Macy’s, the well-known American department store chain, revealed on Monday that a single employee was responsible for significant accounting irregularities, leading to the postponement of its quarterly earnings report. Initially scheduled for release on Tuesday, the report has now been delayed until December 11.
The company announced that the employee in question, whose identity has not been disclosed, concealed as much as $154 million in expenses over nearly three years. This prompted Macy’s to launch an independent forensic accounting investigation. According to the retailer, the employee, who is no longer with the company, intentionally manipulated accounting records to hide small package delivery expenses.
While Macy’s has not disclosed the specific reasons behind the employee’s actions, the company emphasized that the hidden expenses, though substantial, were a small portion of the $4.36 billion in delivery costs that were recorded from the fourth quarter of 2021 to the present period. Despite this, the discrepancies were significant enough to delay the release of its earnings report. However, Macy’s clarified that the issue did not affect the company’s cash flow management or payments to vendors.
At present, the investigation has identified only the single individual involved in the fraudulent activity. No evidence has emerged to suggest that other employees participated in the creation of the erroneous accounting entries.
Macy’s CEO, Tony Spring, expressed the company’s commitment to ethical conduct and transparency. In a statement, he noted, “While we work diligently to complete the investigation and address this issue appropriately, our teams remain focused on delivering excellent service to our customers and executing our strategy for a successful holiday season.”
Despite Macy’s efforts to address the issue, the company’s stock has taken a hit, falling nearly 20% this year. The accounting scandal has raised concerns among investors, with retail analyst Neil Saunders questioning the competence of Macy’s auditors. He pointed out, “Such irregularities cause unease for investors, especially given the retailer’s current performance challenges.”
In its preliminary earnings report, Macy’s revealed a 2.4% decline in quarterly sales, which fell to $4.7 billion. This decrease was attributed to weaker-than-expected performance in its digital channels and categories affected by unseasonably warm weather. Despite this, Macy’s acknowledged that the decline in sales was largely in line with expectations, considering the tough middle-market environment.
Macy’s is in the midst of a restructuring effort, which includes closing hundreds of underperforming stores. Although some locations performed slightly better, overall sales continued to drop.
In contrast, Macy’s higher-end brands, Bloomingdale’s and Bluemercury, saw positive results. Bloomingdale’s sales grew by 1.4%, while Bluemercury reported a 3.2% increase in sales.
Despite these challenges, Macy’s remains determined to reshape its future. Earlier this year, the retailer rejected a takeover offer from private investors, opting instead to pursue its own strategy for revitalization.
Following the announcement, Macy’s stock saw a further decline, falling nearly 3% at the market’s open.