Macy's has revised its full-year earnings outlook, following the conclusion of an investigation into an accounting issue that complicated the release of its comprehensive fiscal third-quarter results. The inquiry revealed that a single employee concealed approximately $151 million in cumulative delivery expenses dating from the fourth quarter of 2021 through the third quarter of 2024.
Upon completing its investigation, the company assessed that the misstatement did not materially affect prior or current reporting periods; however, it updated its financial statements to reflect this misstatement in delivery expenses. Specifically, the total misstatement related to delivery expenses for the first half of the current fiscal year reached around $9 million, which has now been adjusted during the third quarter. Additionally, in a separate regulatory announcement made to the Securities and Exchange Commission, Macy's reported a material weakness in internal controls concerning financial reporting particularly related to journal entries for delivery costs and certain other expenses.
To address this, Macy's has initiated changes aimed at enhancing its internal processes, including reevaluating risks associated with employees bypassing controls. CEO Tony Spring expressed commitment to strengthening oversight: "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.
Our focus is on ensuring that ethical conduct and integrity are upheld across the entire organization." As a result of these developments, the company now projects adjusted earnings for fiscal 2024 to fall between $2.25 and $2.50 per share. This is a decrease from earlier expectations, which ranged from $2.34 to $2.69 per share, primarily influenced by the delivery expense adjustments.
Previously, in August, Macy's had indicated an adjusted EPS expectation of $2.55 to $2.90 for the year. Currently, the consensus estimate on FactSet suggests a non-GAAP EPS of $2.73. This revised guidance includes an adjustment of $13 million for delivery expenses in the third quarter of 2024 and an updated projected impact of $66 million for delivery expenses in the fourth quarter of 2024. Following this news, the stock price of Macy's experienced a significant decline of 10% during Wednesday's trading session. Sales forecasts have been adjusted to a range of $22.3 billion to $22.5 billion for the fiscal year, compared to the previous range of $22.1 billion to $22.4 billion.
Analysts surveyed by FactSet were anticipating $22.19 billion. Additionally, the company predicts comparable owned-plus-licensed-plus-marketplace sales to remain flat or dip by 1%, in contrast to previous projections of a decrease of 0.5% to 2%. On November 25, Macy's announced a delay in the release of its full third-quarter earnings due to the accounting investigation.
In the latest report, the company disclosed adjusted EPS of $0.04 for the quarter ending November 2, aligning with expectations from six analysts polled by FactSet, a decline from $0.21 in the prior year. Sales dropped by 2.4%, amounting to $4.74 billion, which also matched expectations from two analysts. On a comparable owned basis, sales decreased by 2.4%.
Analyzing brand performance, Macy's saw its comparable sales decline by 3%, while Bloomingdale's reported a slight increase of 1%. Bluemercury struggled with an increase in comparable sales of 3.3%. "We are encouraged by the consistent sales growth in our Macy's first 50 locations and the strong performance of Bloomingdale's and Bluemercury," Spring stated.
"Quarter-to-date, comparable sales continue to trend ahead of third-quarter levels across the portfolio." In the face of these challenges, Macy's shareholders, Barington Capital and Thor Equities, have urged the company to reconsider its spending on capital expenditures and evaluate potential strategic options for its Bloomingdale's and Bluemercury brands..