New York Investor DayNew York Investor...
Transcript of New York Investor DayNew York Investor...
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New York Investor DayNew York Investor DayTuesday, October 4, 2011
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Mike BarnesMike BarnesMike BarnesMike BarnesSignet CEOSignet CEO
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Forward Looking Forward Looking StatementsStatements
F d L ki St t t Thi t ti t i t t t hi h f d l ki t t t ithi th iForward-Looking Statements - This presentation contains statements which are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, based upon management’s beliefs and expectations as well as on assumptions made by and data currently available to management, appear in a number of places throughout this presentation and include statements regarding, among other things, our results of operation, financial condition, liquidity, prospects, growth, strategies and the industry in which Signet operates. The use of the words “expects,” “intends,” “anticipates,” “estimates ” “predicts ” “believes ” “should ” “potential ” “may ” “forecast ” “objective ” “plan” or “target ” and other similarestimates, predicts, believes, should, potential, may, forecast, objective, plan or target, and other similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties, including but not limited to general economic conditions, the merchandising, pricing and inventory policies followed by the Signet, the reputation of Signet and its brands, the level of competition in the jewelry sector, the cost and availability of diamonds, gold and other precious metals, regulations relating to consumer credit, seasonality of Signet’s business and financial market risks, deterioration in consumers’ financial condition, exchange rate fluctuations, changes in consumer attitudes regarding jewelry, management of social, ethical and environmental risks, inadequacy in and disruptions to internal controls and systems, changes in assumptions used in making accounting estimates relating to such items as extended service plans and pension, and risks relating to our being a Bermuda corporation.
For a discussion of these and other risks and uncertainties which could cause actual results to differ materially, see the “RiskFactors” section of the Signet’s Fiscal 2011 Annual Report on Form 10 K filed with the U S Securities and ExchangeFactors” section of the Signet’s Fiscal 2011 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 30, 2011. Actual results may differ materially from those anticipated in such forward-looking statements. Signet undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances, except as required by law.
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Program Program Evolving specialty retail jewelry modelUK Division Rob AndersonUK Division - Rob AndersonUS Division - Mark Light
d US tiand US executivesQuestionsLunchTravel to storesTravel to storesStore toursR t t M h tt
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Return to Manhattan
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Why Invest in SignetWhy Invest in Signet
Competitive strengths driving profitable market shareshare
Superior operating model & strong balance sheetMajor initiatives & growth opportunities
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Major initiatives & growth opportunities
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Superior InSuperior In--Store ExperienceStore Experiencepp pp
Best-in-class customer serviceAim to recruit best and brightest
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gFocus on training & development
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People & SystemsPeople & Systems
Experienced and well trained team
Innovative systems
“Test before we invest”
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Established Competitive StrengthsEstablished Competitive Strengths
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Power of BrandsPower of Brands
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Creating Powerful Competitive Creating Powerful Competitive StrengthsStrengthsStrengthsStrengths
Brand differentiation Digital marketing Virtual inventory
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yCustomer Assisted Selling System
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Responding to Consumer NeedsResponding to Consumer NeedsGrowing
importance ofimportance of brands
Changing h ishopping
patterns
Digital
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environment
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Management ApproachManagement Approach
Execute to trendExecute to trend
M &Manage expenses & assets
Innovation
Gain profitable share
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Management PrioritiesManagement PrioritiesBuild and maintain a strong
b l h tbalance sheet
Re-invest in business
Support new initiatives
Shareholder returns
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Rob AndersonRob AndersonChi f E ti UK Di i iChi f E ti UK Di i iChief Executive, UK DivisionChief Executive, UK Division
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SummarySummary
Business overviewBusiness overview
UK th t t UK growth strategy differentiated store brands multi-channel initiatives focused execution
Financial performance
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p
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H.SamuelH.SamuelH.SamuelH.Samuel
No.1 jeweler in UK
Targets mid market
11% of Signet’s sales
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Ernest Jones Ernest Jones
