent or rendered insolvent by reason of the incurrence; • the Guarantor entity was engaged in a business or transaction for which its remaining assets constituted unreasonably small capital; or • the Guarantor entity intended to incur or believed (or reasonably should have believed) that it would incur, debts beyond its ability to pay as those debts matured.
A court might take these actions if it found, among other things, that when the Guarantors incurred the debt evidenced by their Guarantee (i) they received less than reasonably equivalent value or fair consideration for the incurrence of the debt and (ii) any one of the following conditions was satisfied: • the Guarantor entity was insolvent or rendered insolvent by reason of the incurrence; • the Guarantor entity was engaged in a business or transaction for which its remaining assets constituted unreasonably small capital; or • the Guarantor entity intended to incur or believed (or reasonably should have believed) that it would incur, debts beyond its ability to pay as those debts matured.
The tenets of Signet’s capital strategy are: 1) investing in its business to drive growth in line with the Company’s overall business strategy; 2) ensuring adequate liquidity through a strong cash position and financial flexibility under its debt arrangements; and 3) returning excess cash to shareholders. Over time, Signet’s strategy is to sustain an adjusted leverage ratio below 3.0x.
The tenets of Signet’s capital strategy are: 1) investing in its business to drive growth in line with the Company’s overall business strategy; 2) ensuring adequate liquidity through a strong cash position and financial flexibility under its debt arrangements; and 3) returning excess cash to shareholders. Over time, Signet’s strategy is to sustain an adjusted leverage ratio below 2.75x.
(2) Fiscal 2022 includes: 1) $0.9 million of net asset impairments gain related to long-lived assets; 2) $3.3 million credit to restructuring expense, primarily related to adjustments to previously recognized restructuring liabilities in connection with the Company’s transformation plan; 3) $1.7 million related to the settlement of previously disclosed shareholder litigation matters; 4) $8.6 million of charges related to professional fees for direct transaction-related costs incurred for the acquisitions of Rocksbox and Diamonds Direct in Fiscal 2022, as well as includes the impact of the fair value step up for inventory from Diamonds Direct; and 5) $1.4 million gain associated with the sale of customer in-house finance receivables.
Fiscal 2022 includes: 1) $0.9 million of net asset impairment gains related to long-lived assets; 2) $3.3 million credit to restructuring expense, primarily related to adjustments to previously recognized restructuring liabilities in connection with the Company’s transformation plan; 3) $1.7 million related to the settlement of previously disclosed shareholder litigation matters; 4) $8.6 million of charges related to professional fees for direct transaction-related costs incurred for the acquisitions of Rocksbox and Diamonds Direct in Fiscal 2022, as well as includes the impact of the fair value step up for inventory from Diamonds Direct; and 5) $1.4 million gain associated with the sale of customer in-house finance receivables.
RESULTS OF OPERATIONS Fiscal 2022 Overview Similar to many other retailers, Signet follows the retail 4-4-5 reporting calendar. Both Fiscal 2022 and Fiscal 2021 were 52 week reporting periods. Same store sales Management considers same store sales useful as it is a major benchmark used by investors to judge performance within the retail industry.
RESULTS OF OPERATIONS Fiscal 2023 Overview Similar to many other retailers, Signet follows the retail 4-4-5 reporting calendar. Both Fiscal 2023 and Fiscal 2022 were 52 week reporting periods. Same store sales Management considers same store sales useful as it is a major benchmark used by investors to judge performance within the retail industry.
In addition, excluded from net merchandise sales are sales tax in the US, repair, extended service plan, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to change in same store sales. (2) Net merchandise sales within the International segment include all merchandise product sales, including VAT, net of discounts and returns.
In addition, excluded from net merchandise sales are sales tax in the US, repairs, extended service plan, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to change in same store sales. (2) Net merchandise sales within the International segment include all merchandise product sales, including VAT, net of discounts and returns.
Comparisons at the divisional level are made in local 38 Table of Contents currency and consolidated comparisons are made at constant exchange rates and exclude the effect of exchange rate movements by recalculating the prior period results as if they had been generated at the weighted average exchange rate for the current period.
Comparisons at the divisional level are made in local currency and consolidated comparisons are made at constant exchange rates and exclude the effect of exchange rate movements 39 Table of Contents by recalculating the prior period results as if they had been generated at the weighted average exchange rate for the current period.
Revenue from the sale of the lifetime ESP is recognized consistent with the estimated patterns 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 of 14 years after the sale of the warranty contract.
Revenue from the sale of the lifetime ESP is recognized consistent with the estimated patterns 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 of 13 years after the sale of the warranty contract.
In addition, excluded from net merchandise sales are sales tax in the US, repair, extended service plan, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to change in same store sales.
In addition, excluded from net merchandise sales are sales tax in the US, repairs, extended service plan, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to change in same store sales.
As the Company continues to implement and execute on the next phase of its strategy, Inspiring Brilliance, it will continue to focus on working capital efficiency, optimizing its real estate footprint, and prioritizing transformational productivity to drive future cost savings opportunities, all of which are expected to be used to fuel strategic investments, grow the business, and enhance liquidity.
As the Company continues to execute on its Inspiring Brilliance strategy, it will continue to focus on working capital efficiency, optimizing its real estate footprint, and prioritizing transformational productivity to drive future cost savings opportunities, all of which are expected to be used to fuel strategic investments, grow the business, and enhance liquidity.
Factors that influence gross margin include pricing, promotional environment, changes in merchandise costs, changes in non-merchandise components of cost of sales (as described above), changes in sales mix, foreign exchange, gold and currency hedges and the economics of services such as repairs and extended service plans. The price of diamonds varies depending on their size, cut, color and clarity.
Factors that influence gross margin include pricing, promotional environment, changes in merchandise costs, changes in non-merchandise components of cost of sales (as described above), changes in sales mix, foreign exchange, and the economics of services such as repairs and extended service plans. The price of diamonds varies depending on their size, cut, color and clarity.
When the carrying amount of the reporting unit or other intangible assets exceeds its fair value, an impairment charge is recorded. 52 Table of Contents The impairment test for goodwill involves estimating the fair value of the reporting unit through either estimated discounted future cash flows or market-based methodologies.
When the carrying amount of the reporting unit or other intangible assets exceeds its fair value, an impairment charge is recorded. The impairment test for goodwill involves estimating the fair value of the reporting unit through either estimated discounted future cash flows or market-based methodologies.
The Company primarily utilizes the replacement cost method to estimate the fair value of its property and equipment, and the income capitalization method to estimate the fair value of its ROU assets, which incorporates historical store level sales, internal business plans, real estate market capitalization and rental rates, and discount rates.
The Company primarily utilizes the replacement cost method to 53 Table of Contents estimate the fair value of its property and equipment, and the income capitalization method to estimate the fair value of its ROU assets, which incorporates historical store level sales, internal business plans, real estate market capitalization and rental rates, and discount rates.
Other operating income (loss) Other operating income (loss) primarily consists of miscellaneous operating income and expense items such as interest income from customer in-house finance receivables, litigation settlements, foreign currency gains and losses, and gains and losses from de-designated or undesignated derivative contracts. See Note 12 in Item 8 for further detail on the Company’s other operating income.
