The discussion and analysis in this Item 2 is intended to provide the reader
with information that will assist in understanding the significant factors
affecting the Company's consolidated operating results, financial condition,
liquidity and capital resources. This discussion should be read in conjunction
with our condensed consolidated financial statements and notes to the condensed
consolidated financial statements included in Item 1. This discussion contains
forward-looking statements and information. The Company's actual results could
materially differ from those discussed in these forward-looking statements.
Factors that could cause or contribute to those differences include, but are not
limited to, those discussed in the "Forward-Looking Statements" below and
elsewhere in this report, as well as in the "Risk Factors" section within
Signet's Fiscal 2021 Annual Report on Form 10-K filed with the SEC on March 19,
2021.
This management's discussion and analysis provides comparisons of material
changes in the condensed consolidated financial statements for the 13 and 26
weeks ended July 31, 2021 and the 13 and 26 weeks ended August 1, 2020.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q 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 document and include statements regarding,
among other things, Signet's 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," "preliminary," "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 which could cause the actual results to not be realized,
including, but not limited to: the negative impacts that the COVID-19 pandemic
has had, and could have in the future, on Signet's business, financial
condition, profitability and cash flows; the effect of steps we take in response
to the pandemic; the severity, duration and potential resurgence of the pandemic
(including through variants), including whether it is necessary to temporarily
reclose our stores, distribution centers and corporate facilities or for our
suppliers and vendors to temporarily reclose their facilities; the pace of
recovery when the pandemic subsides and the heightened impact it has on many of
the risks described herein, including without limitation risks relating to
disruptions in our supply chain, consumer behaviors such as willingness to
congregate in shopping centers and shifts in spending away from the jewelry
category and the impact on demand of our products, our level of indebtedness and
covenant compliance, availability of adequate capital, our ability to execute
our business plans, our lease obligations and relationships with our landlords,
and asset impairments; general economic or market conditions; financial market
risks; our ability to optimize Signet's transformation strategies; a decline in
consumer spending or deterioration in consumer financial position; changes to
regulations relating to customer credit; disruption in the availability of
credit for customers and customer inability to meet credit payment obligations;
our ability to achieve the benefits related to the outsourcing of the credit
portfolio, including due to technology disruptions, future financial results and
operating results and/or disruptions arising from changes to or termination of
the relevant non-prime outsourcing agreement requiring transition to alternative
arrangements through other providers or alternative payment options and our
ability to successfully establish future arrangements for the forward-flow
receivables; deterioration in the performance of individual businesses or of the
Company's market value relative to its book value, resulting in impairments of
long-lived assets or intangible assets or other adverse financial consequences;
the volatility of our stock price; the impact of financial covenants, credit
ratings or interest volatility on our ability to borrow; our ability to maintain
adequate levels of liquidity for our cash needs, including debt obligations,
payment of dividends, planned share repurchases and capital expenditures as well
as the ability of our customers, suppliers and lenders to access sources of
liquidity to provide for their own cash needs; changes in our credit rating;
potential regulatory changes, global economic conditions or other developments
related to the United Kingdom's exit from the European Union; exchange rate
fluctuations; the cost, availability of and demand for diamonds, gold and other
precious metals; stakeholder reactions to disclosure regarding the source and
use of certain minerals; seasonality of Signet's business; the merchandising,
pricing and inventory policies followed by Signet and failure to manage
inventory levels; Signet's relationships with suppliers including the ability to
continue to utilize extended payment terms and the ability to obtain merchandise
that customers wish to purchase; the failure to adequately address the impact of
existing tariffs and/or the imposition of additional duties, tariffs, taxes and
other charges or other barriers to trade or impacts from trade relations; the
level of competition and promotional activity in the jewelry sector; our ability
to optimize Signet's multi-year strategy to gain market share, expand and
improve existing services, innovate and achieve sustainable, long-term growth;
the maintenance and continued innovation of Signet's OmniChannel retailing and
ability to increase digital sales, as well as management of its digital
marketing costs; changes in consumer attitudes regarding jewelry and failure to
anticipate and keep pace with changing fashion trends; changes in the supply and
consumer acceptance of and demand for gem quality lab created diamonds and
adequate identification of the use of substitute products in our jewelry;
ability to execute successful marketing programs and manage social media; the
ability to optimize Signet's real estate footprint; the ability to satisfy the
accounting requirements for "hedge accounting," or the default or insolvency of
a counterparty to a hedging contract; the performance of and ability to recruit,
train, motivate and retain qualified team members; management of social, ethical
and environmental risks; the reputation of Signet and its banners; inadequacy in
and disruptions to internal controls and systems, including related to the
migration to new information technology systems which impact financial
reporting; security breaches
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and other disruptions to Signet's information technology infrastructure and
databases; an adverse development in legal or regulatory proceedings or tax
matters, including any new claims or litigation brought by employees, suppliers,
consumers or shareholders, regulatory initiatives or investigations, and ongoing
compliance with regulations and any consent orders or other legal or regulatory
decisions; failure to comply with labor regulations; collective bargaining
activity; changes in corporate taxation rates, laws, rules or practices in the
US and jurisdictions in which Signet's subsidiaries are incorporated, including
developments related to the tax treatment of companies engaged in Internet
commerce or deductions associated with payments to foreign related parties that
are subject to a low effective tax rate; risks related to international laws and
Signet being a Bermuda corporation; difficulty or delay in executing or
integrating an acquisition, business combination, major business or strategic
initiative; risks relating to the outcome of pending litigation; our ability to
protect our intellectual property or physical assets; changes in assumptions
used in making accounting estimates relating to items such as extended service
plans and pensions; or the impact of weather-related incidents, natural
disasters, strikes, protests, riots or terrorism, acts of war or another public
