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Macy’s has slashed its annual profit outlook as sales fell in the lead-up to the key holiday shopping season, sending shares in the US department store chain sliding.
The group also confirmed on Wednesday that a lone employee “falsified underlying documentation” to hide more than $150mn in delivery expenses, as it concluded an investigation into an accounting lapse revealed last month.
Wednesday’s profit warning highlights how the group has faltered under rising competition from big-box stores such as Walmart and as ecommerce groups snag business from shopping centre-based department stores.
Macy’s said on Wednesday that it expected fiscal 2024 adjusted earnings per share of $2.25 to $2.50, down from guidance in August of $2.34 to $2.69 as the New York-based group trimmed its forecast for gross margin, a measure of mark-up. It added that the full-year outlook included a $79mn “impact” related to delivery expenses in the accounting lapse.
The group also said that its net sales fell 2.4 per cent in the quarter to November 2 to $4.7bn.
Macy’s shares fell more than 10 per cent in New York trading.
Chief executive Tony Spring also told analysts on Wednesday that the employee involved in the accounting lapse, who has left the company, did not act for personal gain. Adrian Mitchell, chief financial officer, added: “This was not theft.”
Spring said in a statement: “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.”
The accounting error has raised questions about controls at the retail chain, whose brands are Bloomingdale’s, Bluemercury and its namesake Macy’s. Auditor KPMG said approval of internal controls in Macy’s latest annual report was no longer valid, according to a filing on Wednesday.
Two members of Macy’s audit committee, William Lenehan and Ashley Buchanan, have resigned since October. Macy’s has said neither departed over any disagreements with the company.
Macy’s latest earnings announcement comes days after activist investor Barington Capital Group called on the company to hive off real estate properties including its Manhattan flagship store.
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