What: Macy's reports Q3 net sales decrease of 2.4%, and adjusts guidance while highlighting success in its "First 50" locations, Bloomingdale's, and Bluemercury.

Why it is important: This development reflects both the challenges and progress in Macy's transformation strategy, as the company balances operational oversight with strategic initiatives while facing pressure from activist investors.

Macy's has completed its investigation into USD 151 million in delivery expense accounting errors, determining that a former employee intentionally made erroneous entries between Q4 2021 and Q3 2024. The company reported Q3 net income declined to USD 28 million from $41 million year-over-year, with net sales decreasing 2.4% to USD 4.7 billion. Despite overall declines, bright spots emerged with the "First 50" locations showing 1.9% comparable sales growth, while Bloomingdale's and Bluemercury reported positive comparable sales of 3.2% and 3.3% respectively. The company raised its annual sales guidance to USD 22.3-22.5 billion but lowered earnings expectations to USD 2.25-2.50 per share. These results come as Macy's faces new pressure from activist investors urging consideration of spinning off Bloomingdale's and Bluemercury.

IADS Notes: While the USD 151 million delivery expense error shows no material impact, the company's "Bold New Chapter" strategy continues to show promise, particularly in its "First 50" locations. This comes amid new pressure from activist investors to consider spinning off Bloomingdale's and Bluemercury, highlighting the tension between transformation initiatives and shareholder demands.

Macy’s Q3 net sales decreased by 2.4%, cuts its annual profit forecast