health crisis or disease outbreak, epidemic or pandemic on Signet's business.
For a discussion of these and other risks and uncertainties which could cause
actual results to differ materially from those expressed in any forward looking
statement, see the "Risk Factors" and "Forward-Looking Statements" sections of
Signet's Fiscal 2021 Annual Report on Form 10-K filed with the SEC on March 19,
2021 and quarterly reports on Form 10-Q and the "Safe Harbor Statements" in
current reports on Form 8-K filed with the SEC. Signet undertakes no obligation
to update or revise any forward-looking statements to reflect subsequent events
or circumstances, except as required by law.
OVERVIEW
Signet Jewelers Limited ("Signet" or the "Company") is the world's largest
retailer of diamond jewelry. Signet is incorporated in Bermuda. The Company,
with 2,837 stores and kiosks as of July 31, 2021, manages its business by
geography, a description of which follows:
•The North America segment has 2,392 locations in the US and 94 locations in
Canada as of July 31, 2021.
•In the US, the segment primarily operates in malls and off-mall locations under
the following banners: Kay (Kay Jewelers and Kay Outlet); Zales (Zales Jewelers
and Zales Outlet); Jared (Jared The Galleria Of Jewelry and Jared Vault);
JamesAllen.com; and Rocksbox. Additionally, in the US, the segment operates
primarily mall-based kiosks under the Piercing Pagoda banner.
•In Canada, the segment primarily operates under the Peoples banner (Peoples
Jewellers).
•The International segment has 351 stores in the UK, Republic of Ireland and
Channel Islands as of July 31, 2021.
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 4 of Item 1 for additional
information regarding the Company's reportable segments.
Impacts of COVID-19
In December 2019, a novel coronavirus ("COVID-19") was identified in Wuhan,
China. During Fiscal 2021, the Company experienced significant disruption to its
business, specifically in its retail store operations through temporary closures
during the first half of last year. By the end of the third quarter of Fiscal
2021, the Company had re-opened substantially all of its stores. However, during
the fourth quarter of Fiscal 2021, both the UK and certain Canadian provinces
re-established mandated temporary closure of non-essential businesses. The UK
stores began to reopen in April 2021 and Canada substantially re-opened all its
stores by July 31, 2021. In addition, to date, the Company's operations have not
been significantly impacted by the resurgence of the COVID-19 variants. The
Company continues to actively monitor and manage the situation related to its
store and support center operations at the local level focusing on the best
interests of its employees, customers, suppliers and shareholders, and
considering all guidelines from state and federal government and health
organizations.
The COVID-19 pandemic significantly altered the retail climate and the Company
has been navigating that change by accelerating its application of the key
strategic initiatives developed over the past three years including the
Company's focus on becoming an OmniChannel leader, focusing on the needs of its
customers, removing non-customer facing costs, and optimizing its real estate
footprint. The Company continues to maintain its cost diligence efforts as it
shifts to its new Inspiring Brilliance strategy, as further described below.
During Fiscal 2021, the Company also took numerous actions to maximize its
financial flexibility, bolster its cash position and reduce operating
expenditures, both strategically and as temporary measures as a result of
COVID-19. Refer to the Liquidity and Capital Resources section below for further
information.
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Outlook
Signet's same store sales grew 97.4% during the second quarter of Fiscal 2022
compared to the same quarter of Fiscal 2021, reflecting a combination of
traction from strategic initiatives as well as tailwinds from stimulus, tax
refunds and consumer enthusiasm on the heels of vaccine rollouts. The Company's
focus on its connected commerce shopping experience, both online and in-store,
helped to drive overall sales performance during the second quarter of Fiscal
2022, with increases in both conversion rates and transaction values. During the
remainder of Fiscal 2022, the Company will continue implementing the initiatives
under its Inspiring Brilliance strategy, which is focused on sustainable,
industry-leading growth. As described in the Purpose and Strategy section within
Item 1 of Annual Report on Form 10-K for the year ended January 30, 2021 filed
with the SEC on March 19, 2021, through its Inspiring Brilliance strategy, the
Company will focus on leveraging its core strengths that it developed over the
past three years with the goal of creating a broader mid-market and increasing
Signet's share of that larger market as the industry leader.
The full extent of the COVID-19 pandemic impacts on the Company's business
during the remainder of Fiscal 2022 or longer term, and whether the strong
results in the first half of Fiscal 2022 will continue, especially toward the
latter part of Fiscal 2022, remains uncertain. The Company continues to expect a
shift of consumer discretionary spending away from the jewelry category toward
experience-oriented categories; however, the magnitude, timing and impact of
this shift is difficult to predict. The Company is planning for increased
marketing expenses to continue to fuel momentum from the first half of Fiscal
2022, as well as in line with its "always-on" marketing strategy to remain agile
to shifts in consumer spending behavior and a more competitive retail
environment compared to historical periods.
In addition, continued uncertainties exist that could impact the Company's
results of operations or cash flows in Fiscal 2022, such as potential resurgence
of COVID-19, including variants thereof, in key trade areas, extended duration
of heightened unemployment, supply chain disruptions and macro or governmental
influences on consumers' ability to spend, specifically as certain government
relief programs cease, such as enhanced unemployment benefits, stimulus and
eviction moratoriums.
NON-GAAP MEASURES
Signet provides certain non-GAAP information in reporting its financial results
to give investors additional data to evaluate its operations. The Company
believes that non-GAAP financial measures, when reviewed in conjunction with
GAAP financial measures, can provide more information to assist investors in
evaluating historical trends and current period performance. For these reasons,
internal management reporting also includes non-GAAP measures. Items may be
excluded from GAAP financial measures when the Company believes this provides
greater clarity to management and investors.
These non-GAAP financial measures should be considered in addition to, and not
superior to or as a substitute for the GAAP financial measures presented in the
Company's consolidated financial statements and other publicly filed reports. In
addition, our non-GAAP financial measures may not be the same as or comparable
to similar non-GAAP measures presented by other companies.
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 considers this
metric to be helpful in understanding the total indebtedness of the Company
after consideration of liquidity available from cash balances on-hand.
(in millions)                  July 31, 2021       January 30, 2021       August 1, 2020
Cash and cash equivalents     $      1,573.8      $         1,172.5      $       1,204.0
Less: Loans and overdrafts              (0.4)                     -                 (4.6)
Less: Long-term debt                  (146.9)                (146.7)            (1,336.1)
Net cash (debt)               $      1,426.5      $         1,025.8      $        (136.7)


