Accounts Receivable, Net

12 Months Ended

Jan. 30, 2016

Signet’s accounts receivable primarily consist of US customer in-house financing receivables. The accounts receivable portfolio consists of a population that is of similar characteristics and is evaluated collectively for impairment.



(in millions)	January 30, 2016		January 31, 2015
Accounts receivable by portfolio segment, net:
Sterling Jewelers customer in-house finance receivables	$	1,725.9	$	1,552.9
Zale customer in-house finance receivables	13.6		—
Other accounts receivable	16.9		14.7
Total accounts receivable, net	$	1,756.4	$	1,567.6

Signet grants credit to customers based on a variety of credit quality indicators, including consumer financial information and prior payment experience. On an ongoing basis, management monitors the credit exposure based on past due status and collection experience, as it has found a meaningful correlation between the past due status of customers and the risk of loss.

During the third quarter of Fiscal 2016, Signet implemented a program to provide in-house credit to customers in the Zale division’s US locations (“second look”). The resulting accounts receivable balance and allowance for doubtful accounts was immaterial as of January 30, 2016. The credit function for the Zale division was outsourced during Fiscal 2015 and, as such, no accounts receivable exist as of January 31, 2015.

Other accounts receivable is comprised primarily of gross accounts receivable relating to the insurance loss replacement business in the UK Jewelry division of $14.1 million (Fiscal 2015: $13.7 million), with a corresponding valuation allowance of $0.5 million (Fiscal 2015: $0.5 million).

The allowance for credit losses on Sterling Jewelers customer in-house finance receivables is shown below:



(in millions)	Fiscal 2016			Fiscal 2015			Fiscal 2014
Beginning balance:	$	(113.1	)	$	(97.8	)	$	(87.7	)
Charge-offs	173.6			144.7			128.2
Recoveries	35.3			27.5			26.0
Provision	(225.8		)	(187.5		)	(164.3		)
Ending balance	$	(130.0	)	$	(113.1	)	$	(97.8	)
Ending receivable balance evaluated for impairment	1,855.9			1,666.0			1,453.8
Sterling Jewelers customer in-house finance receivables, net	$	1,725.9		$	1,552.9		$	1,356.0

Net bad debt expense is defined as the provision expense less recoveries.

Credit quality indicator and age analysis of past due Sterling Jewelers customer in-house finance receivables are shown below:



	January 30, 2016					January 31, 2015					February 1, 2014
(in millions)	Gross		Valuation allowance			Gross		Valuation allowance			Gross		Valuation allowance
Performing:
Current, aged 0 – 30 days	$	1,473.0	$	(45.4	)	$	1,332.2	$	(41.1	)	$	1,170.4	$	(36.3	)
Past due, aged 31 – 60 days	259.6		(8.3		)	230.2		(7.5		)	195.7		(6.4		)
Past due, aged 61 – 90 days	49.2		(2.2		)	40.9		(1.8		)	34.2		(1.6		)
Non Performing:
Past due, aged more than 90 days	74.1		(74.1		)	62.7		(62.7		)	53.5		(53.5		)
	$	1,855.9	$	(130.0	)	$	1,666.0	$	(113.1	)	$	1,453.8	$	(97.8	)



	January 30, 2016				January 31, 2015				February 1, 2014
(as a percentage of the ending receivable balance)	Gross		Valuation allowance		Gross		Valuation allowance		Gross		Valuation allowance
Performing:
Current, aged 0 – 30 days	79.4	%	3.1	%	80.0	%	3.1	%	80.5	%	3.1	%
Past due, aged 31 – 60 days	14.0	%	3.2	%	13.8	%	3.3	%	13.5	%	3.3	%
Past due, aged 61 – 90 days	2.6	%	4.5	%	2.4	%	4.4	%	2.3	%	4.7	%
Non Performing:
Past due, aged more than 90 days	4.0	%	100.0	%	3.8	%	100.0	%	3.7	%	100.0	%
	100.0	%	7.0	%	100.0	%	6.8	%	100.0	%	6.7	%

Securitized credit card receivables

The Sterling Jewelers division securitizes its credit card receivables through its Sterling Jewelers Receivables Master Note Trust established on May 15, 2014. See Note 19 for additional information regarding this asset-backed securitization facility.