Other operating income (expense) Other operating income (expense) primarily consists of miscellaneous operating income and expense items such as interest income from customer in-house finance receivables, litigation settlements, foreign currency gains and losses, and gains and losses from undesignated derivative contracts. See Note 12 in Item 8 for further detail on the Company’s other operating income (expense).
First, the Company renegotiated its $1.5 billion ABL Facility, as further described in Note 24 of Item 8, to extend the maturity until 2026 and allow overall greater financial flexibility to grow the business and provide an additional option to address the 2024 maturities for its 4.70% senior unsecured notes (“Senior Notes”) and Preferred Shares, if necessary.
First, the Company renegotiated its $1.5 billion ABL Facility, as further described in Note 24 of Item 8, to extend the maturity until 2026 and allow overall greater financial flexibility to grow the business and provide an additional option to address the 2024 maturities for its Senior Notes and Preferred Shares, if necessary.
Non-GAAP operating income (loss) Non-GAAP operating income (loss) is a non-GAAP measure defined as operating income (loss) excluding the impact of significant and unusual items which management believes are not necessarily reflective of operational performance during a period.
Non-GAAP operating income Non-GAAP operating income is a non-GAAP measure defined as operating income excluding the impact of significant and unusual items which management believes are not necessarily reflective of normal operating performance during a period.
The determination of whether a Guarantor was or was not rendered insolvent when it entered into its Guarantee will vary depending on the law of the jurisdiction being applied.
The 55 Table of Contents determination of whether a Guarantor was or was not rendered insolvent when it entered into its Guarantee will vary depending on the law of the jurisdiction being applied.
Operating leases are included in operating lease ROU assets and current and non-current operating lease liabilities in the Company’s consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.
Operating leases are included in operating lease ROU assets and current and non-current operating lease liabilities in the Company’s consolidated balance sheets. 54 Table of Contents ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.
Primary sources and uses of operating cash flows Operating activities provide the primary source of cash for the Company and are influenced by a number of factors, the most significant of which are operating income and changes in working capital items, such as: • changes in the level of inventory as a result of sales and other strategic initiatives (i.e. store count); 48 Table of Contents • changes and timing of accounts payable and accrued expenses, including variable compensation; and • changes in deferred revenue, reflective of the revenue from performance of extended service plans.
Primary sources and uses of operating cash flows Operating activities provide the primary source of cash for the Company and are influenced by a number of factors, the most significant of which are operating income and changes in working capital items, such as: • changes in the level of inventory as a result of sales and other strategic initiatives; • changes and timing of accounts payable and accrued expenses, including variable compensation; and • changes in deferred revenue, reflective of the revenue from performance of extended service plans.
In Fiscal 2023, it is anticipated a five percent movement in the British pound to US dollar exchange rate would impact the Company’s income before income taxes by approximately $0.7 million, while a five percent movement in the Canadian dollar to US dollar exchange rate would impact the Company’s income before income taxes by approximately $1.0 million.
In Fiscal 2024, it is anticipated a five percent movement in the British pound to US dollar exchange rate would impact the Company’s income before income taxes by approximately $0.5 million, while a five percent movement in the Canadian dollar to US dollar exchange rate would impact the Company’s income before income taxes by approximately $1.3 million.
As of January 29, 2022, the threshold related to the fixed coverage ratio was approximately $119 million. The ABL Facility places certain restrictions upon the Company’s ability to, among other things, incur additional indebtedness, pay dividends, grant liens and make certain loans, investments and divestitures.
As of January 28, 2023, the threshold related to the fixed coverage ratio was approximately $126 million. The ABL Facility places certain restrictions upon the Company’s ability to, among other things, incur additional indebtedness, pay dividends, grant liens and make certain loans, investments and divestitures.
A number of non-GAAP measures are used by management to analyze and manage the performance of the business, and the required disclosures for these non-GAAP measures are shown below. Signet provides such non-GAAP information in reporting its financial results to give investors additional data to evaluate its operations.
A number of non-GAAP measures are used by management to analyze and manage the performance of the business, and the required disclosures for these non-GAAP measures are shown below. Signet presents such non-GAAP measures in reporting its financial results to provide investors additional information to evaluate its operations and financial position.
The Company has a valuation allowance of $27.9 million and $83.9 million, as of January 29, 2022 and January 30, 2021, respectively, due to uncertainties related to the Company’s ability to utilize certain of its deferred tax assets, primarily consisting of net operating losses, foreign tax credits and capital losses carried forward.
The Company has a valuation allowance of $19.0 million and $27.9 million, as of January 28, 2023 and January 29, 2022, respectively, due to uncertainties related to the Company’s ability to utilize certain of its deferred tax assets, primarily consisting of net operating losses, foreign tax credits and capital losses carried forward.
Refer to discussion of the adjusted leverage ratio in the Non-GAAP measures section above. 47 Table of Contents Investing in growth Since the Company’s transformation strategies began in Fiscal 2019, the Company delivered substantially against its strategic priorities to establish the Company as the OmniChannel jewelry category leader and position its business for sustainable long-term growth.
Adjusted leverage ratio is a non-GAAP measure as defined in the Non-GAAP Measures section above. 48 Table of Contents Investing in growth Since the Company’s transformation strategies began in Fiscal 2019, the Company delivered substantially against its strategic priorities to establish the Company as the OmniChannel jewelry category leader and position its business for sustainable long-term growth.
Adjusted EBITDAR, as revised by the Company in Fiscal 2021, is a non-GAAP measure, defined as earnings before interest and income taxes, depreciation and amortization, share-based compensation expense, non-operating income (expense) and certain non-GAAP accounting adjustments (“Adjusted EBITDA”) and further excludes minimum fixed rent expense for properties occupied under operating leases.
Adjusted EBITDAR is a non-GAAP measure, defined as earnings before interest and income taxes, depreciation and amortization, share-based compensation expense, non-operating income (expense) and certain non-GAAP accounting adjustments (“Adjusted EBITDA”) and further excludes minimum fixed rent expense for properties occupied under operating leases.
On March 29, 2021, the Company acquired all of the outstanding shares of Rocksbox Inc. (“Rocksbox”), a jewelry rental subscription business, for cash consideration of $14.6 million, net of cash acquired. The acquisition was driven by Signet's initiatives to accelerate growth in its services offerings. On November 17, 2021, the Company acquired Diamonds Direct USA Inc.
On March 29, 2021, the Company acquired all of the outstanding shares of Rocksbox, a jewelry rental subscription business, for cash consideration of $14.6 million, net of cash acquired. The acquisition was driven by Signet's initiatives to accelerate growth in its services offerings.
See Note 18 of Item 8 for more information. • Cash provided by deferred revenue was $100.5 million compared to $73.1 million in the prior year period, primarily due to increased warranty plan sales associated with higher overall sales volume. See Note 3 of Item 8 for further information.
