Macy’s offers a mixed outlook after reporting third quarter profits and sales declines

recent YORK — Macy’s said Wednesday that it has tightened internal budgetary monetary reporting measures after completing a probe of a rogue employee who hid $151 million in delivery outgoings over a span of nearly three years.

A probe into the coverup forced Macy’s to postpone the release of its packed third-quarter profits update late last month.

The intention of the employee was to cover up the mistake and not to steal the money, Chairman and CEO Tony Spring said on a call following the profits update.

The employee told investigators that an error was initially made in monetary reporting for tiny parcel delivery outgoings, and then the person intentionally made errors to hide the mistake, according to source close to the probe but wanted to remain anonymous because of the private nature of the information.

While the business said Wednesday that former employee’s obfuscation would have no material impact on business finances, it had to revise years of budgetary statements. Additional details of the probe were aired as the business’s third quarter results and mixed outlook sent shares down by as much as 11% Wednesday.

Macy’s reported falling profits and sales with the department store chain wrestling with cautious spending by customers, rising competition and sluggish demand for cold-weather goods. The recent York retailer raised sales expectations for the year Wednesday, but lowered profits projections.

Shares did recover in late-day buying and selling, and were down 2% to $16.33.

Spring said on a call that its internal investigation found that the employee, who acted alone and is no longer with the business, “did not pursue these acts for personal boost. ”

“Integrity is paramount at Macy’s Inc. and we promote a population of ethical conduct,” Spring told industry analysts. “When discovered, we moved quickly to investigate and address the issue.”

The incident occurred during a rough operating surroundings for Macy’s, whose shares have fallen more than 20% over the history year. Activist investor Barington stake distribution throng this week asked Macy’s to develop a real estate subsidiary, reduce spending, and explore strategic options for Bloomingdale’s and Bluemercury chains, among other things.

Barington follows a number of attempts by other large investors that have attempted to revive the storied retailer.

In July, the retailer cut off monthslong purchase talks with two resource firms, saying the bid was inadequate and the capitalization was not sure. Macy’s said Arkhouse Management and Brigade stake distribution Management failed to provide it with additional information by its June deadline, including the highest worth they would be willing to pay. Macy’s named two directors to its board backed by Arkhouse in April, ending the takeover attempt and a push by the resource firms to replace most of its board.

Spring, after taking over in February, announced a schedule to close 150 stores, while upgrading another 350.

At the first 50 stores that Macy’s has upgraded, same store sales rose 1.9%. Macy’s is attempting to discover a formula to reinvigorate sales. In the history year it has tested different tactics in dozens of stores, like more salespeople in fitting room areas and shoe departments. The so-called “First 50” schedule is also implementing more visual displays at the first stores to be overhauled.

It is also expanding its Bluemercury and Bloomingdale’s stores.

Macy’s earned $28 million, or 10 cents per distribute, for the three-month period ended Nov. 2. That compares with $41 million, or 15 cents per distribute in the year-ago period.

Adjusted profits was 4 cents per distribute, beating analysts projections by a penny, according to FactSet.

The business had already posted sales results late last month of $4.74 billion, slightly above the $4.72 billion Wall Street was expecting.

Comparable store sales fell 1.3%, better than the decline of 3.3% during the previous quarter.

Macy’s stores had a 2.2% comparable sales decline while Bloomingdale’s had a 2% boost. Same-store sales at Bluemercury rose 3.3%.

Sales of cold weather items have been challenging because of unseasonably warm weather, the business said. It will be challenging to make up for those losses because the period between Thanksgiving and Christmas is five days shorter than last year, Macy’s said.

The business now expects profits per distribute to be $2.25 per distribute to $2.50 per distribute for the year, down from its previous approximate of $2.34 to $2.69. But it projected sales of $22.3 billion to $22.5 billion for the year, up from its previous projection of $22.1 billion to $22.4 billion.

“We are encouraged by the consistent sales growth in our Macy’s First 50 locations and the powerful act of Bloomingdale’s and Bluemercury,” Spring said. “Quarter-to-date, comparable sales continue to pattern ahead of third quarter levels across the holdings.”