Macy’s Delays Earnings Release Amid Internal Investigation
Uncovering Accounting Irregularities
America’s largest department store, Macy’s, has postponed its Q3 earnings release due to an internal investigation into an employee’s intentional concealment of hundreds of millions of dollars in expenses. The employee, responsible for small package delivery expense accounting, made erroneous accounting accrual entries, hiding between $132 million and $154 million from Q4 2021 to the fiscal quarter ending November 2, 2024. Although the employee is no longer with the company, the incident has sparked a thorough investigation.
Preliminary Results: A Mixed Bag
Despite the setback, Macy’s has released preliminary results, showing same-store sales down 1.3%, slightly better than expected. Net sales of $4.74 billion fell short of the anticipated $4.75 billion. The company has not reported adjusted earnings, which are expected to be a loss of one cent.
CEO Tony Spring’s Assurance
Chairman and CEO Tony Spring emphasized that the company is working diligently to complete the investigation and ensure the matter is handled appropriately. “Our colleagues across the company are focused on serving our customers and executing our strategy for a successful holiday season,” he stated.
Bold New Chapter Strategy
Macy’s is pushing forward with its Bold New Chapter Strategy, which involves investing in more staffing, product assortment, and visual displays across select stores. In the first 50 stores, same-store sales have grown for the third consecutive quarter, up 1.9% year-over-year. The company plans to close 55 stores in 2024 and 150 by 2026, while investing in its remaining locations.
Industry Insights
Analysts believe that paring down the Macy’s store base to a more manageable size is prudent, given structural shifts in the industry. As the company closes underperforming stores and implements upgrades, same-store sales are expected to improve.
Shareholder Value
Macy’s recently decided against a take-private offer, opting to focus on improving its business. CEO Tony Spring expressed confidence in the turnaround strategy, stating that it’s essential to look beyond current market dynamics and build a better experience for consumers.
Market Reaction
Shares of Macy’s have taken a hit, down over 3% in premarket trading to under $16 per share, adding to the 18% drop so far this year.
Leave a Reply