See Note 18 of Item 8 for more information. • Cash provided by deferred revenue was $27.9 million compared to $100.5 million in the prior year, primarily due to increased warranty plan sales associated with higher overall sales volume in Fiscal 2022. See Note 3 of Item 8 for further information.
Summary cash flows The following table provides a summary of Signet’s cash flow activity for Fiscal 2022, Fiscal 2021 and Fiscal 2020: (in millions) Fiscal 2022 Fiscal 2021 Fiscal 2020 Net cash provided by operating activities $ 1,257.3 $ 1,372.3 $ 555.7 Net cash used in investing activities (642.7) (77.8) (140.8) Net cash used in financing activities (366.6) (498.6) (237.0) Increase in cash and cash equivalents 248.0 795.9 177.9 Cash and cash equivalents at beginning of period 1,172.5 374.5 195.4 Increase in cash and cash equivalents 248.0 795.9 177.9 Effect of exchange rate changes on cash and cash equivalents (2.2) 2.1 1.2 Cash and cash equivalents at end of period $ 1,418.3 $ 1,172.5 $ 374.5 Operating activities Net cash provided by operating activities was $1.3 billion compared to net cash provided by operating activities of $1.4 billion in the prior year comparable period.
Summary cash flows The following table provides a summary of Signet’s cash flow activity for Fiscal 2023, Fiscal 2022 and Fiscal 2021: (in millions) Fiscal 2023 Fiscal 2022 Fiscal 2021 Net cash provided by operating activities $ 797.9 $ 1,257.3 $ 1,372.3 Net cash used in investing activities (545.4) (642.7) (77.8) Net cash used in financing activities (490.0) (366.6) (498.6) (Decrease) increase in cash and cash equivalents (237.5) 248.0 795.9 Cash and cash equivalents at beginning of period 1,418.3 1,172.5 374.5 (Decrease) increase in cash and cash equivalents (237.5) 248.0 795.9 Effect of exchange rate changes on cash and cash equivalents (14.0) (2.2) 2.1 Cash and cash equivalents at end of period $ 1,166.8 $ 1,418.3 $ 1,172.5 Operating activities Net cash provided by operating activities in Fiscal 2023 was $797.9 million compared to net cash provided by operating activities of $1.3 billion in the prior year comparable period.
Credit ratings The following table provides Signet’s credit ratings as of January 29, 2022: Rating Agency Corporate Senior Unsecured Notes Standard & Poor’s BB- BB- Moody’s Ba3 B2 Fitch BB BB OFF-BALANCE SHEET ARRANGEMENTS Merchandise held on consignment Signet held $533.2 million of consignment inventory which is not recorded on the balance sheet at January 29, 2022, as compared to $387.4 million at January 30, 2021.
Credit ratings The following table provides Signet’s credit ratings as of January 28, 2023: Rating Agency Corporate Senior Notes Standard & Poor’s BB- BB- Moody’s Ba3 B2 Fitch BB BB OFF-BALANCE SHEET ARRANGEMENTS Merchandise held on consignment Signet held $623.0 million of consignment inventory which is not recorded on the balance sheet at January 28, 2023, as compared to $533.2 million at January 29, 2022.
The following table provides a summary of these items as of January 29, 2022, January 30, 2021 and February 1, 2020: (in millions) January 29, 2022 January 30, 2021 February 1, 2020 Working capital (1) $ 1,659.7 $ 1,583.3 $ 1,502.2 Capitalization: Long-term debt 147.1 146.7 515.9 Series A redeemable convertible preferred shares 652.1 642.3 617.0 Shareholders’ equity 1,564.0 1,190.3 1,222.6 Total capitalization 2,363.2 1,979.3 2,355.5 Additional amounts available under credit agreements $ 1,245.9 $ 1,320.8 $ 1,158.1 (1) Includes cash and cash equivalents If the excess availability under the ABL Revolving Facility falls below the threshold specified in the ABL Facility agreement, the Company will be required to maintain a fixed charge coverage ratio of not less than 1.00 to 1.00.
The following table provides a summary of these items as of January 28, 2023, January 29, 2022 and January 30, 2021: (in millions) January 28, 2023 January 29, 2022 January 30, 2021 Working capital (1) $ 1,259.0 $ 1,659.7 $ 1,583.3 Capitalization: Long-term debt 147.4 147.1 146.7 Redeemable Series A Convertible Preference Shares 653.8 652.1 642.3 Shareholders’ equity 1,578.6 1,564.0 1,190.3 Total capitalization 2,379.8 2,363.2 1,979.3 Additional amounts available under credit agreements $ 1,406.6 $ 1,245.9 $ 1,320.8 (1) Includes cash and cash equivalents If the excess availability under the ABL Revolving Facility falls below the threshold specified in the ABL Facility agreement, the Company will be required to maintain a fixed charge coverage ratio of not less than 1.00 to 1.00.
As described in the Purpose and Strategy section within Item 1 this Annual Report, through its Inspiring Brilliance strategy, the Company will focus on leveraging its core strengths that it developed over the past few years with the goal of creating a broader mid-market for jewelry and increasing Signet’s share of that larger market as the industry leader.
As described in the Purpose and Strategy section within Item 1 of this Annual Report on Form 10-K, through its Inspiring Brilliance strategy, the Company is focused on leveraging its core strengths that it developed over the past five years with the goal of creating a broader mid-market and increasing Signet’s share of that larger market as the industry leader.
Factors that could cause or contribute to those differences include, but are not limited to, those discussed below and elsewhere in this report, particularly in “Risk Factors” and “Forward-Looking Statements.” This management's discussion and analysis provides comparisons of material changes in the consolidated financial statements for Fiscal 2022 and Fiscal 2021.
Factors that could cause or contribute to those differences include, but are not limited to, those discussed below and elsewhere in this report, particularly in “Forward-Looking Statements” above as well as the “Risk Factors” section within Item 1A. This management's discussion and analysis provides comparisons of material changes in the consolidated financial statements for Fiscal 2023 and Fiscal 2022.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the store asset group, based on the Company’s internal business plans.
Potentially impaired assets or asset groups are identified by reviewing the undiscounted cash flows of individual stores. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the store asset group, based on the Company’s internal business plans.
Management believes these financial measures are helpful to enhancing investors’ ability to analyze trends in Signet’s business and evaluate Signet’s performance. 46 Table of Contents (in millions) Fiscal 2022 Fiscal 2021 Fiscal 2020 Adjusted debt: Long-term debt $ 147.1 $ 146.7 $ 515.9 Loans and overdrafts — — 95.6 Series A redeemable convertible preferred shares 652.1 642.3 617.0 Adjustments: 5x Rent expense 2,216.5 2,263.0 2,398.5 Adjusted debt $ 3,015.7 $ 3,052.0 $ 3,627.0 Adjusted EBITDAR: Net income (loss) $ 769.9 $ (15.2) $ 105.5 Income taxes 114.5 (74.5) 24.2 Interest expense, net 16.9 32.0 35.6 Depreciation and amortization on property, plant and equipment (1) 162.4 175.1 177.1 Amortization of definite-lived intangibles (1) 1.1 0.9 0.9 Amortization of unfavorable contracts (3.3) (5.4) (5.5) Share-based compensation 45.8 14.5 16.9 Other non-operating expense, net 2.1 — — Other accounting adjustments (2) 4.7 214.5 153.8 Adjusted EBITDA $ 1,114.1 $ 341.9 $ 508.5 Rent expense 443.3 452.6 479.7 Adjusted EBITDAR $ 1,557.4 $ 794.5 $ 988.2 Adjusted leverage ratio 1.9x 3.8x 3.7x (1) Total amount of depreciation and amortization reflected on the consolidated statement of cash flows for Fiscal 2022, Fiscal 2021 and Fiscal 2020 equals $163.5 million, $176 million and $178.0 million, respectively, which includes $1.1 million, $0.9 million and $0.9 million, respectively, related to the amortization of definite-lived intangibles, primarily favorable leases and trade names.