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2. Free cash flow and adjusted free cash flow
Free cash flow is a non-GAAP measure defined as the net cash provided by
operating activities less purchases of property, plant and equipment. Management
considers this helpful in understanding how the business is generating cash from
its operating and investing activities that can be used to meet the financing
needs of the business. Adjusted free cash flow, a non-GAAP measure, excludes the
proceeds from the sale of in-house finance receivables. Free cash flow and
adjusted free cash flow are indicators frequently used by management in
evaluating its overall liquidity needs and determining appropriate capital
allocation strategies. Free cash flow and Adjusted free cash flow does not
represent the residual cash flow available for discretionary purposes.
                                                               13 weeks ended                      26 weeks ended
                                                         July 31,          August 1,         July 31,          August 1,
(in millions)                                              2021              2020              2021              2020
Net cash provided by operating activities               $  297.4          $  163.7          $  458.5          $  156.1
Purchase of property, plant and equipment                  (20.9)            (15.9)            (32.2)            (23.6)
Free cash flow                                             276.5             147.8             426.3             132.5

Proceeds from sale of in-house finance receivables (81.3)

      -             (81.3)                -

Adjusted free cash flow (excluding sale of in-house finance receivables)

$  195.2          $ 

147.8 $ 345.0 $ 132.5




3.   Earnings before interest, income taxes, depreciation and amortization
("EBITDA") and Adjusted EBITDA
EBITDA is a non-GAAP measure defined as earnings before interest and income
taxes (operating income), depreciation and amortization. EBITDA is an important
indicator of operating performance as it excludes the effects of financing and
investing activities by eliminating the effects of interest, depreciation and
amortization costs. Adjusted EBITDA, 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, and certain
non-GAAP accounting adjustments. Reviewed in conjunction with net income (loss)
and operating income (loss), management believes that EBITDA and Adjusted EBITDA
help in enhancing investors' ability to evaluate and analyze trends regarding
Signet's business and performance based on its current operations. The revisions
made in Fiscal 2021 and the Company's overall methodology are further described
in Item 7 of the Signet's Fiscal 2021 Annual Report on Form 10-K. All periods
below have been presented consistently with the revised calculation of Adjusted
EBITDA, as defined above.
                                                                13 weeks ended                       26 weeks ended
                                                          July 31,          August 1,         July 31,          August 1,
(in millions)                                               2021              2020              2021               2020
Net income (loss)                                        $  224.6          $  (81.7)         $  363.0          $  (278.8)
Income tax expense (benefit)                                 (3.5)            (17.2)             23.0             (126.7)
Other non-operating income, net                              (0.1)             (0.2)             (0.2)              (0.3)
Interest expense, net                                         4.4               9.4               8.3               16.5
Depreciation and amortization                                41.6              47.5              83.7               84.8
Amortization of unfavorable contracts                        (1.0)             (1.3)             (2.4)              (2.7)
EBITDA                                                   $  266.0          $  (43.5)         $  475.4          $  (307.2)
Share-based compensation                                     17.5               4.9              25.5                6.3
Other accounting adjustments
Restructuring charges - cost of sales                           -              (0.2)                -               (0.6)
Restructuring charges                                        (0.9)             28.9              (1.6)              41.6
Asset impairments, net (1)                                   (0.1)             20.3              (0.3)             156.6
Rocksbox acquisition-related costs                              -                 -               1.1                  -
Gain on sale of in-house finance receivables                 (1.4)                -              (1.4)                 -
Shareholder settlement                                          -              (1.0)                -                7.5
Adjusted EBITDA                                          $  281.1          $    9.4          $  498.7          $   (95.8)

(1) Includes ROU asset impairment gains, net recorded primarily due to gains on terminations or modifications of leases, resulting from previously recorded impairments of the right of use assets in Fiscal 2021.


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4.   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. Management finds the information useful when analyzing
financial results in order to appropriately evaluate the performance of the
business without the impact of significant and unusual items. In particular,
management believes the consideration of measures that exclude such expenses can
assist in the comparison of operational performance in different periods which
may or may not include such expenses.
                                                                 13 weeks ended                       26 weeks ended
                                                           July 31,          August 1,         July 31,          August 1,
(in millions)                                                2021              2020              2021               2020
Operating income (loss)                                   $  225.4          $  (89.7)         $  394.1          $  (389.3)
Gain on sale of in-house finance receivables                  (1.4)                -              (1.4)                 -
Restructuring charges - cost of sales                            -              (0.2)                -               (0.6)
Restructuring charges                                         (0.9)             28.9              (1.6)              41.6
Asset impairments, net (1)                                    (0.1)             20.3              (0.3)             156.6
Rocksbox acquisition-related costs                               -                 -               1.1                  -
Shareholder settlement                                           -              (1.0)                -                7.5
Non-GAAP operating income (loss)                          $  223.0

$ (41.7) $ 391.9 $ (184.2)

(1) Includes ROU asset impairment gains, net recorded primarily due to gains on terminations or modifications of leases, resulting from previously recorded impairments of the right of use assets in Fiscal 2021.


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RESULTS OF OPERATIONS
`The following should be read in conjunction with the financial statements and
related notes in Item 1 of this Quarterly Report on Form 10-Q, as well as the
financial and other information included in Signet's Fiscal 2021 Annual Report
on Form 10-K.
Comparison of Second Quarter Fiscal 2022 to Second Quarter Fiscal 2021
•Same store sales: Up 97.4%.
•Total sales: $1.79 billion, increased 101.4%.
•Operating income (loss): $225.4 million compared to $(89.7) million in the
prior year.
•Diluted earnings (loss) per share: $3.60 compared to $(1.73) in the prior year.

Comparison of Second Quarter Fiscal 2022 Year to Date to Prior Year
•Same store sales: Up 101.7%.
•Total sales: $3.48 billion, increased 99.8%.
•Operating income (loss): $394.1 million compared to $(389.3) million in the
prior year.
•Diluted earnings (loss) per share: $5.84 compared to $(5.69) in the prior year.
                                                                Second Quarter                                                                         Year to Date
                                           Fiscal 2022                                 Fiscal 2021                                Fiscal 2022          

                     Fiscal 2021
(in millions)                        $                % of sales                $                 % of sales                $                % of sales                $                % of sales
Sales                          $  1,788.1                  100.0  %       $     888.0                  100.0  %       $  3,476.9                  100.0  %       $  1,740.1                  100.0  %
Cost of sales                    (1,070.5)                 (59.9)              (663.9)                 (74.8)           (2,080.9)                 (59.8)           (1,312.2)                 (75.4)
Restructuring charges - cost
of sales                                -                      -                  0.2                      -                   -                      -                 0.6                      -
Gross margin                        717.6                   40.1                224.3                   25.3             1,396.0                   40.2               428.5                   24.6
Selling, general and
administrative expenses            (502.6)                 (28.1)              (265.9)                 (29.9)           (1,014.6)                 (29.2)             (624.3)                 (35.9)

Restructuring charges                 0.9                    0.1                (28.9)                  (3.3)                1.6                      -               (41.6)                  (2.4)
Asset impairments, net                0.2                      -                (20.3)                  (2.3)               (1.3)                     -              (156.6)                  (9.0)
Other operating income, net           9.3                    0.5                  1.1                    0.1                12.4                    0.4                 4.7                    0.3
Operating income (loss)             225.4                   12.6                (89.7)                 (10.1)              394.1                   11.3              (389.3)                 (22.4)
Interest expense, net                (4.4)                  (0.2)                (9.4)                  (1.1)               (8.3)                  (0.2)              (16.5)                  (0.9)
Other non-operating income,
net                                   0.1                      -                  0.2                      -                 0.2                      -                 0.3                      -
Income (loss) before income
taxes                               221.1                   12.4                (98.9)                 (11.1)              386.0                   11.1              (405.5)                 (23.3)
Income tax benefit (expense)          3.5                    0.2                 17.2                    1.9               (23.0)                  (0.7)              126.7                    7.3
Net income (loss)              $    224.6                   12.6  %       $     (81.7)                  (9.2) %       $    363.0                   10.4  %       $   (278.8)                 (16.0) %
Dividends on redeemable
convertible preferred shares         (8.6)                       nm              (8.3)                       nm            (17.2)                       nm            (16.5)                       nm
Net income (loss) attributable
to common shareholders         $    216.0                   12.1  %       $     (90.0)                 (10.1) %       $    345.8                    9.9  %       $   (295.3)                 (17.0) %


