Macy’s (M) Q3 2024 Earnings

Macy’s The company announced Wednesday that it has concluded an investigation into an employee who intentionally hid approximately $151 million in shipping costs from its books over a period of approximately three years, and has restated its past financial statements for that year.

Chief Executive Tony Spring, who took over in February, said in a statement that Macy’s is “strengthening existing controls to prevent this from happening again and demonstrate our strong commitment to corporate governance.” We are implementing additional changes aimed at this.”

“We are focused on ensuring ethical behavior and integrity are observed throughout our organization,” he said in a company news release.

The department store operator postponed its full quarterly results in late November after discovering accounting problems while preparing them and launching an independent investigation. The company announced Wednesday that the investigation had concluded and found there was no material impact on its financial results for the prior year or quarter.

According to financial filings with the SEC on Wednesday morning, an independent review of Macy’s found that “a single employee responsible for accounting for parcel shipping costs intentionally made incorrect accounting accruals and It was discovered that he had forged certain documents. The investigation found “material weaknesses in internal controls over financial reporting” that allowed the individual to avoid verification of information through “manual journal entries,” the filing said.

According to sources involved in the investigation, the employee told the investigation that there was initially a mistake in recording the cost of small parcel deliveries, and that the mistake was made intentionally to cover up the mistake.

Macy’s announced in late November that the person was no longer with the company, but did not say whether the person had left the company or been fired.

Macy’s stock price fell more than 10% in premarket trading after the company cut its full-year profit outlook. The company lowered its outlook, saying it now expects adjusted earnings per share to be between $2.25 and $2.50, down from its previous estimate of $2.34 to $2.69.

However, although Macy’s slightly raised its full-year sales forecast, it still expects sales to decline year over year. Macy’s said it expects net sales to be between $22.3 billion and $22.5 billion, compared with its previous estimate of a range of $22.1 billion to $22.4 billion. This would be a year-over-year decrease from the $23.09 billion reported in fiscal 2023.

For the full year, Macy’s expects comparable sales, which exclude the impact of store openings and closings, to be about 1% down to about flat compared to the same period last year. This is larger than the previous range of about 2% decline to about 0.5% decline. This metric includes products owned by Macy’s, products from brands that pay for space in their stores, and Macy’s third-party online marketplaces.

Macy’s lowered its full-year forecast in August, and its latest outlook remains below the high end of its outlook at the beginning of the year.

Here’s how retailers reported in their fiscal third quarter compared to Wall Street’s expectations, according to a survey of analysts by LSEG.

• Earnings per share: Adjusted 4 cents. Due to the accounting treatment of the delivery accrual survey, it was not possible to compare it with the estimate.
• Revenue: $4.74 billion vs. $4.78 billion expected

Macy’s net income for the three months ended Nov. 2 fell to $28 million, or 10 cents a share, from $41 million, or 15 cents a share, a year earlier.

Macy’s, which is in the midst of a new turnaround effort, previously disclosed several quarterly metrics. According to the company, sales for the third quarter were $4.74 billion, down 2.4% from the same period last year. The company also reported a similar 1.3% decline in sales across its owned and licensed businesses and online marketplaces.

Macy’s namesake brand remains the company’s weakest link. In the most recent quarter, the segment’s comparable sales decreased 2.2% on an owned and licensed basis, including third-party markets.

However, Macy’s said stores that have stepped up efforts are seeing stronger sales trends. The company plans to close about 150 stores with the same name by early 2027, which would bring the total to about 350 Macy’s stores nationwide. Fifty of the stores that remain open have already increased staffing and investment. In these locations, known as the “first 50,” comparable sales increased by 1.9%.

At Bloomingdale’s, comparable sales, including third-party markets, on an owned and licensed basis increased 3.2%. Bluemercury’s comparable sales also increased 3.3%, marking the 15th consecutive quarter of increased comparable sales for the beauty brand.

In addition to intense scrutiny over its accounting scandal, Macy’s is also feeling the heat from activist investors. On Monday, activist Barrington Capital said it held a stake in the company and wanted action from the retailer, including a possible sale of the luxury brand. This is the fourth time in the past 10 years that a traditional department store has been targeted by activists.

This is breaking news. Please check back for the latest information.