Management believes these financial measures are helpful to enhancing investors’ ability to analyze trends in Signet’s business and evaluate Signet’s performance. 47 Table of Contents (in millions) Fiscal 2023 Fiscal 2022 Fiscal 2021 Adjusted debt: Long-term debt $ 147.4 $ 147.1 $ 146.7 Redeemable Series A Convertible Preference Shares 653.8 652.1 642.3 Adjustments: 5x Rent expense 2,232.5 2,216.5 2,263.0 Adjusted debt $ 3,033.7 $ 3,015.7 $ 3,052.0 Adjusted EBITDAR: Net income (loss) $ 376.7 $ 769.9 $ (15.2) Income taxes 74.5 114.5 (74.5) Interest expense, net 13.5 16.9 32.0 Depreciation and amortization on property, plant and equipment (1) 162.2 162.4 175.1 Amortization of definite-lived intangibles (1) 2.3 1.1 0.9 Amortization of unfavorable contracts (1.8) (3.3) (5.4) Share-based compensation 42.0 45.8 14.5 Other non-operating expense, net (2) 140.2 2.1 — Other accounting adjustments (3) 245.5 4.7 214.5 Adjusted EBITDA $ 1,055.1 $ 1,114.1 $ 341.9 Rent expense 446.5 443.3 452.6 Adjusted EBITDAR $ 1,501.6 $ 1,557.4 $ 794.5 Adjusted leverage ratio 2.0x 1.9x 3.8x (1) Total amount of depreciation and amortization reflected on the consolidated statement of cash flows for Fiscal 2023, Fiscal 2022 and Fiscal 2021 equals $164.5 million, $163.5 million and $176 million, respectively, which includes $2.3 million, $1.1 million and $0.9 million, respectively, related to the amortization of definite-lived intangibles, primarily favorable leases and trade names.
Average Merchandise Transaction Value (1)(2) Merchandise Transactions Average Value Change from previous year Change from previous year Fiscal Year Fiscal 2022 Fiscal 2021 Fiscal 2022 Fiscal 2021 Fiscal 2022 Fiscal 2021 North America segment $ 448 $ 392 14.3 % — % 29.2 % (7.6) % International segment (3) £ 129 £ 153 (17.3) % 8.5 % 30.7 % (30.4) % (1) Net merchandise sales within the North America segment include all merchandise product sales, net of discounts and returns.
Average Merchandise Transaction Value (1)(2) Merchandise Transactions Average Value Change from previous year Change from previous year Fiscal Year Fiscal 2023 Fiscal 2022 Fiscal 2023 Fiscal 2022 Fiscal 2023 Fiscal 2022 North America segment $ 507 $ 448 11.2 % 14.3 % (17.2) % 29.2 % International segment (3) £ 171 £ 129 8.9 % (17.3) % (2.3) % 30.7 % (1) Net merchandise sales within the North America segment include all merchandise product sales, net of discounts and returns.
(in millions) Fiscal 2022 Fiscal 2021 Fiscal 2020 Net cash provided by operating activities $ 1,257.3 $ 1,372.3 $ 555.7 Purchase of property, plant and equipment (129.6) (83.0) (136.3) Free cash flow 1,127.7 1,289.3 419.4 Proceeds from sale of in-house finance receivables (81.3) — — Adjusted free cash flow $ 1,046.4 $ 1,289.3 $ 419.4 3.
(in millions) Fiscal 2023 Fiscal 2022 Fiscal 2021 Net cash provided by operating activities $ 797.9 $ 1,257.3 $ 1,372.3 Purchase of property, plant and equipment (138.9) (129.6) (83.0) Free cash flow 659.0 1,127.7 1,289.3 Proceeds from sale of in-house finance receivables — (81.3) — Adjusted free cash flow $ 659.0 $ 1,046.4 $ 1,289.3 46 Table of Contents 3.
SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION The Company and certain of its subsidiaries, which are listed on Exhibit 22.1 to this Annual Report on Form 10-K, have guaranteed obligations under the 4.70% senior unsecured notes due in 2024 (the “Senior Notes”). The Senior Notes were issued by Signet UK Finance plc (the “Issuer”).
SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION The Company and certain of its subsidiaries, which are listed on Exhibit 22.1 to this Annual Report on Form 10-K, have guaranteed obligations under the Senior Notes. The Senior Notes were issued by Signet UK Finance plc (the “Issuer”). The Senior Notes rank senior to the Preferred Shares and common shares.
Average Merchandise Transaction Value (1)(2) Merchandise Transactions Average Value Change from previous year Change from previous year Fourth Quarter Fiscal 2022 Fiscal 2021 Fiscal 2022 Fiscal 2021 Fiscal 2022 Fiscal 2021 North America segment $ 444 $ 380 16.8 % 1.1 % 3.6 % 9.9 % International segment (3) £ 141 £ 136 2.2 % 6.3 % 37.6 % (29.7) % 41 Table of Contents (1) Net merchandise sales within the North America segment include all merchandise product sales, net of discounts and returns.
Average Merchandise Transaction Value (1)(2) Merchandise Transactions Average Value Change from previous year Change from previous year Fourth Quarter Fiscal 2023 Fiscal 2022 Fiscal 2023 Fiscal 2022 Fiscal 2023 Fiscal 2022 North America segment $ 485 $ 444 3.9 % 16.8 % (12.6) % 3.6 % International segment (3) £ 162 £ 141 13.3 % 2.2 % (18.7) % 37.6 % (1) Net merchandise sales within the North America segment include all merchandise product sales, net of discounts and returns.
The Company has declared the Fiscal 2022 preferred share dividends payable in cash, and beginning in the second quarter of Fiscal 2022, elected to reinstate the dividend program on its common shares.
Returning excess cash to shareholders The Company remains committed to its goal to return excess cash to shareholders. During Fiscal 2022 and Fiscal 2023, the Company has declared the Fiscal 2022 preferred share dividends payable in cash, and beginning in the second quarter of Fiscal 2022, elected to reinstate the dividend program on its common shares.
However, the Company believes that its banner value propositions, including the Diamonds Direct addition to Signet‘s portfolio, the strength of the Company’s product assortment and its investments in digital and flexible fulfillment methods are expected to continue fueling a strong response from customers across merchandise categories and banners in Fiscal 2023.