nm  Not meaningful.
Second quarter sales
Signet's total sales increased 101.4% year over year to $1.79 billion in the 13
weeks ended July 31, 2021. Total sales at constant exchange rates increased
99.4%. Signet's same store sales increased 97.4%, compared to a decrease of
31.3% in the prior year quarter. This growth reflects a combination of traction
from strategic initiatives as well as jewelry market trends being currently
strong, benefiting from stimulus and customer enthusiasm on the heels of the
vaccine rollouts. In addition, sales in all channels were negatively impacted in
the second quarter of Fiscal 2021 by the temporary closures of all stores in
March 2020.
eCommerce sales in the second quarter of Fiscal 2022 were $336.2 million, up
$66.1 million or 24.5%, compared to $270.1 million in the prior year quarter.
eCommerce sales accounted for 18.8% of second quarter sales. Brick and mortar
same store sales increased 130.8% from prior year second quarter.
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The increase in eCommerce sales reflects the enhanced eCommerce capabilities,
digital first focus and Connected Commerce strategies are resonating with
customers. Even as the Company experienced an eCommerce surge in the first half
of Fiscal 2021, the Company is delivering both eCommerce and brick and mortar
growth during Fiscal 2022. The brick and mortar sales increase was driven by a
combination of factors including differentiated product assortments in stores
and the Company's always-on marketing initiatives during Fiscal 2022.
The breakdown of the sales performance by segment is set out in the table below:
                                                                                               Change from previous year
                                                     Same                     Non-same                 Total sales                  Exchange                  Total                    Total
                                                     store                  store sales,           at constant exchange           translation                 sales                    sales
Second Quarter of Fiscal 2022                        sales                       net                       rate                      impact                as reported             (in millions)

North America segment                                      97.6  %                    1.8  %                     99.4  %                   0.6  %                 100.0  %       $      1,645.7

International segment                                      95.1  %                   (1.2) %                     93.9  %                  20.4  %                 114.3  %       $        130.7
Other segment (1)                                               nm                        nm                          nm                       nm                       nm       $         11.7
Signet                                                     97.4  %                    2.0  %                     99.4  %                   2.0  %                 101.4  %       $      1,788.1


(1)   Includes sales from Signet's diamond sourcing initiative.
nm Not meaningful.
Average merchandise transaction value ("ATV") is defined as net merchandise
sales on a same store basis divided by the total number of customer
transactions. As such, changes from the prior year do not recompute within the
table below.
                                                                Average Merchandise Transaction Value(1)(2)                                   

Merchandise Transactions


                                                        Average Value                         Change from previous year                       Change from previous year
Second Quarter                                Fiscal 2022          Fiscal 2021          Fiscal 2022            Fiscal 2021              Fiscal 2022              Fiscal 2021

North America segment                         $     449          $        408                 10.0  %                   2.0  %                  70.1  %                 (28.1) %

International segment (3)                     £     168          £        176                 (4.5) %                  11.4  %                  89.5  %                 (42.8) %


(1)   Net merchandise sales within the North America segment include all
merchandise product sales, net of discounts and returns. In addition, excluded
from net merchandise sales are sales tax in the US, repair, extended service
plan, insurance, employee and other miscellaneous sales.
(2)  Net merchandise sales within the International segment include all
merchandise product sales, including value added tax ("VAT"), net of discounts
and returns. In addition, excluded from net merchandise sales are repairs,
warranty, insurance, employee and other miscellaneous sales. As a result, the
sum of the changes will not agree to change in same store sales.
(3)  Amounts for the International segment are denominated in British pounds.
North America sales
The North America segment's total sales were $1.65 billion compared to $0.82
billion in the prior year, or an increase of 100.0%. Same store sales increased
97.6% compared to a decrease of 30.6% in the prior year. North America's ATV and
number of transactions increased 10.0% and 70.1%, respectively. All US banners
achieved strong second quarter sales, demonstrating that the Company's banner
value propositions, product newness, always-on marketing and connected commerce
experiences are resonating with customers. The increase year over year also
reflects the impact from the temporary closures of all North America stores
beginning March 23, 2020.
eCommerce sales increased 25.8%, while brick and mortar same store sales
increased 130.4%.
International sales
The International segment's total sales increased 114.3% to $130.7 million
compared to $61.0 million in the prior year and increased 93.9% at constant
exchange rates. Same store sales increased 95.1% compared to a decrease of 38.8%
in the prior year. In the International segment, the ATV decreased 4.5% year
over year, while the number of transactions increased 89.5%. The increase
reflects the reopening of all UK stores in April 2021. In the prior year
quarter, all UK stores temporarily closed on March 24, 2020, negatively
impacting second quarter sales in Fiscal 2021.
Year to date sales
Signet's total sales increased 99.8% to $3.48 billion compared to $1.74 billion
in the prior year. Total sales at constant exchange rates increased 97.9%.
Signet's same store sales increased 101.7%, compared to a decrease of 35.2% in
the prior year. This growth reflects a combination of traction from strategic
initiatives, as described above, as well as jewelry market trends being
currently strong, benefiting from stimulus and customer enthusiasm on the heels
of the vaccine rollouts. In addition, sales in all channels were negatively
impacted in the first half of Fiscal 2021 by the temporary closures of all
stores in March 2020.
eCommerce sales year to date were $682.5 million, up $247.7 million or 57.0%,
compared to $434.8 million in the prior year. eCommerce sales accounted for
19.6% of year to date sales, down from 25.0% of total sales in the prior year.
Brick and mortar same store sales increased 118.0% from the prior period.
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The increase in eCommerce sales reflects the accelerated enhancement of
eCommerce capabilities and a digital first focus, related to the Connected
Commerce strategies, that began in Fiscal 2021 and is resonating with customers.
Even as the Company experienced an eCommerce surge in the first half of Fiscal
2021, the Company is delivering both eCommerce and brick and mortar growth. The
brick and mortar sales increase was driven by a combination of factors including
differentiated product assortments in stores and the Company's always-on
marketing initiatives during Fiscal 2022.
The breakdown of the sales performance is set out in the table below:
                                                                                                 Change from previous year
                                                       Same                      Non-same                 Total sales                 Exchange                    Total                    Total
                                                      store                    store sales,           at constant exchange           translation                  sales                    sales
Year to date Fiscal 2022                              sales                        net                        rate                     impact                  as reported             (in millions)

North America segment                                       106.9  %                    (3.9) %                   103.0  %                    0.5  %                  103.5  %       $      3,263.7

International segment                                        42.1  %                    (6.4) %                    35.7  %                   13.7  %                   49.4  %       $        188.1
Other segment (1)                                                 nm                         nm                         nm                        nm                        nm       $         25.1
Signet                                                      101.7  %                    (3.8) %                    97.9  %                    1.9  %                   99.8  %       $      3,476.9

(1) Includes sales from Signet's diamond sourcing initiative. nm Not meaningful. Changes from the prior year do not recompute within the table below.


