Macy’s top line on track, full results on hold pending investigation

New York – Macy’s Inc.’s consolidated sales fell slightly as underperformance at the bulk of Macy’s department stores offset gains in other businesses.

Total company net sales decreased 2.4% to $4.742 billion, with comparable sales down 2.4% on an owned basis and down 1.3% on an owned-plus-licensed-plus-marketplace basis.

Breaking out results by business, the company reported:

• Total Macy’s nameplate net sales were down 3.1%, with comparable sales down 3.0% on an owned basis and down 2.2% on an owned-plus-licensed-plus-marketplace basis. The top performing categories included fragrances, dresses and men’s and women’s active apparel were strong.
• Same-store sales at Macy’s nameplate First 50 stores – where the company is testing new retail strategies – delivered a third consecutive quarter of comparable sales growth, up 1.9%.
• At Macy’s go-forward stores – the Macy’s locations that are not among the 150 slated to close by 2026 – comp declined 2.6% on an owned basis and declined 1.8% on an owned-plus-licensed-plus-marketplace basis.

• Bloomingdale’s net sales were up 1.4%, with comp up 1.0% on an owned basis and up 3.2% on an owned-plus-licensed-plus-marketplace basis. Leading drivers included contemporary apparel, beauty and digital.
• Bluemercury net sales were up 3.2% and comp was up 3.3% on an owned basis, representing the 15th consecutive quarter of comparable sales growth.

• Macy’s Inc. also generated  $66 million from the sale of non-go-forward real estate assets, beating expectations.

“We delivered third quarter sales in line with expectations as we continued to make traction on our Bold New Chapter strategy initiatives,” said Tony Spring, Macy’s Inc. chairman and CEO. “Importantly, November comparable sales are trending ahead of third quarter levels across nameplates.”

Other data points from Q3:

• Merchandise inventories increased 3.9% year-over-year, reflecting improved inventory composition and supply chain efficiencies.
• Macy’s Inc. ended the third quarter with cash and cash equivalents of $315 million and $2.770 billion of available borrowing capacity.
• Total debt of $2.865 billion included $86 million of short-term borrowings under the company’s asset-based credit facility and no material long-term debt maturities until 2027.
• The company voluntarily retired $220 million of debt during the quarter through a previously disclosed tender offer.

Full results temporarily on hold

Macy’s announced this morning that it will postpone the release of full results for the fiscal third quarter until early December due to deliberate accounting errors in expenses.

During the preparation of its unaudited results, the company uncovered an issue related to delivery expenses in one of its accrual accounts. An independent investigation thus far has found that a single employee with responsibility for small package delivery expense accounting intentionally made erroneous accounting accrual entries to hide approximately $132 million to $154 million of total delivery expenses from the fourth quarter of 2021 through fiscal quarter ended Nov. 2, 2024.

During that time period, Macy’s Inc. recognized approximately $4.36 billion in delivery expenses.

“There is no indication that the erroneous accounting accrual entries had any impact on the company’s cash management activities or vendor payments,” the company said. “The individual who engaged in this conduct is no longer employed by the company. The investigation has not identified involvement by any other employee.”

Macy’s Inc. expects to report its full third quarter financial results and provide its outlook for Q4 and the full year Dec. 11.

See also:

• Macy’s CEO talks tariffs, sourcing diversification
• Macy’s home sales tumbled by double digits during 1st half