Macy’s delays full earnings release due to employee probe

Macy’s on Monday said it will delay its full earnings release as it investigates an accounting problem stemming from an employee who the company said knowingly hid up to $154 million in delivery costs.

The department store owner was due to report its quarterly earnings before the opening bell on Tuesday.

In a press release, Macy’s said it is closing an investigation after finding “an issue related to delivery charges in one of its accrual accounts” as it prepares for its third-quarter earnings. The company found through an independent investigation that an employee handling “small package expense accounting” made erroneous entries to hide about $132 million to $154 million in delivery costs from the fourth quarter of 2021 to this year’s fiscal third quarter. The company said it had about $4.36 billion in delivery costs during that time.

Macy’s declined to say how it discovered the accounting errors and whether it is pursuing criminal or civil charges.

In a statement, CEO Tony Spring said Macy’s promotes “a culture of ethical behavior” and remains focused on the busy holiday shopping season, when customers are looking for decor and gifts.

“While we are working diligently to complete the investigation as quickly as possible 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,” he said in a declaration.

The retailer added that the actions did not affect its cash management and supplier payments, and said the employee no longer works for the company.

Macy’s said it expects to release its full results, along with fourth-quarter and full-year guidance, by Dec. 11.

Although it delayed earnings results, Macy’s revealed some quarterly metrics. The company said in the announcement Monday that its third-quarter sales fell 2.4% to $4.74 billion. Comparable sales for its owned and licensed businesses plus its online marketplace fell 1.3%.

In the press release, Spring touted progress in efforts to close struggling namesake stores and return to growth. It has stepped 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 brands.

In the three-month period, the company said comparable sales at the first 50 of its Macy’s stores to make additional investments rose 1.9% year over year. It marked the third consecutive quarter of growth in these stores.

At Bloomingdale’s, comparable sales increased 3.2% on an owned-plus-licensed basis, including the third-party marketplace. And Bluemercury comparable sales rose 3.3%, marking the 15th consecutive quarter of comparable sales growth for the beauty brand.

This owned-plus-licensed metric includes owned and licensed sales, which include merchandise the retailer owns and merchandise from brands that pay for space in 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 close the locations in early 2027. It has sold some of those malls, but has not disclosed which ones.

In the release Monday, Macy’s said sales gains totaled $66 million and were higher than their expectations.

At Macy’s stores that remain open, comparable sales decreased 0.9% on an owned-plus-licensed basis, including the third-party marketplace.

Spring said November comparable sales at all three brands “trend ahead of third-quarter levels.”

Macy’s credit card revenue fell $22 million, or 15.5%, year over year to $120 million for the quarter. That was partially offset by growth in Macy’s Media Network, the company’s advertising business. Revenue increased $5 million, or 13.9%, year over year to $41 million in the quarter.

Macy’s shares were down about 3% in midday trading.

As of Friday’s close, Macy’s shares are down about 19% so far this year. That follows the 25% gains in the S&P 500 over the same period. Macy’s stock closed Friday at $16.30, bringing its market capitalization to $4.52 billion.