No.2 jeweler in UK
Targets upper mid market
9% of Signet’s sales
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UK Retail Market Map UK Retail Market Map (ex independents)(ex independents)(ex. independents)(ex. independents)
£250
GoldsmithsErnest Jones
BeaverbrooksHIGH
Fraser HartH Samuel
Estimated Average Transaction Value
LOW
ArgosWarrenJames
Value
FEW MANYRANGE OF PRODUCTS
F. Hinds
£0
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RANGE OF PRODUCTS
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Contrast Between US & UKContrast Between US & UKMerchandise MixMerchandise Mix 7%
28%8%7%
30%10%
US Division
UKDivision
Diamonds Gold & silver
Division Division23%12%75%
Diamonds Gold & SilverOther jewelry Watches
Diamonds Gold & silverOther jewelry WatchesGifts & other
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UK Growth StrategyUK Growth Strategygygy
Differentiated store brands retail formatsretail formats merchandise marketing marketing
Multi-channel opportunitiesF d tiFocused execution
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Store Brands Positioning Store Brands Positioning Store EnvironmentStore Environment
Updated storeUpdated store designs
Better customer service
Increased focus on brands
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brands
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Store Brands PositioningStore Brands PositioningB d d M h diBranded Merchandise
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Store Brands PositioningStore Brands PositioningDifferentiated & Exclusive BrandsDifferentiated & Exclusive Brands
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Store Brands Positioning Store Brands Positioning Marketing InitiativesMarketing Initiatives
Focus on optimising mix
Partner with third party brands
In-store events
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Multi Channel OpportunityMulti Channel OpportunityCreating synergy
f i tifrom existing infrastructure
Strong base to build frombuild from
ContinuallyContinually upgrading capabilities
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capabilities
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Focus on ExecutionFocus on Execution
Customer service
In-store efficiency
Investment in IT
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UK Performance YTDUK Performance YTDChanges in
Sales Same store sales
Exchange impact
Salessales impact
YTD Fiscal 2012H.Samuel $160.9m 3.0% 7.4% 8.7% Ernest Jones $143.0m -1.6% 7.1% 4.4%UK division $303.9m 0.8% 7.3% 6.7%
Operating income $2.6m down by $0.7 million
Fiscal 2011 included $0.9 million disposal gain$ p g
Operating margin 0.9% down by 30 bpts
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Major Competitive AssetMajor Competitive Assetj pj p
Market leader in UKMarket leader in UK
Largest mid market specialty jeweler inLargest mid market specialty jeweler in Europe
Strategic partner for international mid-k t t h & j l b dmarket watch & jewelry brands
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MARK LIGHTMARK LIGHTPresident & CEO, US DivisionPresident & CEO, US Division
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Growth StrategyGrowth Strategy
Drive store productivityp y bridal category branded merchandise
Space growth potential to increase selling
space Use technology to
enhance sales andenhance sales and execution
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Superior InSuperior In--Store ExperienceStore Experience
Customer serviceCustomer service central to selling bridal jewelry
“Our People Make pthe Difference”
Consistent use of best practice
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“Our People Make The Difference”“Our People Make The Difference”pp
R it d t iRecruit and retain the best
Promote from within
Longevity of staffing
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staffing
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Merchandising & Supply Merchandising & Supply ChainChainChainChain
Merchandising teamg
Virtual inventory and Virtual inventory and personalized jewelry
Supply chain expertise
Branded merchandise
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Branded Bridal SalesBranded Bridal Sales
Leo: recognized as the most successful branded diamond programbranded diamond program
Neil Lane Bridal: rolled out to all stores over last 15 months
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over last 15 months
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Bridal AdvertisingBridal Advertising
Ability to develop brands using national television advertisingadvertising
“P t f Ch i ” “Partner of Choice”
Testing different strategies
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InIn--house Customer Financehouse Customer Financeouse Custo e a ceouse Custo e a ce Tailored to our
customers needsDesigned to support
sale of jewelry not to sell credit
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Branded, Differentiated & Branded, Differentiated & ExclusiveExclusive
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Third Party BrandsThird Party Brands
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Core MerchandiseCore Merchandise
Benefit from store brand equity
Strong value proposition
Quality of execution
Scale advantage
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US Real Estate Driven by Kay US Real Estate Driven by Kay and Jaredand Jaredand Jaredand Jared
Kay mall1
Kay off-mall Jared2
Kay/Jared total
Change in
2Regional b d Total
Change in
space2mall1 mall Jared2 total space2 brands Total space2