                                                               Average Merchandise Transaction Value(1)(2)                                     

Merchandise Transactions


                                                      Average Value                          Change from previous year                         Change from previous year
Year to date Fiscal 2022                    Fiscal 2022          Fiscal 2021           Fiscal 2022             Fiscal 2021               Fiscal 2022               Fiscal 2021

North America segment                      $      434          $        384                  12.4  %                   (2.5) %                   79.7  %                  (31.6) %

International segment (3)                  £      167          £        162                   0.6  %                    6.6  %                   36.4  %                  (41.9) %


(1)   Net merchandise sales within the North America segment include all
merchandise product sales, net of discounts and returns. In addition, excluded
from net merchandise sales are sales tax in the US, repair, extended service
plan, insurance, employee and other miscellaneous 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 repairs, warranty, insurance,
employee and other miscellaneous sales. As a result, the sum of the changes will
not agree to change in same store sales.
(3)  Amounts for the International segment are denominated in British pounds.
North America sales
The North America segment's total sales were $3.26 billion compared to $1.60
billion in the prior year, up 103.5%. Same store sales increased 106.9% compared
to a decrease of 35.0% in the prior year. North America's ATV increased 12.4%,
while the number of transactions increased 79.7%. All US banners achieved strong
sales in the 26 weeks ended July 31, 2021, demonstrating that the Company banner
value propositions, product newness, always-on marketing and connected commerce
experiences are resonating with customers. The increase year over year also
reflects the impact from the temporary closures of all North America stores
beginning March 23, 2020.
eCommerce sales increased 58.7%, while brick and mortar same store sales
increased 124.3%.
International sales
The International segment's total sales increased 49.4% to $188.1 million
compared to $125.9 million in the prior year and increased 35.7% at constant
exchange rates. Same store sales increased 42.1% compared to a decrease of 38.1%
in the prior year. The ATV increased 0.6% over prior year, while the number of
transactions increased 36.4%. The increase reflects the reopening of all UK
stores in April 2021. In the prior year, all UK stores temporarily closed on
March 24, 2020 and began reopening in the second quarter of Fiscal 2022.
Gross margin
In the second quarter of Fiscal 2022, gross margin was $717.6 million or 40.1%
of sales compared to $224.3 million or 25.3% of sales in the prior year
comparable period. In the first half of Fiscal 2022, gross margin was $1.4
billion or 40.2% of sales compared to $428.5 million or 24.6% of sales in the
prior year comparable period. The increase in gross margin rate for both the 13
and 26 weeks ended July 31, 2021, compared to prior year, was primarily driven
by sales returning to pre-pandemic levels providing leverage on fixed costs,
such as occupancy, as well as merchandise margin rate expansion through reduced
clearance and favorable merchandise and services mix.
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Selling, general and administrative expenses ("SG&A")
In the second quarter of Fiscal 2022, SG&A was $502.6 million or 28.1% of sales
compared to $265.9 million or 29.9% of sales in prior year quarter. In the first
half of Fiscal 2022, SG&A was $1.0 billion or 29.2% of sales compared to $624.3
million or 35.9% of sales in the prior year comparable period. The increase in
SG&A for the 13 and 26 weeks ended July 31, 2021, compared to prior year, was
primarily due to investments in digital/IT, payroll and advertising as well as
sales returning to pre-pandemic levels which drove higher incentive compensation
and proprietary credit costs. In addition, staffing costs were overall higher in
the current year quarter, as a substantial portion of the Company's workforce
was furloughed beginning in April 2020. This was partially offset by the
benefits of permanent cost savings from the Company's transformation activities,
such as more efficient operating hours and corresponding labor, contributing to
the improvement in the current year SG&A as a percentage of sales.
Restructuring charges
During the first quarter of Fiscal 2019, Signet launched a three-year
comprehensive transformation plan, called "Signet Path to Brilliance" (the
"Plan"), to, among other objectives, reposition the Company to be a share
gaining, OmniChannel jewelry category leader. The Plan was substantially
completed as of the end of Fiscal 2021. Credits to restructuring expense of $0.9
million and $1.6 million, were recognized in the 13 and 26 weeks ended July 31,
2021, respectively, and related to the adjustment of previously recognized Plan
liabilities. Restructuring expenses of $28.9 million and $41.6 million were
recognized in the 13 and 26 weeks ended August 1, 2020, respectively. Charges
primarily related to store closures, severance costs, and professional fees for
legal and consulting services related to the Plan. See Note 5 for additional
information.
Asset impairments, net
The Company recorded net pre-tax asset impairment gain of $0.2 million and a
pre-tax asset impairment charge of $20.3 million during the 13 weeks ended
July 31, 2021 and August 1, 2020, respectively. All amounts relate to long-lived
asset impairments (including the gain on termination of leases).
Asset impairment charges of $1.3 million and $156.6 million were recognized in
the 26 weeks ended July 31, 2021 and August 1, 2020, respectively. For the 26
weeks ended August 1, 2020, the Company recorded charges related to the
impairment of goodwill, intangible assets and long-lived assets of $10.7
million, $83.3 million and $62.6 million, respectively.
See Notes 14 and 16 for additional information on the asset impairments.
Other operating income, net
During the 13 and 26 weeks ended July 31, 2021, other operating income, net, was
$9.3 million and $12.4 million, respectively, primarily driven by interest
income on the Company's non-prime credit card portfolio and UK government
subsidies granted for restrictions imposed on non-essential businesses. For the
26 weeks ended August 1, 2020, other operating income, net was $4.7 million
primarily driven by gains recognized as a result of the Company liquidating
derivative financial instruments primarily related to forecasted commodity
purchases that were deemed no longer effective in light of the economic impacts
of the COVID-19 pandemic. These gains were offset by a charge related to the
proposed settlement of previously disclosed shareholder litigation matters. See
Note 17 and Note 22 for additional information on these matters.
Operating income (loss)
In the second quarter of Fiscal 2022, operating income (loss) was $225.4 million
or 12.6% of sales, compared to $(89.7) million or (10.1)% of sales in the prior
year second quarter. In the first half of Fiscal 2022, operating income (loss)
was $394.1 million or 11.3% of sales compared to $(389.3) million or (22.4)% of
sales in the prior year comparable period. This increase reflects sales
returning to pre-pandemic levels as well as permanent cost savings, driven by
lower fixed occupancy costs, staff related costs and supply chain savings
partially offset by higher incentive compensation and higher advertising costs.
For the 13 weeks ended August 1, 2020, operating income reflects the impact of
the temporary closure of all stores as a result of the COVID-19 pandemic in
March 2020. In addition, results for the 13 weeks ended August 1, 2020 were also
inclusive of impacts of lower sales and asset impairment charges, offset by
lower staff costs and other variable costs.
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Signet's operating income (loss) by segment for the second quarter is as
follows:
                                                              Fiscal 2022                                Fiscal 2021
                                                                        % of segment                               % of segment
(in millions)                                           $                   sales                  $                   sales
North America segment (1)                         $     237.3                  14.4  %       $     (57.0)                 (6.9) %
International segment (2)                                15.5                  11.9  %             (15.6)                (25.6) %
Other segment                                            (0.1)                      nm              (0.2)                      nm
Corporate and unallocated expenses (3)                  (27.3)                      nm             (16.9)                      nm
Operating income (loss)                           $     225.4                  12.6  %       $     (89.7)                (10.1) %