The Company believes that its banner value propositions and differentiation, including the additions of Diamonds Direct and Blue Nile to Signet’s portfolio, the strength of the Company’s product assortment and its investments in digital and flexible fulfillment capabilities are expected to continue fueling a positive response from customers across most merchandise categories and banners into Fiscal 2024.
Sales from stores that were acquired during the period and have not been included in the Company’s results for both the current and prior period presented are also excluded from same store sales. Sales after the 12-month anniversary are compared against the equivalent prior period sales within the comparable store sales comparison.
Similarly, sales from acquired businesses made within the last 12 months are excluded from the comparison until their 12-month anniversary. Sales from stores that were acquired during the period and have not been included in the Company’s results for both the current and prior period presented are also excluded from same store sales.
Adjusted debt is a non-GAAP measure defined as debt recorded in the consolidated balance sheet, plus Series A redeemable convertible preferred shares, plus an adjustment for operating leases (5x annual rent expense).
Leverage ratio The leverage ratio is a non-GAAP measure calculated by dividing Signet’s adjusted debt by adjusted EBITDAR. Adjusted debt is a non-GAAP measure defined as debt recorded in the consolidated balance sheet, plus redeemable Series A convertible preference shares (“Preferred Shares”), plus an adjustment for operating leases (5x annual rent expense).
The breakdown of Signet’s sales performance during Fiscal 2022 is set out in the table below: Change from previous year Fiscal 2022 Same store sales Non-same store sales, net (2) Total sales at constant exchange rate Exchange translation impact Total sales as reported Total sales (in millions) North America segment 49.5 % 0.4 % 49.9 % 0.2 % 50.1 % $ 7,264.8 International segment 34.7 % (3.0) % 31.7 % 6.7 % 38.4 % $ 492.4 Other segment (1) nm nm nm nm nm $ 68.8 Signet 48.5 % 0.5 % 49.0 % 0.7 % 49.7 % $ 7,826.0 (1) Includes sales from Signet’s diamond sourcing initiative.
The breakdown of the year to date sales performance is set out in the table below: Change from previous year Year to date Fiscal 2023 Same store sales Non-same store sales, net (2) Total sales at constant exchange rate (3) Exchange translation impact Total sales as reported Total sales (in millions) North America segment (7.0) % 7.5 % 0.5 % (0.2) % 0.3 % $ 7,289.5 International segment 8.3 % (0.4) % 7.9 % (12.4) % (4.5) % $ 470.1 Other segment (1) nm nm nm nm nm $ 82.5 Signet (6.1) % 7.2 % 1.1 % (0.9) % 0.2 % $ 7,842.1 (1) Includes sales from Signet’s diamond sourcing initiative.
See Note 14 of Item 8 for additional information. • During the second quarter of Fiscal 2022, the Company sold its existing customer in-house finance receivables, as well as collected the payment obligation of the remaining 5% of the receivables previously sold in June 2018. This resulted in cash proceeds of $81.3 million.
Refer to Note 11 of Item 8 for additional information. 50 Table of Contents • During the prior year, the Company sold its existing customer in-house finance receivables, as well as collected the payment obligation of the remaining 5% of the receivables previously sold in June 2018. This resulted in cash proceeds of $81.3 million.
Continued uncertainties exist that could impact the Company’s results of operations or cash flows, such as potential resurgence of COVID-19 in key trade areas, the ability to recruit and retain qualified team members, organized retail crime, extended duration of heightened unemployment in certain areas, pricing and inflationary environment changes impacting the Company (including, but not limited to, materials, labor, fulfillment and advertising costs) or the consumers’ ability to spend.
Uncertainties exist that could continue to impact the Company’s results of operations or cash flows in the future, such as further pricing and inflationary environment changes impacting the Company (including, but not limited to, materials, labor, fulfillment and advertising costs) or adverse shifts in consumer discretionary spending, supply chain disruptions to the Company’s business, the potential resurgence of COVID-19 in key trade areas, the Company’s ability to recruit and retain qualified team members, or organized retail crime.
Summarized Statements of Operations (in millions) Fiscal 2022 Fiscal 2021 Sales $ 7,188.9 $ 4,894.8 Gross margin 3,014.9 1,681.7 Income before income taxes (2) 939.7 161.1 Net income (2) 827.9 240.1 (2) Includes income from intercompany transactions with Non-Guarantors of $49.8 million for Fiscal 2022, and income of $231.2 million for Fiscal 2021.
Summarized Statements of Operations (in millions) Fiscal 2023 Fiscal 2022 Sales $ 6,705.7 $ 7,188.9 Gross margin 2,786.0 3,014.9 Income before income taxes (2) 546.0 939.7 Net income (2) 490.1 827.9 (2) Includes income from intercompany transactions with Non-Guarantors of $128.3 million for Fiscal 2023, and income of $49.8 million for Fiscal 2022.
The investments and new capabilities built during the past three years laid the foundation for stronger than expected results during Fiscal 2022, including prioritizing digital investments in both technology and talent, enhancing its new and modernized eCommerce platform and optimizing a connected commerce shopping journey for its customers.
The investments and new capabilities built during the past few years laid the foundation for the Company’s accelerated growth post-pandemic, including prioritizing digital investments in both technology and talent, enhancing the Company’s new and modernized eCommerce platform and optimizing a connected commerce shopping journey for its customers.
Stores closed in the current financial period are included up to the date of closure and the comparative period is correspondingly adjusted. Stores that have been relocated or expanded, but remain within the same local geographic area, are included within the comparison with no adjustment to either the current or comparative period.
Stores that have been relocated or expanded, but remain within the same local geographic area, are included within the comparison with no adjustment to either the current or comparative period.
See Note 6 of Item 8 for additional information regarding the Company’s restructuring activities. Asset impairments, net During Fiscal 2022, the Company recorded net non-cash, pre-tax asset impairments related to the impairment of long-lived assets of $1.5 million.
During Fiscal 2022, the Company recorded non-cash, pre-tax asset impairments related to the impairment of long-lived assets of $1.5 million. During the fourth quarter of Fiscal 2022, the Company recorded non-cash, pre-tax asset net gain on impairment of $0.5 million, all of which related to long-lived assets. See Note 17 of Item 8 for additional information on the asset impairments.
To the extent that management’s estimates of settlements change, or the final tax outcome of these matters is different than the amounts recorded, such differences will impact the income tax provision in the period in which such determinations are made.
To the extent that management’s estimates of settlements change, or the final tax outcome of these matters is different than the amounts recorded, such differences will impact the income tax provision in the period in which such determinations are made. See Note 11 of Item 8 for additional information regarding deferred tax assets and unrecognized tax benefits.
See Note 27 of Item 8 for more information. • Deferred taxes were a source of $0.1 million compared to a source of $141.8 million in the prior year period offset by current income taxes of a use of $6.7 million compared to a use of $45.5 million in the prior year.
See Note 12 of Item 8 for additional information. • Change in current income taxes was a source of $98.5 million in the current period compared to a use of $6.7 million in the prior year. Deferred taxes was a use of $99.3 million in the current period compared to a source of $0.1 million in the prior year.
