Macy’s on Monday posted preliminary third-quarter results and said it would delay its full earnings release as it completes an investigation of an accounting issue.
The company was slated to report its quarterly earnings before the opening bell on Tuesday.
In a statement Monday, Macy’s said its third-quarter sales fell 2.4% to $4.74 billion. Comparable sales for its owned and licensed businesses, plus its online marketplace, dropped 1.3%.
Macy’s did not post earnings figures for the third quarter. The retailer said it expects to release its full results, along with fourth-quarter and full-year guidance, by Dec. 11.
Macy’s said it found “an issue related to delivery expenses in one of its accrual accounts” while preparing its quarterly results. After an independent investigation, the company found that one employee who handled “small package delivery expense accounting” made erroneous entries to hide about $132 million to $154 million in delivery expenses from the fourth quarter of 2021 through this year’s fiscal third quarter. The company said it had about $4.36 billion in delivery expenses during that time.
The retailer added the actions did not affect its cash management and vendor payments, and said the employee no longer works at the company.
“At Macy’s, Inc., we promote a culture of ethical conduct. 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,” CEO Tony Spring said in a statement.
In the news release, Spring touted progress on efforts to close struggling namesake stores and get back to growth. It has been stepping up staffing and merchandising efforts at 50 of its Macy’s stores and plans to open more locations of Bloomingdale’s and Bluemercury, its two stronger-performing brands.
In the three-month period, the company said that comparable sales at the first 50 of its Macy’s stores to get additional investment rose 1.9% year over year. That marked the third consecutive quarter of growth at those stores.
At Bloomingdale’s, comparable sales climbed 3.2% on an owned-plus-licensed basis, including the third-party marketplace. And Bluemercury comparable sales increased 3.3%, marking the 15th consecutive quarter of comparable sales growth for the beauty brand.
That owned-plus-licensed metric includes owned and licensed sales, which encompass merchandise that the retailer owns and items from brands that pay for space within its stores, along with the company’s third-party online marketplace.
Macy’s announced in February that the company would close about 150 – or nearly a third – of its namesake stores and invest in the roughly 350 locations that remain. It plans to shutter the locations by early 2027. It has been selling some of those mall anchor stores, but has not disclosed which ones.
In the release Monday, Macy’s said asset sale gains totaled $66 million and were higher than its expectations.
At the Macy’s stores that will remain open, comparable sales were down 0.9% on an owned-plus-licensed basis, including the third-party marketplace.
Spring said comparable sales in November at all three brands are “trending ahead of third quarter levels.”
Macy’s credit card revenue dropped $22 million, or 15.5%, year over year to $120 million for the quarter. That was offset, in part, by growth of Macy’s Media Network, the company’s advertising business. Revenue rose by $5 million, or 13.9%, year over year, to $41 million in the quarter.
Macy’s shares fell 1.2% in premarket trading Monday.
As of Friday’s close, Macy’s shares have dropped about 19% so far this year. That trails behind the 25% gains of the S&P 500 during the same period. Macy’s stock closed Friday at $16.30, bringing its market value to $4.52 billion.