Macy's(US:M) Forbes·2024-12-12 15:43Core Viewpoint - Macy's has faced significant financial repercussions due to the revelation of over $150 million in concealed delivery costs, leading to a reduction in its annual profit outlook and raising concerns about internal controls [2][3][4]. Financial Impact - The concealed delivery expenses amounted to $151 million, prompting Macy's to lower its fiscal 2024 adjusted earnings per share guidance to a range of $2.25 to $2.50, down from a previous range of $2.34 to $2.69 [3][6]. - The company's net sales for the quarter ending November 2 fell by 2.4% to $4.7 billion, with comparable sales down 3.0% on an owned basis [7]. Operational Changes - Macy's is implementing stronger internal controls and additional changes to prevent future occurrences of such issues, as stated by the company's chairman and CEO [7]. - The company plans to close about 150 unproductive stores and focus on approximately 350 "go-forward" locations as part of its 'Bold New Chapter' strategy [10]. Performance by Segment - Bloomingdale's reported a net sales increase of 1.4%, with comparable sales up 1.0% on an owned basis, driven by strength in contemporary apparel, beauty, and digital sales [8]. - Bluemercury also saw a sales rise of 3.2%, marking its 15th consecutive quarter of comparable sales growth [8]. Governance and Oversight - Following the investigation, two members of Macy's audit committee have stepped down, although it was clarified that their departure was not due to disagreements with the company [9][10]. - Auditor KPMG indicated that the approval of internal controls in Macy's latest annual report was no longer valid [9]. Shareholder Actions - Activist investor Barington Capital Group, in collaboration with Thor Equities, is advocating for changes in Macy's capital allocation strategy, including potential structural actions to enhance shareholder value [11].