Macy’s delays earnings release amid false multimillion-dollar accounting issue
Macy’s Inc. reported preliminary third-quarter sales but delayed its earnings release as it awaits the results of an investigation into an accounting issue.
The department store giant said that, while preparing its unaudited condensed consolidated financial statements for third quarter, it identified an issue related to delivery expenses in one of its accrual accounts.
“As a result of the independent investigation and forensic analysis, the company identified that a single employee with responsibility for small package delivery expense accounting intentionally made erroneous accounting accrual entries to hide approximately $132 to $154 million of cumulative delivery expenses from the fourth quarter of 2021 through fiscal quarter ended Nov. 2, 2024,” Macy’ stated, adding that it had about $4.36 billion in delivery expenses during that time.
The retailer noted that the person who engaged in this conduct is no longer employed by the company, and that the the actions did not affect its cash management and vendor payments. Macy’s said it expects to provide its fourth quarter and full year outlooks by Dec. 11, 2024.
“At Macy’s, Inc., we promote a culture of ethical conduct,” Spring stated. "While we work diligently to complete the investigation as soon as practicable and ensure this matter is handled appropriately, our colleagues across the company are focused on serving our customers and executing our strategy for a successful holiday season.”
Third-quarter sales
Macy’s Inc. sales decreased 2.4% to $4.742 billion for the quarter ended Nov. 2, with comparable sales down 2.4% on an owned basis and down 1.3% on an owned-plus-licensed-plus-marketplace basis.
At the company’s namesake banner, net sales were down 3.1%, with comparable sales down 3.0% on an owned basis and down 2.2% on an owned-plus-licensed-plus-marketplace basis.
In February, as part of its “Bold New Chapter” strategy, Macy’s announced it would close about 150 of its unproductive namesake stores and prioritize investment in approximately 350 “go-forward” nameplate locations. In reporting its preliminary third-quarter sales, the retailer said that comparable sales at the first 50 (“First 50”) of its Macy’s stores to get the additional investment rose 1.9% year-over-year on both an owned basis and on an owned-plus-licensed basis amid investments in staffing, merchandising, visual presentation and eventing.
“We delivered third-quarter sales in line with expectations as we continued to make traction on our Bold New Chapter strategy initiatives,” Spring said. “At the same time, our luxury brands, Bloomingdale's and Bluemercury, reported positive comparable sales. Importantly, November comparable sales are trending ahead of third quarter levels across nameplates.”
Bloomingdale’s net sales were up 1.4%, with comparable sales up 1.0% on an owned basis and up 3.2% on an owned-plus-licensed-plus-marketplace basis. Key drivers included strength in contemporary apparel, beauty and digital.
Bluemercury net sales were up 3.2% and comparable sales were up 3.3% on an owned basis, representing the fifteenth consecutive quarter of comparable sales growth.
Macy’s credit card revenue fell $22 million, or 15.5%, year-over-year to $120 million for the quarter. At Macy’s Media Network, revenue rose by $5 million, or 13.9% to $41 million in the quarter.
