Macy’s fell short of analyst expectations for adjusted earnings in its third quarter while posting a revenue beat with its updated First 50 stores reporting comparable sales that surpassed those of the rest of the company.
Net income was $28 million, or 10 cents per diluted share, versus $41 million, or 15 cents per diluted share, in the year-before quarter
Adjusted for one-time events, net income was $11 million, or four cents per diluted share, Macy’s reported, versus $57 million, or 21 cents per diluted share, in the year-previous quarter.
A Zacks Investment Research analyst consensus estimate called for adjusted diluted earnings per share of seven cents and revenues of $4.73 billion.
Company comparable sales slipped 2.4% in the period year over year and 1.3% on an owned-plus-licensed-plus-marketplace basis.
In the Macy’s store division, go-forward business, including locations not scheduled for closings, posted comparable sales down 2.0% on an owned basis and down 0.9% on an owned-plus-licensed-plus-marketplace basis, while the overall division’s comps were down 3% on an owned basis and down 2.2% on an owned-plus-licensed-plus-marketplace basis. The company’s remerchandised First 50 locations comps gained 1.9% on both an owned basis and an owned-plus-licensed basis. Bloomingdale’s comps were up 1% on an owned basis and up 3.2% on an owned-plus-licensed-plus-marketplace basis. Bluemercury comp sales were up 3.3%
Total revenue in the third quarter was $4.9 billion while sales were $4.74 billion versus $5.04 billion and net sales were $4.86 billion in the year-earlier period, respectively, the company noted. Operating income was $64 million versus $83 million in the year-prior quarter.
“Our third quarter results reflect the positive momentum we are building through our ‘Bold New Chapter’ strategy,” said Tony Spring, Macy’s chairman and CEO. “We are encouraged by the consistent sales growth in our Macy’s First 50 locations and the strong performance of Bloomingdale’s and Bluemercury. Quarter-to-date, comparable sales continue to trend ahead of third quarter levels across the portfolio. Looking ahead, we remain committed to achieving sustainable, profitable growth for Macy’s, Inc.”
Macy’s release of its third-quarter financials follows news earlier in the week that shareholders Barington Capital Group and Thor Equities announced they are recommending the company make changes to its capital allocation strategy and consider other structural actions to improve shareholder value, including a possible selloff of luxury brands Bloomingdale’s and Bluemercury.
Macy’s added that, as previously disclosed, the company recently identified an issue related to delivery expenses in one of its accrual accounts and initiated an independent investigation that determined that there was no material impact to financial results for any historical annual or interim period. The company identified a single employee with responsibility for small package delivery expense accounting who intentionally made 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.
“We’ve concluded our investigation and are strengthening our existing controls and implementing additional changes designed to prevent this from happening again and demonstrate our strong commitment to corporate governance,” Spring said. “Our focus is on ensuring that ethical conduct and integrity are upheld across the entire organization.”
