The news: Macy’s sales slump continued into Q3 despite positive momentum from its revamped stores and Bloomingdale’s and Bluemercury brands.

• Both net sales and comparable sales fell 2.4% YoY, per its preliminary report.
• Net sales of $4.74 billion beat FactSet’s $4.72 billion consensus.

However, the retailer delayed the release of its full earnings report after discovering that an employee hid between $132 million and $154 million in delivery expenses across nearly three years, triggering an independent investigation.

How we got here: Shoppers shied away from Macy’s namesake stores but were happy to spend on luxury and beauty items from Bluemercury and Bloomingdale’s.

• Macy’s comparable sales fell 3% YoY, due to weakness across its store fleet as well as softer-than-expected sales in its digital channels and cold-weather categories.
• However, in the 50 stores where the retailer invested in staffing, merchandising, and revamped displays, comparable sales rose 1.9% YoY.
• Bloomingdale’s bounced back from its Q2 net sales decline with a 1.4% YoY increase—and 1% growth in comp sales. Apparel, beauty, and digital drove growth.
• Bluemercury delivered its 15th consecutive quarter of comp sales growth—up 3.3% YoY—thanks to resilient demand for premium beauty, particularly skincare.
• Macy’s advertising business also grew during the quarter: Sales rose 13.9% YoY to $41 million, although that was not enough to offset the $22 million (15.5%) YoY decline in credit card revenues.

Our take: Accounting issues aside, Macy’s turnaround plan appears to be working.

• Its revamped stores have delivered comparable sales growth for three consecutive quarters, while its focus on luxury and beauty is helping it stay relevant with wealthier shoppers.
• Department stores are also expected to get a boost from in-person shopping this holiday season—although they face tough competition from big-box stores, off-price retailers, and ecommerce marketplaces as consumers prioritize value.

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