Jan 2008 789 105 154 1,048 13% 351 1,399 10%Jan 2009 7953 131 171 1,097 7% 3043 1,401 4%Jan 2010 794 129 178 1,101 2% 260 1,361 (1)%Opened 2 2 2 6 - 6
Closed (16) (3) - (19) (31) (50)Closed (16) (3) - (19) (31) (50)Jan 2011 780 128 180 1,088 0% 229 1,317 (2)%Openings planned 9 11 3 23 - 253 Closures forecast (9) (5) - (14) (21) (35)Jan 2012 forecast 780 134 183 1,097 1% 208 1,305 0%
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1. Includes stores in downtown locations2. A Jared store is equivalent to about four mall stores in size3. Includes two regional stores rebranded as Kay in Fiscal 2010
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Emotionally Connected TechnologyEmotionally Connected Technology
Based on our consumer insights
Personalized jewelry & virtual inventoryy
Sales opportunitySales opportunity
S l d t
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Scale advantage
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Fiscal 2012 YTD US PerformanceFiscal 2012 YTD US PerformanceChanges in
Sales Same store sales
Sales ASP1
sales
YTD Fiscal 2012Kay $802.9m 13.7% 13.5% 11.6%yJared $441.6m 12.2% 12.7% 7.9%Regionals $136.5m 5.3% (3.0)% 13.6%US division $1,381.0m 12.4% 11.3% 12.5%
Operating income, net $221.0m up $77.5 million , +54.0%
Operating margin 16.7% + 470 bpts
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1. Average selling price, excluding charm bracelet category
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Ed HrabakEd HrabakSVP General Merchandising ManagerSVP General Merchandising ManagerSVP, General Merchandising ManagerSVP, General Merchandising Manager
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Growth StrategyGrowth Strategy Bridal category
selection differentiation value
Branded differentiated & exclusive merchandise create branded collections
that lastinnovative designs innovative designs
Virtual inventory &
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Virtual inventory & personalized jewelry
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Bridal SelectionBridal Selection
Comprehensive poffer
Test before we investinvest
Expertise, systems and scale
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Bridal DifferentiationBridal Differentiation
Strategic brand positioningTesting new products and brand
extensions
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Bridal ValueBridal Value
Experience, systems and scaleStrong balance sheet competitive
advantage
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Consistency of quality
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ASP OpportunityASP Opportunity
Uncertified 1ct solitaire $3,199
Certified 1ct solitaire$4,599
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1ct Leo solitaire$6,499
1ct Tolkowsky solitaire$7,999
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Exclusive & Differentiated Exclusive & Differentiated BrandsBrandsBrandsBrands
C t i t d ti tiCreates a unique store destinationPowerful selling proposition for sales associates St f b b d d h di49
Strong performance by branded merchandise
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Open Hearts by Jane SeymourOpen Hearts by Jane Seymour
Original design AngelsWatchesWatchesKeys
B dBeadsButterfly and
Nature collectionColored stones
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Virtual Inventory & Virtual Inventory & Personalized JewelryPersonalized JewelryPersonalized JewelryPersonalized Jewelry
Originally developed for pJared
Extended toExtended to websites
Now beingNow being expanded to Kay
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Personalized JewelryPersonalized Jewelryyy
Exclusive programMillions of different combinations to
choose fromEasy step-by-step instructionsasy step by step st uct o sDynamic pricingReal time view and detailedReal time view and detailed
descriptions of the selected item
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Merchandise Margin Merchandise Margin M tM tManagementManagement
Art & science of pricing
Wide range of price points
Time to carefully plan and execute
Closely monitor outcome
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George MurrayGeorge MurraySVP MarketingSVP MarketingSVP, MarketingSVP, Marketing
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Marketing LeadershipMarketing Leadership
Scale to build brands store concepts merchandise brands
Multiple touch pointstargeted targeted communications
integrated approach
Increased investment i di it l di
55
in digital media
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Leading Market ShareLeading Market Share
High marketing to sales ratio
$161.5 million expenditure in Fiscal 20112011
27 illi 27 million name database
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Bridal MarketBridal Market
Major research jinitiatives
Dominated by specialty sector
Research used in creation of advertising & training
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Kay.comKay.com
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Kay.comy
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Jared.comJared.com
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MobileMobile
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Social MediaSocial Media
Mobile execution
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On-Line Digital Advertising
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On-Line Digital Advertisingg g
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Marketing LeadershipMarketing Leadership
Scale to build brands Store concepts Merchandise brands
Multiple touch pointstargeted targeted communications
integrated approach
Increased investment i di it l di
65
in digital media