Macy’s Inc (NYSE: M) no longer expects to report its third-quarter financial results on November 26th.
The department-store chain cited “erroneous accounting accrual entries” as it delayed the earnings release on Monday.
Macy’s did, however, report its preliminary results for the quarter that missed analysts’ forecast, resulting in a more than 3.0% decline in its stock price today.
What does it mean for Macy’s stock?
Macy’s says its independent investigation suggests an employee responsible for small package delivery expense intentionally made inaccurate accounting accrual entries.
They hid as much as $154 million worth of delivery expenses in total between the final quarter of 2021 and the third quarter of 2024.
But the erroneous accounting accrual entries didn’t have “any impact on the company’s cash management activities or vendor payments.”
Macy’s has fired the employee responsible for the accounting issue as well, according to a press release on Monday.
Shares of the department-store chain are now down over 25% versus their high in March.
Macy’s sales missed estimates in Q3
Macy’s now expects to report its third-quarter results and offer future guidance on December 11th.
Its stock price is taking a hit this morning because the preliminary quarterly update it posted today failed to meet analysts’ forecast.
The retail chain reported a 2.4% year-on-year decline in sales to $4.74 billion for Q3.
Analysts, in comparison, had called for $4.77 billion instead.
Comparable sales also slipped 2.4% as Macy’s failed to attract spending-conscious customers with promotions in its recently concluded quarter.
On Monday, Macy’s reiterated its commitment to launching new Bloomingdale’s and Bluemercury locations as well.
Those two chains have done well for the retailer in 2024.
Macy’s stock currently pays a healthy dividend yield of 4.26%, which makes the case for investing in it on the weakness today.
Macy’s is committed to same-store sales growth
Macy’s has been investing in its namesake stores in pursuit of future growth.
The first 50 of those locations that received additional investments were up 1.9% versus last year.
On the other hand, the retailer has been closing its lowest-performing stores in 2024.
“We continue to believe that paring down the store base to a more manageable (and profitable) size is prudent given structural shifts,” as per Dana Telsey of Telsey Advisory Group.
She expects that strategic move to help drive same-store sales growth in the coming quarters.
Despite challenges, analysts at JPMorgan continue to see upside in Macy’s stock to $21.
Their price target indicates potential for a well over 30% gain from here.
Note that the department-store chain rejected a take-private offer from Arkhouse and Brigade Capital in July.
The potential suitors were willing to pay $24.80 for each share of Macy’s at the time.
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