Shares of Macy’s (M) declined in pre-market trading after the company announced a delay in its Q3 earnings release due to an accounting issue. The company now expects to report its Q3 results by December 11, instead of the originally scheduled date of November 26. Explaining the delay, the retail giant disclosed that an investigation revealed that a single employee had intentionally made inaccurate accrual entries while managing small package delivery expense accounting.
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Macy’s Employee Concealed Delivery Expenses
These entries were designed to conceal cumulative delivery expenses ranging between $132 million and $154 million during the fourth quarter of 2021 and the Fiscal quarter ending November 2, 2024. During this period, Macy’s reported approximately $4.36 billion in total delivery expenses.
Furthermore, Macy’s stated that after the issue came to light, the employee responsible for the misconduct was no longer employed by the retailer. The company also noted that there is no evidence to suggest these actions impacted its cash management activities or vendor payments.
Macy’s Preliminary Q3 Results
Additionally, the retailer announced preliminary Q3 net sales of $4.74 billion, a decline of 2.4% year-over-year. This figure exceeded consensus estimates of $4.72 billion. Furthermore, comparable sales fell by 2.4% on an owned basis.
Tony Spring, Chairman and CEO of Macy’s, commented, “Our Macy’s First 50 locations achieved their third consecutive quarter of comparable sales growth. At the same time, our luxury brands, Bloomingdale’s and Bluemercury, reported positive comparable sales. Importantly, November comparable sales are trending ahead of third-quarter levels across nameplates.” Nameplates refer to the company’s brand identifiers on products.
Is Macy’s Stock a Buy or Sell?
Analysts remain sidelined about Macy’s stock, with a Hold consensus rating based on one Buy and five Holds. Over the past year, Macy’s has increased by more than 10%, and the average M price target of $17.60 implies an upside potential of around 8% from current levels.
