Macy’s Sales Disappoint, Accounting Issue Uncovered
Third Quarter Preliminary Results Fall Short
Macy’s, the iconic department store chain, has reported weaker-than-expected preliminary sales for the fiscal third quarter, citing an accounting-related issue that has delayed the release of its quarterly earnings results. The company, which also operates Bloomingdale’s and Bluemercury cosmetics chain, was initially scheduled to report quarterly results on Tuesday.
Accounting Irregularities Uncovered
An investigation revealed that a single employee, responsible for small package delivery expense accounting, intentionally made erroneous accounting accrual entries to conceal approximately $132 million to $154 million of expenses from the fourth quarter of 2021 through the fiscal quarter ended November 2. The company recognized about $4.36 billion of delivery expenses during the same period.
No Impact on Cash Management or Vendor Payments
Macy’s assured that the erroneous accounting accrual entries had no effect on its cash management activities or vendor payments. The individual responsible for the misconduct is no longer an employee, and the investigation did not find any involvement by other workers.
Independent Investigation Underway
The company is delaying the reporting of its third-quarter earnings results to complete an independent investigation. Macy’s anticipates releasing its full third-quarter financial results by December 11.
A Commitment to Ethical Conduct
Chairman and CEO Tony Spring emphasized the company’s commitment to ethical conduct, stating, “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.”
Preliminary Results: Net Sales and Comparable Sales Down
Macy’s provided preliminary results for its third quarter, including net sales of $4.74 billion, a 2.4% decrease, and comparable sales down 2.4%, excluding licensed businesses like cosmetics. By division, Macy’s comparable sales fell 3%, while Bloomingdale’s comparable sales rose 1%, and Bluemercury’s comparable sales increased 3.3%.
Stock Performance
Macy’s stock remained relatively unchanged in premarket trading after initially falling more than 3% earlier in the morning on Monday.
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