Remember, not so long ago, when department store giant Macy’s (M) noted it had to delay earnings when it discovered a serious accounting scandal in the works? Earlier today, news came in about the probe that Macy’s launched into its own accounting practices, and it managed to trace it all back to, apparently, one guy. This did little to help share prices, though, as Macy’s was down around 4% in Wednesday afternoon’s trading.
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A Wall Street Journal report noted that the investigation found all of Macy’s accounting issues traced back to just one employee who made a mistake and then engaged in a massive cover-up project that led to $151 million in false bookkeeping entries, the report noted. The employee in question “…mistakenly understated the amount of small parcel delivery expenses in late 2021.”
So, in a bid to cover the error, the employee started to make a series of “erroneous accounting entries” with falsified support documents. The move proved little help, as the employee in question no longer works for Macy’s. However, the probe did reveal that said employee did not “…act out of personal or financial gain.” At least, none beyond “keeping your job,” which likely did not help much anyway.
A Growing Real Estate Issue
Meanwhile, activist investors are circling at Macy’s, demanding changes in the way it handles real estate. While Macy’s does have quite a bit of that—being a mall-facing retailer, it tends to—that real estate is not exactly productive the way it used to be. Thus, the coalition effort of Barington Capital Group and Thor Equities recently got together to push for change at Macy’s, according to a CoStar News report.
More specifically, the coalition is looking for change with Bloomingdale’s and Bluemercury, two of Macy’s more upscale operations. The activist coalition wants Macy’s to break off a real estate operation to collect rents from the retail operations, as well as “…pursue other asset sale and redevelopment opportunities.” With e-commerce gaining and physical stores suffering, such a move might be a way to get added value out of the operation.
Is Macy’s Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Hold consensus rating on M stock based on one Buy and seven Holds assigned in the past three months, as indicated by the graphic below. After a 12.49% loss in its share price over the past year, the average M price target of $17.33 per share implies 7.17% upside potential.
