Signet Jewelers Limited (SIG) announced the first phase of the strategic outsourcing of its in-house credit program and outlined steps to achieve a fully-outsourced program structure.

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: Signet will sell $1B of its prime-only credit quality accounts receivable to Alliance Data Systems Corporation (ADS) 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. 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 with an initial term of five years.

Signet will form a seven-year partnership with Progressive Leasing, a subsidiary of Aaron's, Inc. (AAN), 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% 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.