Signet's operating income (loss) by segment for the year to date period is as follows:

                                                              Fiscal 2022                                Fiscal 2021
                                                                        % of segment                               % of segment
(in millions)                                           $                   sales                  $                   sales
North America segment (1)                         $     449.3                  13.8  %       $    (291.2)                (18.2) %
International segment (2)                                (4.2)                 (2.2) %             (54.2)                (43.1) %
Other segment                                            (1.0)                      nm              (0.5)                      nm
Corporate and unallocated expenses (3)                  (50.0)                      nm             (43.4)                      nm
Operating income (loss)                           $     394.1                  11.3  %       $    (389.3)                (22.4) %


(1)  Operating income (loss) during the 13 and 26 weeks ended July 31, 2021
includes: $0.0 million and $1.1 million, respectively, of acquisition-related
expenses in connection with the Rocksbox acquisition; $1.4 million of gains
associated with the sale of customer in-house finance receivables;
$(0.3) million and $(1.0) million, respectively, to restructuring expense,
primarily related to adjustments to previously recognized restructuring
liabilities; and $(0.2) million and $1.3 million, respectively, of net asset
impairments. See Note 1, Note 5, Note 11, and Note 14 for additional
information.
Operating income (loss) during the 13 and 26 weeks ended August 1, 2020
includes: a $0.2 million and $0.6 million benefit, respectively, recognized due
to a change in inventory reserves previously recognized as part of the Company's
restructuring activities; charges of $27.7 million and $36.6 million,
respectively, primarily related to severance, professional fees and store
closure costs recorded in conjunction with the Company's restructuring
activities; and asset impairment charges of $17.5 million and $135.4 million,
respectively. See Note 5, Note 14, and Note 16 for additional information.
(2)  Operating income (loss) during the 13 and 26 weeks ended August 1, 2020
includes: charges of $1.0 million and $4.6 million, respectively, related to
severance and store closure costs recorded in conjunction with the Company's
restructuring activities; and asset impairment charges of $2.8 million and
$21.2 million, respectively. See Note 5, Note 14, and Note 16 for additional
information.
(3)  Operating income (loss) during the 13 and 26 weeks ended July 31, 2021
includes $-0.6 million credit to restructuring expense, primarily related to
adjustments to previously recognized restructuring liabilities. See Note 5 for
additional information.
Operating income (loss) during the 13 and 26 weeks ended August 1, 2020
includes: $(1.0) million and $7.5 million, respectively, related to the
settlement of previously disclosed shareholder litigation matters, inclusive of
expected insurance proceeds; and charges of $0.2 million and $0.4 million,
respectively, primarily related to severance and professional services recorded
in conjunction with the Company's restructuring activities. See Note 5 and Note
22 for additional information.
nm  Not meaningful.

Interest expense, net
In the 13 and 26 weeks ended July 31, 2021, net interest expense was $4.4
million and $8.3 million, respectively, compared to $9.4 million and $16.5
million in the 13 and 26 weeks ended August 1, 2020, respectively. The decrease
in Fiscal 2022 is primarily due to lower average borrowings compared to prior
year.
Income taxes
In the second quarter of Fiscal 2022, income tax benefit was $3.5 million, an
effective tax rate ("ETR") of (1.6)%, compared to the income tax benefit of
$17.2 million, an ETR of 17.4% in the prior year comparable period. The ETR for
the 13 weeks ended July 31, 2021 was lower than the US federal income tax rate
primarily due to the favorable impact of the reversal of the valuation allowance
recorded against certain state deferred tax assets. In the first quarter of
Fiscal 2021, the Company recorded a valuation allowance on certain state
deferred tax assets based primarily on its three-year cumulative loss position.
During the second quarter of Fiscal 2022, the Company evaluated evidence to
consider the reversal of the valuation allowance on its state net deferred tax
assets and determined that there was sufficient positive evidence to conclude
that it is more likely than not its state deferred tax assets are realizable. In
determining the likelihood of future realization of the state deferred tax
assets, the Company considered both positive and negative evidence. As a result,
the Company believed that the weight of the positive evidence, including the
cumulative income position in the three most recent years as of July 31, 2021
and forecasts for a sustained level of future taxable income, was sufficient to
overcome the weight of the negative evidence, and thus recorded a $49.8 million
tax benefit to release the valuation allowance against the Company's state
deferred tax assets in the second quarter of Fiscal 2022. The ETR for the 13
weeks ended August 1, 2020 was
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unfavorably impacted by the anticipated annual mix of pre-tax income by
jurisdiction resulting in the projection of US state and local income tax
expense on income in jurisdictions which are not offset by the consolidated
loss.
In the year to date period of Fiscal 2022, income tax expense was $23.0 million,
an ETR of 6.0%, compared to an income tax benefit of $126.7 million, an ETR of
31.2% in the prior year comparable period. The ETR for the 26 weeks ended
July 31, 2021 was lower than the US federal income tax rate primarily due to the
favorable impact of the reversal of the valuation allowance recorded against
certain state deferred tax assets, as noted above. The year to date ETR in the
prior year comparable period was primarily impacted by the anticipated tax
benefit of $106.5 million relating to the CARES Act offset by the unfavorable
impact of the valuation allowance recorded against certain US and state deferred
tax assets of $56.7 million and the impairment of goodwill which was not
deductible for tax purposes. Refer to Note 10 for additional information.