Lease terms, which include the period of the lease that cannot be canceled, may also include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The operating lease ROU asset may also include initial direct costs, prepaid and/or accrued lease payments and the unamortized balance of lease incentives received.
Lease terms, which include the period of the lease that cannot be canceled, may also include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
Although claims experience varies between the Company’s national banners, thereby resulting in different recognition rates, approximately 55% to 60% of revenue is recognized within the first two years on a weighted average basis. As noted above, the Company utilizes historical claims data to estimate the expected future patterns of claims cost and the related revenue recognition rates utilized.
Although claims experience varies between the Company’s national banners, thereby resulting in different recognition rates, approximately 60% to 65% of revenue is recognized within the first two years on a weighted average basis.
Summarized Balance Sheets (in millions) January 29, 2022 January 30, 2021 Total current assets $ 3,507.0 $ 3,799.6 Total non-current assets 2,245.3 2,475.9 Total current liabilities 2,309.3 2,357.1 Total non-current liabilities 3,407.0 3,578.7 Redeemable preferred shares 652.1 642.3 Total due from Non-Guarantors (1) 311.4 395.9 Total due to Non-Guarantors (1) 1,666.9 1,695.0 (1) Amounts included in asset and liability subtotals above.
Summarized Balance Sheets (in millions) January 28, 2023 January 29, 2022 Total current assets $ 3,225.3 $ 3,507.0 Total non-current assets 2,056.3 2,245.3 Total current liabilities 2,555.5 2,309.3 Total non-current liabilities 3,192.3 3,407.0 Redeemable preferred shares 653.8 652.1 Total due from Non-Guarantors (1) 425.1 311.4 Total due to Non-Guarantors (1) 1,798.3 1,666.9 (1) Amounts included in asset and liability subtotals above.
Fiscal 2022 Fiscal 2021 (in millions) $ % of sales $ % of sales North America segment (1) $ 981.4 13.5 % $ 57.9 1.2 % International segment (2) 14.4 2.9 % (43.3) (12.2) % Other segment (3) (0.2) nm (0.3) nm Corporate and unallocated expenses (4) (92.2) nm (72.0) nm Operating income (loss) $ 903.4 11.5 % $ (57.7) (1.1) % (1) Fiscal 2022 includes: 1) $5.4 million of cost of sales associated with the fair value step-up of inventory acquired in the Diamonds Direct acquisition; 2) $6.4 million of acquisition-related expenses related to Diamonds Direct and Rocksbox; 3) net asset impairment charges of $2.0 million; 4) $1.4 million gain associated with the sale of customer in-house finance receivables; and 5) $1.0 million credit to restructuring expense, primarily related to adjustments to previously recognized restructuring liabilities.
Fiscal 2022 includes: 1) $5.4 million of cost of sales associated with the fair value step-up of inventory acquired in the Diamonds Direct acquisition; 2) $6.4 million of acquisition-related expenses related to Diamonds Direct and Rocksbox; 3) net asset impairment charges of $2.0 million; 4) $1.4 million of gains associated with the sale of customer in-house finance receivables; and 5) $1.0 million credit to restructuring expense, primarily related to adjustments to previously recognized restructuring liabilities.
The uncertainty of the COVID-19 impact to the Company’s business could continue to further negatively affect the operating performance and cash flows of the Company’s stores, including the magnitude and potential resurgence of COVID-19 (including variants), occupancy restrictions in the Company’s stores, the inability to achieve or maintain cost savings initiatives included in the business plans, changes in real estate strategy or macroeconomic factors which influence consumer behavior.
The uncertainty of the current macroeconomic environment on to the Company’s business could continue to further negatively affect the operating performance and cash flows of the previously impaired stores or additional stores, including the impacts of inflation, continued changes in consumer behavior and shifts in discretionary spending, the inability to achieve or maintain cost savings initiatives included in the business plans, changes in real estate strategy or other macroeconomic factors which influence consumer behavior.
Stores opened and closed in Fiscal 2022: Store count by segment January 30, 2021 Opened and acquired (2) (3) Closed (2) January 29, 2022 North America segment (1) 2,481 104 (79) 2,506 International segment (1) 352 3 (7) 348 Signet 2,833 107 (86) 2,854 (1) The net change in selling square footage for Fiscal 2022 for the North America and International segments was 0.5% and (0.7)%, respectively.
Stores opened and closed in Fiscal 2023: Store count by segment January 29, 2022 Opened and acquired (2) (3) Closed (2) January 28, 2023 North America segment (1) 2,506 83 (114) 2,475 International segment (1) 348 2 (17) 333 Signet 2,854 85 (131) 2,808 (1) The net change in selling square footage for Fiscal 2023 for the North America and International segments was 0.9% and (3.7)%, respectively.
The Senior Notes rank senior to the Preferred Shares (as defined in Note 7 of Item 8) and Common Shares. The Senior Notes are effectively subordinated to our existing and future secured indebtedness to the extent of the assets securing that indebtedness.
The Senior Notes are effectively subordinated to our existing and future secured indebtedness to the extent of the assets securing that indebtedness.
(4) Fiscal 2022 includes: 1) charges of $1.7 million related to the settlement of previously disclosed shareholder litigation matters; and 2) $2.3 million credit to restructuring expense primarily related to adjustments to previously recognized restructuring liabilities.
(3) Fiscal 2022 includes: 1) a charge of $1.7 million related to the settlement of previously disclosed shareholder litigation matters; and 2) $2.3 million credit to restructuring expense primarily related to adjustments to previously recognized restructuring liabilities. See Note 6 and Note 28 of Item 8 for additional information. nm Not meaningful.
(2) Includes 12 store repositions in Fiscal 2022. (3) Includes 22 Diamonds Direct locations acquired as described in Note 4 of Item 8.
(2) Includes 23 store repositions in Fiscal 2023. (3) Includes 23 locations acquired from Blue Nile in Fiscal 2023 as described in Note 4 of Item 8.
Liquidity and financial flexibility During Fiscal 2022, the Company made significant progress in line with its Inspiring Brilliance growth strategy through two key financial milestones.
See Note 4 of Item 8 for further details. Liquidity and financial flexibility During the past two years, the Company made significant progress in line with its Inspiring Brilliance growth strategy through three key financial milestones.
Payments arising from operating lease activity, as well as variable and short-term lease payments not included within the operating lease liability, are included as operating activities on the Company’s consolidated statement of cash flows.
Payments arising from operating lease activity, as well as variable and short-term lease payments not included within the operating lease liability, are included as operating activities on the Company’s consolidated statement of cash flows. Expenditures made to ready an asset for its intended use (i.e. leasehold improvements) are represented within investing activities within the Company’s consolidated statements of cash flows.
ROU assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of the assets may not be recoverable in accordance with the Company’s long-lived asset impairment assessment policy.
We have elected this practical expedient as presented in ASC 842, and do not separate non-lease components for all underlying asset classes. ROU assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of the assets may not be recoverable in accordance with the Company’s long-lived asset impairment assessment policy.
