Signet Jewelers Announces First Phase of Strategic Outsourcing of Credit Portfolio

(IDEX Online) – Signet Jewelers Limited has started the first phase of a strategic outsourcing of its in-house credit program and outlined steps to achieve a fully-outsourced program structure. The firm aims to use money raised to reduce its debt and return capital in the form of share repurchases.

The first phase, which is designed to substantially maintain the full spectrum of Signet’s retail financing options and net sales, is expected to be fully implemented by October 2017:

Alliance Data Primary Program: Signet will sell $1.0 billion of its prime-only credit quality accounts receivable to Alliance Data Systems Corporation at par value. Additionally, under a seven-year agreement, Alliance Data will become the primary provider of credit funding, servicing and associated program functions to Signet’s Kay, Jared and Regional brands’ customers.

Genesis Secondary Program: Signet will retain the existing non-prime accounts receivable on its balance sheet and continue to originate new accounts, while outsourcing the credit servicing functions of those accounts to Genesis Financial Solutions (“Genesis”) with an initial term of five years.

Progressive Leasing Lease-Purchase Program: Signet will form a seven-year partnership with Progressive Leasing, a subsidiary of Aaron’s, Inc. to provide a lease-purchase payment program to Signet customers who do not qualify for Signet’s credit programs, or do not wish to pursue a credit option to access Signet’s merchandise.

Following the successful implementation of the first phase, which is expected to occur by October 2017, Signet will have completed the sale of approximately 55 percent of its credit portfolio to Alliance Data, and established long-term third party relationships to service its full credit programs.

As part of the second phase, Signet intends to fully outsource its secondary credit programs, including the sale of the remaining receivables on its balance sheet, as well as funding for new non-prime account originations. The Company plans on engaging in discussions with capital providers to finalize the fully-outsourced structure.

Todd Stitzer, Signet’s Chairman, said: “Today’s announcement is a significant milestone on our journey toward becoming the world’s premier jeweler. Our Board is extremely pleased with the progress our management team has made in structuring a strategic, phased outsourcing of our credit program. By rolling out tailored outsourcing solutions for various tiers of our in-house credit program, we believe we will be able to substantially meet the strategic priorities we initially set for Signet: eliminating material credit risk from our balance sheet, maintaining net sales and streamlining our business model, while minimizing the potential impact on our operations and creating value for our shareholders.”

Mark Light, Chief Executive Officer of Signet, said: “We believe today’s announcement regarding the first phase of the strategic outsourcing of our credit portfolio will unlock significant value as it drives EPS accretion and increases our capital efficiency, while enabling us to maintain the full spectrum of our competitive retail credit offering and net sales. Additionally, we will continue to pursue a fully-outsourced model that removes the remaining credit risk from our balance sheet through capital providers.”

Light added: “Further demonstrating our commitment to create shareholder value, we plan to direct the net proceeds from this transaction to reduce our outstanding debt and return capital in the form of share repurchases. We remain focused on enhancing customer experience and driving the growth of our OmniChannel retail platforms.”