Macy’s was forced to delay reporting its third-quarter earnings after an employee hid up to $154 million in expenses related to delivering small packages.
The retailer, which also owns Bloomingdale’s and Bluemercury, on Monday said it discovered the accounting issue on one of its accrual accounts while preparing its quarterly financial statements.
Macy’s has launched an independent investigation, including forensic analysis, into the discrepancy and identified that a single accounting unit employee overseeing small package delivery expenses intentionally hid between $132 million and $154 million worth of delivery expenses. The erroneous entries ran from the fourth quarter of 2021 through the most recent period, according to the company.
The employee in question no longer works for Macy’s, the retailer said. The company’s investigation did not identify any other individuals who participated in the scheme. It added that the accounting errors did not affect its cash management or payments to vendors.
At Macy’s, Inc., we promote a culture of ethical conduct. While we work diligently to complete the investigation as soon as practicable and ensure this matter is handled appropriately, our colleagues across the company are focused on serving our customers and executing our strategy for a successful holiday season,” Macy’s CEO Tony Spring said in a statement on Monday.
The duration of the accounting errors raised alarm bells with analysts.
“The delay in Macy’s full third-quarter results is not a good look. While Macy’s cannot control the actions of every employee, it is worrying that these are intentional accounting errors that go back to 2021,” GlobalData managing director Neil Saunders said in an email. “It also raises the question as to the competence of the company’s auditors. Such things create more nervousness for investors who are already concerned about the company’s performance.”
Macy’s reported preliminary third-quarter results Monday, with net sales decreasing 2.4% to $4.7 billion. Macy’s comparable sales were down 2.4% in company-owned stores, excluding cosmetics. Bloomingdale’s comparable sales rose 1%, while Bluemercury’s comparable sales rose 3.3%.
It expects to report full third-quarter financial results by Dec. 11. Macy’s shares fell 51 cents, or 3%, to $15.79 in morning trade.
Macy’s in February said it planned to close 150 stores and lay off more than 2,000 workers amid a pullback in consumer spending. The retailer this summer ended acquisition talks with two investment firms that had jointly bid $6.9 billion to buy Macy’s.