If future economic conditions are different than those projected by management in its most recent impairment tests for goodwill and indefinite-lived intangible assets, future impairment charges may be required. See Note 19 for further details. Long-lived assets Long-lived assets of the Company consist primarily of property and equipment, definite-lived intangible assets and operating lease right-of-use ("ROU") assets.
If future economic conditions or operating performance, such as declines in sales or increases in discount rates, are different than those projected by management in its most recent impairment tests for goodwill and indefinite-lived intangible assets, future impairment charges may be required. See Note 19 of Item 8 for further details.
The amount invested in each liquidity fund or at each financial institution takes into account the credit rating and size of the liquidity fund or financial institution and is invested for short-term durations.
Signet has cash and cash equivalents invested in various ‘AAA’ rated government money market funds and at a number of large, highly-rated financial institutions. The amount invested in each liquidity fund or at each financial institution takes into account the credit rating and size of the liquidity fund or financial institution and is invested for short-term durations.
Exchange translation impact Monthly average exchange rates are used to prepare the Company’s consolidated statements of operations.
Refer to Item 1 for further information on the Company’s business, markets and strategy. Exchange translation impact Monthly average exchange rates are used to prepare the Company’s consolidated statements of operations.
(3) Amounts for the International segment are denominated in British pounds. North America sales The North America segment’s total sales were $7.3 billion compared to $4.8 billion in the prior year, up 50.1%. Same store sales increased 49.5% compared to a decrease of 9.5% in the prior year.
(3) Amounts for the International segment are denominated in British pounds. North America sales The North America segment’s total sales were $7.29 billion compared to $7.26 billion in the prior year, up 0.3%. Same store sales decreased 7.0% compared to an increase of 49.5% in the prior year. North America’s ATV increased 11.2% and the number of transactions decreased 17.2%.
COMPARISON OF FISCAL 2022 TO FISCAL 2021 • Total sales: up 49.7%. • Same store sales: up 48.5%. • Diluted earnings (loss) per share: $12.22 compared to $(0.94) in Fiscal 2021. 39 Table of Contents Fiscal 2022 Fiscal 2021 (in millions) $ % of sales $ % of sales Sales $ 7,826.0 100.0 % $ 5,226.9 100.0 % Cost of sales (4,702.0) (60.1) (3,493) (66.8) Restructuring charges - cost of sales — — (1.4) — Gross margin 3,124.0 39.9 1,732.5 33.1 Selling, general and administrative expenses (2,230.9) (28.5) (1,587.4) (30.4) Restructuring charges 3.3 — (46.2) (0.9) Goodwill and intangible impairments (1.5) — (159.0) (3.0) Other operating income 8.5 0.1 2.4 — Operating income (loss) 903.4 11.5 (57.7) (1.1) Interest expense, net (16.9) (0.2) (32.0) (0.6) Other non-operating loss, net (2.1) — — — Income (loss) before income taxes 884.4 11.3 (89.7) (1.7) Income tax (expense) benefit (114.5) (1.5) 74.5 1.4 Net income (loss) $ 769.9 9.8 % $ (15.2) (0.3) % Year to date sales In Fiscal 2022, Signet’s sales were $7.8 billion, up $2.6 billion or 49.7%, compared to $5.2 billion in Fiscal 2021.
COMPARISON OF FISCAL 2023 TO FISCAL 2022 • Total sales: up 0.2%. • Same store sales: down 6.1%. • Diluted earnings per share: $6.64 compared to $12.22 in Fiscal 2022. 40 Table of Contents Fiscal 2023 Fiscal 2022 (in millions) $ % of sales $ % of sales Sales $ 7,842.1 100.0 % $ 7,826.0 100.0 % Cost of sales (4,790.0) (61.1) (4,702) (60.1) Gross margin 3,052.1 38.9 3,124.0 39.9 Selling, general and administrative expenses (2,214.6) (28.2) (2,230.9) (28.5) Restructuring charges — — 3.3 — Asset impairments, net (22.7) (0.3) (1.5) — Other operating income (expense) (209.9) (2.7) 8.5 0.1 Operating income (loss) 604.9 7.7 903.4 11.5 Interest expense, net (13.5) (0.2) (16.9) (0.2) Other non-operating expense, net (140.2) (1.8) (2.1) — Income (loss) before income taxes 451.2 5.8 884.4 11.3 Income taxes (74.5) (1.0) (114.5) (1.5) Net income (loss) $ 376.7 4.8 % $ 769.9 9.8 % Year to date sales Signet’s total sales increased 0.2% to $7.84 billion compared to $7.83 billion in the prior year while total sales at constant exchange rates increased 1.1%.
CRITICAL ACCOUNTING ESTIMATES Critical accounting policies covering areas of greater complexity that are subject to the exercise of judgment due to the reliance on key estimates are listed below. A comprehensive listing of Signet’s significant accounting policies is set forth in Note 1 of the consolidated financial statements in Item 8.
CRITICAL ACCOUNTING ESTIMATES Critical accounting policies covering areas of greater complexity that are subject to the exercise of judgment due to the reliance on key estimates are listed below.
Gross margin In Fiscal 2022, gross margin was $3.1 billion or 39.9% of sales compared to $1.7 billion or 33.1% of sales in Fiscal 2021. In the fourth quarter, gross margin was $1.2 billion or 41.0% of sales compared to $869.5 million or 39.8% of sales in the prior year fourth quarter.
In the fourth quarter, gross margin was $1.11 billion or 41.7% of sales compared to $1.15 billion or 41.0% of sales in the prior year fourth quarter.
Change from previous year Fourth Quarter of Fiscal 2022 Same store sales (1) Non-same store sales, net Total sales at constant exchange rate Exchange translation impact Total sales as reported Total sales (in millions) North America segment 22.2 % 4.6 % 26.8 % 0.1 % 26.9 % $ 2,606.9 International segment 50.2 % (0.7) % 49.5 % (0.5) % 49.0 % $ 183.4 Other segment (1) nm nm nm nm nm $ 21.0 Signet 23.8 % 4.7 % 28.5 % 0.1 % 28.6 % $ 2,811.3 (1) Includes sales from Signet’s diamond sourcing initiative. nm Not meaningful.
Brick and mortar same store sales decreased 9.6% from the prior year fourth quarter. 42 Table of Contents The breakdown of the fourth quarter sales performance by segment is set out in the table below: Change from previous year Fourth Quarter of Fiscal 2023 Same store sales Non-same store sales, net (2) Total sales at constant exchange rate (3) Exchange translation impact Total sales as reported Total sales (in millions) North America segment (9.3) % 5.5 % (3.8) % (0.2) % (4.0) % $ 2,503.3 International segment (6.8) % (0.2) % (7.0) % (9.5) % (16.5) % $ 153.2 Other segment (1) nm nm nm nm nm $ 9.7 Signet (9.1) % 4.8 % (4.3) % (0.9) % (5.2) % $ 2,666.2 (1) Includes sales from Signet’s diamond sourcing initiative.
These claims patterns are subject to change based primarily on revisions to the Company’s ESP product offerings and changes in customer behavior over time.