LIQUIDITY AND CAPITAL RESOURCES
Overview
The Company's primary sources of liquidity are cash on hand, cash provided by
operations and availability under its senior unsecured asset-based revolving
credit facility (the "ABL Revolving Facility"). As of July 31, 2021, the Company
had approximately $1.6 billion of cash and cash equivalents and $148.0
million of outstanding debt, with $1.2 billion of availability under its ABL
Revolving Facility.
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 reduce its adjusted leverage ratio (a non-GAAP
measure as defined in Item 7 of the Signet's Fiscal 2021 Annual Report on
Form 10-K) to below 3.0x.
During the past three years under its Path-to-Brilliance transformation plan,
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. The investments and new
capabilities built during the past three years laid the foundation for stronger
than expected results and momentum beginning in the second half of Fiscal 2021,
including prioritizing digital investments in both technology and talent,
enhancing its new and modernized eCommerce platform and optimizing the
OmniChannel shopping journey for its customers. The Company's cash discipline
has also led to more efficient working capital, through both the extension of
payment days with the Company's vendor base, as well through continued inventory
reduction efforts. In addition, structural cost reductions during the past three
years of the Company's transformation strategy generated annual costs savings of
$300 million which are now embedded in the business.
As the Company transitions to 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 costs savings opportunities, all of which are expected to be used
to fuel strategic investments, grow the business, and enhance liquidity.
During the second quarter of Fiscal 2022, the Company also made significant
progress in line with its Inspiring Brilliance growth strategy through two key
financial milestones. First, the Company renegotiated its $1.5 billion ABL
Facility, as further described in Note 19, 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.
Second, as described in Note 11, the Company entered into amended and restated
receivable purchase agreements with CarVal and Castlelake regarding the purchase
of add-on receivables on such Investors' existing accounts, as well as the
purchase of the Company-owned credit card receivables portfolio for accounts
that had been originated through Fiscal 2021. These agreements provide Signet
with improved terms for the next two years, as well as fully remove consumer
credit risk from the balance sheet. During the second quarter of Fiscal 2022,
Signet received cash proceeds of $57.8 million for the sale of these customer
in-house finance receivables, as well as received $23.5 million from the
Investors for the payment obligation of the remaining 5% of the receivables
previously purchased in June 2018.
The Company has declared the second quarter Fiscal 2022 preferred share dividend
(payable during the third quarter of Fiscal 2022) payable in cash. Signet has
also elected to reinstate the dividend program on the common shares beginning in
the second quarter of Fiscal 2022. In addition, on August 23, 2021, the Board
authorized a reinstatement of repurchases under the 2017 Program, as well as an
increase in the remaining amount of shares authorized for repurchase under the
2017 Program, from $165.6 million to $225 million. The Company anticipates that
repurchases will begin in the third quarter of Fiscal 2022.
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 the Company's share repurchase program.
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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.
Signet derives most of its operating cash flows through the sale of merchandise
and extended service plans. As a retail business, Signet receives cash when it
makes a sale to a customer or when the payment has been processed by Signet or
the relevant bank if the payment is made by third-party credit or debit card. As
further discussed in Note 11, the Company has outsourced its entire credit card
portfolio, and it receives cash from its outsourced financing partners (net of
applicable fees) within two days of the customer sale. Offsetting these
receipts, the Company's largest operating expenses are the purchase of
inventory, store occupancy costs (including rent), and payroll and
payroll-related benefits.
Summary cash flow
The following table provides a summary of Signet's cash flow activity for Fiscal
2022 and Fiscal 2021:
                                                                                     26 weeks ended
(in millions)                                                            July 31, 2021           August 1, 2020
Net cash provided by operating activities                              $        458.5          $         156.1
Net cash used in investing activities                                           (44.7)                   (20.5)
Net cash (used in) provided by financing activities                             (15.9)                   696.3
Increase in cash and cash equivalents                                  $    

397.9 $ 831.9



Cash and cash equivalents at beginning of period                       $      1,172.5          $         374.5
Increase in cash and cash equivalents                                           397.9                    831.9
Effect of exchange rate changes on cash and cash equivalents                      3.4                     (2.4)
Cash and cash equivalents at end of period                             $    

1,573.8 $ 1,204.0




Operating activities
Net cash provided by operating activities was $458.5 million compared to net
cash provided by operating activities of $156.1 million in the prior year
comparable period, primarily due to higher operating income in the current year
versus the prior comparable period, in which the Company experienced closures to
all of its stores beginning at the end of March 2020 and other business
disruptions as a result of the impacts of the COVID-19 pandemic.
•Net income was $363.0 million compared to net loss of $278.8 million in the
prior year period, an increase of $641.8 million.
•Deferred taxes was a use of $33.2 million in the current period, compared to a
source of $115.0 million in the prior year period. Changes in current income
taxes was a use of $3.8 million in the current period compared to a use of
$243.0 million in the prior year. The year over year change was primarily the
result of the net operating loss carryback filed in the first quarter of Fiscal
2021 in accordance with the provisions of the CARES Act. Refer to Note 10 for
more information. The loss carryback was collected in the third quarter of
Fiscal 2021.
•Non-cash impairment charges were $1.3 million compared to $156.6 million in the
prior year period. See Note 14 for additional information regarding asset
impairments.
•During the current period, 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. See Note 11 for further information.
•Cash provided by inventory was $33.9 million compared to $135.3 million in the
prior year period. Inventory decreased more in the prior year primarily due to
store closures and cash management initiatives implemented as a result of
COVID-19.
•Cash used by accounts payable was $95.6 million compared to cash provided of
$65.5 million in the prior year period, as the Company paid down a significant
portion of its fourth quarter merchandise purchases from the Holiday Season. In
the prior
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year period, as a result of cash management initiatives implemented as a result
of the COVID-19, the Company began utilizing extended terms with its vendors.
•Cash provided by other assets and other receivables was $244.0 million in the
prior year period and was driven primarily by the collection of insurance
proceeds related to the shareholder litigation settlement described in Note 22.
Offsetting these cash proceeds was the payment of the settlement amount during
the prior year period, which resulted in cash used by accrued expenses and other
liabilities of $241.1 million.
•Cash used by changes in operating leases was $44.7 million in Fiscal 2022,
compared to cash provided of $64.2 million in the prior year period, driven by
the Company's deferral of rent payments due beginning in April 2020, which were
partially repaid during Fiscal 2022. See Note 15 for further information.
Investing activities
Net cash used in investing activities for the 26 weeks ended July 31, 2021 was
$44.7 million compared to net cash used in investing activities of $20.5 million
in the prior period. Cash used in Fiscal 2022 was primarily related to the
acquisition of Rocksbox Inc. for $14.4 million (net of cash acquired) and
capital expenditures of $32.2 million. Capital expenditures are associated with
new stores, remodels of existing stores, and strategic capital investments in
digital and IT. The Company reduced planned capital expenditures in Fiscal 2021
due to uncertainty around COVID-19; however, it expects to spend between $190
million and $200 million in Fiscal 2022, focusing on technology, banner
differentiation and innovation.
Stores opened and closed in the 26 weeks ended July 31, 2021:
Store count by segment        January 30, 2021       Openings        Closures         July 31, 2021
North America segment (1)                  2,481             27            (22)                 2,486
International segment (1)                    352              -             (1)                   351
Signet                                     2,833             27            (23)                 2,837


