Macy’s (M) on Monday delayed its Q3 earnings release as it said it conducts an internal investigation into an employee hiding hundred of millions of dollars of expenses.
An employee responsible for small package delivery expense accounting, Macy’s said, intentionally made “erroneous accounting accrual entries” that hid hid nearly $132 million to $154 million from the fourth quarter of 2021 through the fiscal quarter that ended November 2, 2024.
Macy’s said the employee was no longer with the company and that there was “no indication that the accounting error had any impact on the cash management activities or vendor payments.”
America’s largest department store was expected to post its Q3 earnings report on Tuesday before the market open, already against a challenging consumer backdrop this holiday season. Same-store sales were down 1.3%, slightly better than expectations, in the preliminary results.
“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,” Chairman and CEO Tony Spring said in the release.
Net sales of $4.74 billion came in slightly below the $4.75 billion expected. The company did not reported adjusted earnings, which Wall Street expects to come in at a loss of one cent.
The company said it plans to provide its fourth quarter and full year outlook by December 11, 2024.
Shares of Macy’s were under pressure to start the week, down over 3% in premarket trading, compounding the 19% drop so far this year.
Here’s what Macy’s shared in its preliminary Q3 results, compared to Bloomberg consensus estimates:
Net sales: $4.74 billion, compared to $4.75 billion
Adjusted EPS: -$0.01, to be determined
Same-store sales: -1.3% versus -1.49%
The earnings developments come as Macy’s implements its Bold New Chapter Strategy. In the first 50 stores, where it is making investments in more staffing, product assortment, alongside visual displays across the store, same-store sales grew for the third straight quarter, up 1.9% year-over-year, higher than the 0.8% in the previous quarter.
“You have different consumers looking for different things,” Chairman and CEO Tony Spring said at Yahoo Finance’s Invest conference earlier this month, consumers are looking for “newness,” boosting its luxury business Bloomingdale’s and Macy’s, while he said other consumers are “looking for great value” both in terms of price and the overall experience.
