Macy’s ( M ) Q3 2024 Earnings

macy’s on Wednesday said it has closed an investigation into an employee who intentionally hid about $151 million in delivery charges on its accounting books for nearly three years and has reviewed those years of its historical financial statements.

In a statement, CEO Tony Spring, who took over in February, said Macy’s is “strengthening our existing controls and implementing additional changes designed to prevent this from happening again and demonstrate our strong commitment to the government corporate”.

“Our focus is to ensure that ethical conduct and integrity are maintained throughout the organization,” he said in the company’s press release.

The department store operator delayed its full quarterly earnings until late November, after discovering the accounting problem while preparing its financial statements for the fiscal quarter and beginning an independent investigation. It said Wednesday that that investigation has concluded and found there was no material impact on financial results for prior years or quarters.

On Wednesday, Macy’s also raised its full-year forecast slightly, though it still expects sales to decline. Macy’s said it expects net sales to be between $22.3 billion and $22.5 billion compared with the range of $22.1 billion to $22.4 billion it previously anticipated. That would be a year-over-year drop from the $23.09 billion it reported for fiscal 2023.

For full-year comparable sales, a metric that strips out the impact of store openings and closings, Macy’s expects a decline of about 1% to nearly flat compared to the year-ago period . This is higher than the previous range of a 2% decrease to a 0.5% decline. This metric includes merchandise that Macy’s owns, items from brands that pay for space in its stores, and Macy’s third-party online marketplace.

Macy’s had cut its full-year forecast in August, and its latest guidance is still below the high end of its outlook. at the beginning of the year.

Here’s what the retailer reported for the fiscal third quarter compared to what Wall Street expected, according to a survey of LSEG analysts:

• Earnings per share: 4 cents adjusted. It was not comparable with the estimates due to the accounting treatment of the delivery accrual investigation.
• Revenue: $4.74 billion vs. $4.78 billion expected

In the three-month period ended Nov. 2, Macy’s net income fell to $28 million, or 10 cents a share, from $41 million, or 15 cents a share, in the quarter last year

Macy’s, which is in the midst of a new turnaround effort, previously disclosed some quarterly metrics. The company said its third-quarter sales totaled $4.74 billion, down 2.4 percent year over year. It also reported a comparable sales decline of 1.3% at its owned and licensed businesses, in addition to its online marketplace.

Macy’s namesake brand remains the weakest part of the company. In the most recent quarter, the segment’s comparable sales fell 2.2% in owned and licensed and including its third-party marketplace.

However, Macy’s said sales trends are stronger in stores where it has stepped up efforts. The company will close about 150 of its namesake stores by early 2027, which will mean it will have about 350 Macy’s locations nationwide. It has already increased staffing and investment in 50 of these stores which will remain open. In those locations, dubbed the “Top 50,” comparable sales grew 1.9%.

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

Along with scrutiny over the accounting incident, Macy’s has felt the heat from activist investors. On Monday, activist Barington Capital revealed that he has a stake in the company and said it wants the retailer to make moves, including a possible sale of its luxury brands. It is the fourth time in the last decade that the legacy department store has been targeted by activists.

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