The iconic retail chain also recently concluded an accounting irregularity investigation
Embattled retail stock Macy’s (NYSE:M) slumped 10% to 11% early Wednesday as traders mulled the company’s year-over-year sales and profit declines.
For the third quarter of 2024, Macy’s generated net sales of $4.7 billion, down 2.4% compared to the year-earlier quarter. The company’s comparable-store sales on an owned basis also declined 2.4%.
It wasn’t all negative news as Macy’s-owned Bloomingdale’s net sales increased 1.4%. On the other hand, Macy’s credit card revenue fell 15.5%, and the retailer’s Media Network revenue slid 13.9%.
Turning to the bottom line, Macy’s disclosed adjusted (non-GAAP) diluted earnings per share (EPS) of $0.04. This represents a substantial drop-off from the company’s EPS of $0.21 in 2023’s third quarter. The EPS decline likely contributed to Wednesday’s sharp sell-off in M stock.
Also, traders were probably dismayed by Macy’s downward-revised full-year 2024 adjusted EPS guidance. In particular, the company lowered its guidance range from $2.55-$2.90 previously to $2.25-$2.50 currently.
Analysis: Macy’s wraps up accounting irregularity investigation
Macy’s quarterly financial report also revealed that it completed its internal investigation into an accounting irregularity.
According to the company, Macy’s expense investigation determined a “single employee” was solely responsible for “intentionally” making “erroneous accounting accrual entries to hide approximately $151 million of cumulative delivery expenses from the fourth quarter of 2021 through the third quarter of 2024”.
Fortunately, Macy’s probe concluded that “this matter had no impact on the company’s reported net cash flows, inventories or vendor payments”. In other words, Macy’s management seems to be suggesting that the investigation is wrapped up and the scandal can be put to rest.
Nevertheless, Wednesday’s traders evidently remained downbeat about Macy’s stock and its future prospects, given the firm’s declining total sales and earnings. Even with the accounting scandal possibly resolved, Macy’s still has to quell its shareholders’ financial concerns in the coming quarters.