(1)  The net change in selling square footage for Fiscal 2022 year to date for
the North America and International segments was (0.4%) and (0.3%),
respectively.
Financing activities
Net cash used in financing activities for the 26 weeks ended July 31, 2021 was
$15.9 million, primarily due to dividends paid of $8.2 million and payment of
debt issuance costs of $3.6 million related to the modification to the ABL
Facility.
Net cash provided by financing activities for the 26 weeks ended August 1, 2020
was $696.3 million, consisted primarily of net borrowings of $733.2 million
partially offset by $27.1 million for dividend payments on common and preferred
shares. See further information on debt movements below.
Movement in cash and indebtedness
Cash and cash equivalents at July 31, 2021 were $1.6 billion compared to $1.2
billion as of August 1, 2020. 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.
As further described in Note 19, on July 28, 2021, the Company entered into an
agreement to amend the ABL Revolving Facility. The amendment extends the
maturity of the ABL Revolving Facility to July 28, 2026 and allows the Company
to increase the size of the ABL Revolving Facility by up to $600 million.
At July 31, 2021, Signet had $148.0 million of outstanding debt, consisting
almost entirely of $147.6 million of Senior Notes.
At August 1, 2020, Signet had $1.3 billion of outstanding debt, consisting of
$147.6 million of Senior Notes, $1.1 billion on the ABL Revolving Facility,
$100.0 million on the FILO Term Loan Facility and $4.6 million of bank
overdrafts. On March 19, 2020, as a prudent measure in response to the COVID-19
pandemic to increase the Company's financial flexibility and bolster its cash
position, the Company elected to access $900 million on the ABL Revolving
Facility. Subsequently in Fiscal 2021, the Company fully repaid the $100 million
FILO Term Loan Facility and the outstanding balance of the ABL Revolving
Facility. Refer to Note 19 for further information regarding the Company's
indebtedness.
The Company had stand-by letters of credit outstanding of $18.8 million as of
July 31, 2021 that reduces borrowing capacity under the ABL Revolving Facility.
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Net cash was $1.4 billion as of July 31, 2021 compared to net debt of $136.7
million as of August 1, 2020. Refer to the non-GAAP measures discussed above for
the definition of net cash (debt) and reconciliation to its most comparable
financial measure presented in accordance with GAAP.
As of July 31, 2021, January 30, 2021 and August 1, 2020, the Company was in
compliance with all debt covenants.
SEASONALITY
Signet's business is seasonal, with the fourth quarter historically accounting
for approximately 35-40% of annual sales as well as accounts for a substantial
portion of the annual operating profit. However, in Fiscal 2022, Signet has
experienced shifts in discretionary spending and consumer behavior that may
cause the fourth quarter to account for a lower percentage of annual sales and
profits. The "Holiday Season" consists of results for the months of November and
December, with December being the highest volume month of the year.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements and reported amounts of revenues and expenses
during the reporting period. On an ongoing basis, management evaluates its
accounting policies, estimates and judgments, including those related to the
valuation of accounts receivables, inventories, deferred revenue, derivatives,
employee benefits, income taxes, contingencies, asset impairments, leases,
indefinite-lived intangible assets, depreciation and amortization of long-lived
assets and accounting for business combinations. Management bases the estimates
and judgments on historical experience and various other factors believed to be
reasonable under the circumstances. Actual results may differ from these
estimates. There have been no material changes to the critical accounting
policies and estimates disclosed in Signet's Annual Report on Form 10-K for the
fiscal year ended January 30, 2021 filed with the SEC on March 19, 2021.
SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
The Company and certain of its subsidiaries, which are listed on Exhibit 22.1 to
this Quarterly Report on Form 10-Q, 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"). The Senior
Notes rank senior to the Preferred Shares (as defined in Note 6) 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 fully and unconditionally guaranteed on a joint and several
basis by the Company, as the parent entity ( the "Parent") of the Issuer, and
certain of its subsidiary guarantors (each, a "Guarantor" and collectively, the
"Guarantors").
The Senior Notes are structurally subordinated to all existing and future debt
and other liabilities, including trade payables, of our subsidiaries that do not
guarantee the Senior Notes (the "Non-Guarantors"). The Non-Guarantors will have
no obligation, contingent or otherwise, to pay amounts due under the Senior
Notes or to make funds available to pay those amounts. Certain Non-Guarantors
may be limited in their ability to remit funds to us by means of dividends,
advances or loans due to required foreign government and/or currency exchange
board approvals or limitations in credit agreements or other debt instruments of
those subsidiaries.
The Guarantors jointly and severally irrevocably and unconditionally guarantee
on a senior unsecured basis the performance and full and punctual payment when
due of all obligations of Issuer, as defined in the Indenture, in accordance
with the Senior Notes and the related Indentures, as supplemented, whether for
payment of principal of or interest on the Senior Notes when due and any and all
costs and expenses incurred by the trustee or any holder of the Senior Notes in
enforcing any rights under the guarantees (collectively, the "Guarantees"). The
Guarantees and Guarantors are subject to release in limited circumstances only
upon the occurrence of certain customary conditions.
Although the Guarantees provide the holders of Senior Notes with a direct
unsecured claim against the assets of the Guarantors, under U.S. federal
bankruptcy law and comparable provisions of U.S. state fraudulent transfer laws,
in certain circumstances a court could cancel a Guarantee and order the return
of any payments made thereunder to the Guarantor or to a fund for the benefit of
its creditors.
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.

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In applying the above factors, a court would likely find that a Guarantor did
not receive fair consideration or reasonably equivalent value for its Guarantee,
except to the extent that it benefited directly or indirectly from the issuance
of the Senior Notes. 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. Generally, an entity would be considered
insolvent if the sum of its debts (including contingent or unliquidated debts)
is greater than all of its assets at a fair valuation or if the present fair
salable value of its assets is less than the amount that will be required to pay
its probable liability on its existing debts, including contingent or
unliquidated debts, as they mature.
If a court canceled a Guarantee, the holders of the Senior Notes would no longer
have a claim against that Guarantor or its assets.
Each Guarantee is limited, by its terms, to an amount not to exceed the maximum
amount that can be guaranteed by the applicable Guarantor without rendering the
Guarantee, as it relates to that Guarantor, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
Each Guarantor is a consolidated subsidiary of Parent at the date of each
balance sheet presented. The following tables present summarized financial
information for Parent, Issuer, and the Guarantors on a combined basis after
elimination of (i) intercompany transactions and balances among Parent, Issuer,
and the Guarantors and (ii) equity in earnings from and investments in any
Non-Guarantor.
                                                     Summarized Balance Sheets
    (in millions)                               July 31, 2021          January 30, 2021
    Total current assets                   $      3,886.9             $         3,799.6
    Total non-current assets                      2,351.4                       2,475.9
    Total current liabilities                     2,232.5                       2,357.1
    Total non-current liabilities                 3,482.1                       3,578.7
    Redeemable preferred stock                      651.3                         642.3
    Total due from Non-Guarantors (1)               355.2                         395.9
    Total due to Non-Guarantors (1)               1,718.8                       1,695.0

(1) Amounts included in asset and liability subtotals above.

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