Accounts receivable, net

6 Months Ended

Jul. 30, 2016

Receivables [Abstract]

Accounts receivable, net

Accounts receivable, net

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)	July 30, 2016		January 30, 2016		August 1, 2015
Accounts receivable by portfolio segment, net:
Sterling Jewelers customer in-house finance receivables	$	1,615.6	$	1,725.9	$	1,483.1
Zale customer in-house finance receivables	25.0		13.6		—
Other accounts receivable	10.0		16.9		10.1
Total accounts receivable, net	$	1,650.6	$	1,756.4	$	1,493.2

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 allowance for doubtful accounts associated with Zale customer in-house finance receivables was immaterial as of July 30, 2016 and January 30, 2016. The credit function for the Zale division was entirely outsourced during the second quarter of Fiscal 2016 and, as such, no accounts receivable existed as of August 1, 2015.

Other accounts receivable is comprised primarily of accounts receivable relating to the insurance loss replacement business in the UK Jewelry division of $7.6 million (January 30, 2016 and August 1, 2015: $13.6 million and $7.4 million, respectively).

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

	26 weeks ended
(in millions)	July 30, 2016			August 1, 2015
Beginning balance:	$	(130.0	)	$	(113.1	)
Charge-offs, net	89.5			74.6
Recoveries	18.3			18.4
Provision	(107.2		)	(95.9		)
Ending balance	$	(129.4	)	$	(116.0	)
Ending receivable balance evaluated for impairment	1,745.0			1,599.1
Sterling Jewelers customer in-house finance receivables, net	$	1,615.6		$	1,483.1

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

The credit quality indicator and age analysis of Sterling Jewelers customer in-house finance receivables are shown below:

	July 30, 2016					January 30, 2016					August 1, 2015
(in millions)	Gross		Valuation allowance			Gross		Valuation allowance			Gross		Valuation allowance
Performing:
Current, aged 0 – 30 days	$	1,350.7	$	(41.3	)	$	1,473.0	$	(45.4	)	$	1,252.4	$	(38.1	)
Past due, aged 31 – 60 days	264.1		(8.6		)	259.6		(8.3		)	232.3		(7.5		)
Past due, aged 61 – 90 days	53.2		(2.5		)	49.2		(2.2		)	46.1		(2.1		)
Non Performing:
Past due, aged more than 90 days	77.0		(77.0		)	74.1		(74.1		)	68.3		(68.3		)
	$	1,745.0	$	(129.4	)	$	1,855.9	$	(130.0	)	$	1,599.1	$	(116.0	)

	July 30, 2016				January 30, 2016				August 1, 2015
(as a % of the ending receivable balance)	Gross		Valuation allowance		Gross		Valuation allowance		Gross		Valuation allowance
Performing
Current, aged 0 – 30 days	77.4	%	3.1	%	79.4	%	3.1	%	78.3	%	3.0	%
Past due, aged 31 – 60 days	15.1	%	3.3	%	14.0	%	3.2	%	14.5	%	3.2	%
Past due, aged 61 – 90 days	3.1	%	4.7	%	2.6	%	4.5	%	2.9	%	4.6	%
Non Performing
Past due, aged more than 90 days	4.4	%	100.0	%	4.0	%	100.0	%	4.3	%	100.0	%
	100.0	%	7.4	%	100.0	%	7.0	%	100.0	%	7.3	%

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 16 for additional information regarding this asset-backed securitization facility.