Macy’s has reported mixed preliminary trading numbers after postponing its third-quarter financial results due to accounting errors.
The company said it had identified an issue related to delivery expenses in one of its accrual accounts. An investigation later showed that an employee made erroneous accounting accrual entries to hide approximately up to 154 million of cumulative delivery expenses between late 2021 and November this year.
There is no indication that the incident had any impact on the company’s cash management, but it had to delay earnings release to allow for completion of the investigation.
Preliminary results show the company’s sales decreased 2.4 per cent year-on-year to $4.742 billion, which management said was in line with expectations. Comparable sales were down 2.4 per cent on an owned basis and down 1.3 per cent on an owned-plus-licensed-plus-marketplace basis.
According to GlobalData MD Neil Saunders, the negative numbers are not too bad given the softness in the quarter – especially from apparel which suffered from warmer than average weather.
Bloomingdale’s sales grew 1.4 per cent with comparables up 1 per cent. Saunders said the growth indicated market share gains as it was delivered in a very soft luxury market that has been in overall decline.
Bluemercury also saw a 3.2 per cent uplift in sales and 3.3 per cent increase in comparables, thanks to strong consumer interest in beauty.
At Macy’s, sales were down 3.1 per cent with comparable sales slipping 3 per cent. Its ‘First 50’ stores – which are the ones Macy’s has refurbished and put more effort into – produced a comparable sales gain of 1.9 per cent.
According to the analyst, while the First 50 stores delivered better results than the second quarter, more work needs to be done to bolster overall growth.
“Macy’s deserves credit for the changes it is making… However, the new strategy is akin to turning around an oil tanker. It is not something that can be done quickly, or rushed,” Saunders concluded.
The company will provide an update on its full-year outlook when it reports the full third-quarter financial results.
