Signet Jewelers Limited announcing its results for the 13 weeks ended May 4, 2019 (first quarter Fiscal 2020) reported total sales valued at US$ 1.43 billion for the period, marking a decrease of 3.3%, on a reported basis and 2.6% drop on a constant currency basis.

The jeweller’s Same Store Sales (SSS) were down 1.3% as compared to the same period of the previous year.  

However, eCommerce sales for first quarter Fiscal 2020 amounting to US$ 154.3 million, marked a growth of 5.3% year-over-year. “eCommerce sales accounted for 10.8% of sales, up from 9.9% of total sales in the prior year quarter. Brick and mortar same store sales declined 2.0%,” Signet said.

The Company reported GAAP diluted earnings per share (EPS) of US$ (0.35) and non-GAAP diluted EPS of US$ 0.082.

Cash accrued out of operating activities amounted to US$ 105.4 million in the first quarter, an increase of US$ 77.5 million, compared to the same period of the previous year. Signet had a free cash flow of US$ 80.8 million in the first quarter, an increase of US$ 79 million y-o-y.

The Company’s guidance for Fiscal 2020 postulated a drop in same store sales of between 2.5% to 1.5%; and guidance for total sales of between US$ 6.0 billion - US$ 6.06 billion for the period.

For Fiscal 2020 Signet expects a GAAP operating income of between US$ 190 - US$ 225 million and non-GAAP operating income of between US$ 260 - US$ 280 million; and Fiscal 2020 GAAP diluted EPS of between US$ 1.88 - US$ 2.38 and non-GAAP diluted EPS of between US$ 2.88-US$ 3.172.

“We delivered operating profit above our guidance range and strong free cash flow in the first quarter, with same store sales at the low end of our guidance,” said Signet Chief Executive Officer Virginia C. Drosos. “Given the sales trends we experienced year to date and softening retail traffic, we are narrowing our Fiscal 2020 guidance while continuing to expect strong progress on cost savings across our business. We remain focused on executing our Path to Brilliance transformation initiatives to improve the trajectory of our same store sales and drive higher profitability over the long term.”

Referring to benefits which would accrue under its Signet Path to Brilliance programme, the Company said that in Fiscal 2020, it expects net cost savings of between US$ 70 million – US$ 80 million. “The company continues to expect its transformation plan to deliver US$ 200 million - US$ 225 million of net cost savings in Fiscal Years 2019-2021, inclusive of the US$ 85 million achieved in Fiscal 2019,” Signet underlined.

Moreover, in Fiscal 2020, the Company’s preliminary estimate for pre-tax charges related to cost reduction activities ranges from between US$ 55 million - US$ 70 million; of which US$ 46 million - US$ 58 million are expected to be cash charges. The company's estimate for pre-tax charges in Fiscal Years 2019 - 2021 is expected to be between US$ 200 million - US$ 220 million, of which US$ 105 million - US$ 115 million are expected to be cash charges.

Signet said that in Fiscal 2020, it would be shutting down approximately 150 stores; with 44 closures having taken place in the in the first quarter, and limited new store openings for the full year. “By the end of Fiscal 2020, the company expects it will have reduced its store base by 13% over the three-year period from Fiscal Years 2018 – 2020,” Signet said.