As noted above, the Company utilizes historical claims data to estimate the expected future patterns of claims cost and the related revenue recognition rates utilized. These claims patterns are subject to change based primarily on revisions to the Company’s ESP product offerings and changes in customer behavior over time.
In the fourth quarter, income tax expense was $82.4 million, with an effective tax rate of 20.8%, compared to expense of $30.9 million, with an effective tax rate of 10.8% in the prior year fourth quarter. The fourth quarter Fiscal 2022 effective tax rate approximated the US federal income tax rate.
In the fourth quarter of Fiscal 2023, income tax expense was $89.5 million, with an ETR of 24.4%, compared to expense of $82.4 million, with an ETR of 20.8% in the fourth quarter of Fiscal 2022.
Certain operating leases include predetermined rent increases, which are charged to store occupancy costs within cost of sales on a straight-line basis over the lease term, including any construction period or other rental holiday. Other variable amounts paid under operating leases, such as taxes and common area maintenance, are charged to selling, general and administrative expenses as incurred.
Leases Signet occupies certain properties and holds machinery and vehicles under operating leases. Signet determines if an arrangement is a lease at the agreement’s inception. Certain operating leases include predetermined rent increases, which are charged to store occupancy costs within cost of sales on a straight-line basis over the lease term, including any construction period or other rental holiday.
In addition, the Company invested over $190 million for capital investments in Fiscal 2022, which included approximately $130 million for capital expenditures and approximately $60 million related to investments in digital and cloud IT. In addition, during Fiscal 2022, the Company made two acquisitions in line with its “Inspiring Brilliance” strategy.
In addition, the Company invested $210.5 million for capital investments in Fiscal 2023, which included $138.9 million for capital expenditures and $71.6 million related to investments in digital and cloud IT initiatives. In addition, during the past two years, the Company made three acquisitions in line with its Inspiring Brilliance strategy.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+1 added−0 removed18 unchanged
Biggest changeAs of January 29, 2022, a hypothetical 100 basis point increase in interest rates would result in no additional annual interest expense since all of the Company’s variable rate debt has been repaid. 56 Table of Contents Sensitivity Analysis Management has used a sensitivity analysis technique that measures the change in the fair value of Signet’s financial instruments from hypothetical changes in market rates as shown in the table below.
Biggest changeSensitivity Analysis Management has used a sensitivity analysis technique that measures the change in the fair value of Signet’s financial instruments from hypothetical changes in market rates as shown in the table below.
Signet may enter into derivative transactions to hedge a significant portion of forecasted merchandise purchases using 55 Table of Contents commodity forward purchase contracts, options, net zero premium collar arrangements, or some combination thereof. Additionally, the North America segment enters into forward foreign currency exchange contracts to manage the currency fluctuations associated with the Company’s Canadian operations.
Signet may enter into derivative transactions to hedge a significant portion of forecasted merchandise purchases using commodity forward purchase contracts, options, net zero premium collar arrangements, or some combination thereof. Additionally, the North America segment enters into forward foreign currency exchange contracts to manage the currency fluctuations associated with the Company’s Canadian operations.
As certain of the International segment’s purchases are denominated in US dollars and its net cash flows are in British pounds, Signet’s policy is to enter into forward foreign currency exchange contracts and foreign currency swaps to manage the exposure to the US dollar.
As a portion of the International segment’s purchases are denominated in US dollars and its net cash flows are in British pounds, Signet’s policy is to enter into forward foreign currency exchange contracts and foreign currency swaps to manage the exposure to the US dollar.
Any depreciation in the weighted average value of the US dollar against the British pound or Canadian dollar could increase reported revenues and operating profit and any appreciation in the weighted average value of the US dollar against the British pound or Canadian dollar could decrease reported revenues and operating profit.
Any depreciation in the value of the US dollar against the British pound or Canadian dollar could increase reported revenues and operating profit and any appreciation in the value of the US dollar against the British pound or Canadian dollar could decrease reported revenues and operating profit.
The interest rates earned on cash and cash equivalents will fluctuate in line with short-term interest rates. MARKET RISK MANAGEMENT POLICY A committee of the Board is responsible for the implementation of market risk management policies within the treasury policies and guidelines framework, which are deemed to be appropriate by the Board for the management of market risk.
The interest rates earned on cash and cash equivalents will fluctuate in line with short-term interest rates. 56 Table of Contents MARKET RISK MANAGEMENT POLICY A committee of the Board is responsible for the implementation of market risk management policies within the Company’s treasury policies and guidelines framework, which are deemed to be appropriate by the Board for the management of market risk.
In Fiscal 2022, approximately 35% of the International segment’s goods purchased were transacted in US dollars (Fiscal 2021: 35%). Signet holds a fluctuating amount of British pounds reflecting the cash generating characteristics of the International segment.
In Fiscal 2023, approximately 32% of the International segment’s goods purchased were transacted in US dollars (Fiscal 2022: 35%). Signet holds a fluctuating amount of British pounds reflecting the cash generating characteristics of the International segment.
Foreign Currency Exchange Rate Risk Approximately 90% of Signet’s total assets were held in entities whose functional currency is the US dollar at January 29, 2022 and generated approximately 91% of its sales in US dollars in Fiscal 2022. All remaining assets and sales are in British pounds and Canadian dollars.
Foreign Currency Exchange Rate Risk Approximately 90% of Signet’s total assets were held in entities whose functional currency is the US dollar at January 28, 2023 and the Company generated approximately 91% of its sales in US dollars in Fiscal 2023. Remaining assets and sales are primarily in British pounds and Canadian dollars.
Fair value gains (losses) arising from: (in millions) Fair Value January 29, 2022 10% depreciation of $ against £ 10% depreciation of $ against C$ 10% depreciation of gold prices Fair Value January 30, 2021 Foreign exchange contracts $ (1.0) $ 7.3 $ 0.9 $ — $ (0.2) Commodity contracts — — — — (0.1) The amounts generated from the sensitivity analysis quantify the impact of market risk assuming that certain adverse market conditions, specified in the table above, occur.
Fair value gains (losses) arising from: (in millions) Fair Value January 28, 2023 10% depreciation of $ against £ Fair Value January 29, 2022 Foreign exchange contracts $ (0.6) $ 0.1 $ (1.0) 57 Table of Contents The amounts generated from the sensitivity analysis quantify the impact of market risk assuming that certain adverse market conditions, specified in the table above, occur.
The estimated changes in the fair value for foreign exchange rates are based on a 10% depreciation of the US dollar against British pound and Canadian dollar from the levels applicable at January 29, 2022 with all other variables remaining constant. 57 Table of Contents
The estimated changes in the fair value for foreign exchange rates are based on a 10% depreciation of the US dollar against British pound from the levels applicable at January 28, 2023 with all other variables remaining constant. There were no foreign exchange contracts outstanding in other foreign currencies as of January 28, 2023. 58 Table of Contents
Added
As of January 28, 2023, a hypothetical 100 basis point increase in interest rates would result in no additional annual interest expense since all of the Company’s variable rate debt has been repaid.

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