Macy’s delays results after employee hides $150m

America’s largest department store chain has delayed its quarterly results after discovering an employee hid up to $154 million in expenses.
Macy’s disclosed on Monday that an employee had “intentionally made erroneous accounting accrual entries” of delivery expenses from the fourth quarter of 2021 through to the third quarter of 2024.
The employee, who was responsible for small package delivery expense accounting and is no longer working at the company, hid between about $132 million and $154 million over that period.
The company said that an independent investigation showed no involvement by any other employee and there was no sign of the error affecting cash management activities or vendor payments.
Tony Spring, chairman and chief executive officer of Macy’s, said: “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 are focused on serving our customers and executing our strategy for a successful holiday season.”
Macy’s, the owner of Bloomingdale’s, traces its origins to 1858 and a small dry goods shop in New York City and now operates more than 500 stores.
Preliminary third-quarter results released on Monday showed sales fell 2.4 per cent to $4.74 billion compared with analyst expectations of $4.77 billion based on estimates compiled by LSEG. Spring said that comparable sales in November “are trending ahead of third quarter levels across nameplates”.
Last year it reported revenue of $23.1 billion, including in-store and digital sales.
Shares of Macy’s, which was scheduled to report its results on November 26, closed down $0.37, or 2.3 per cent, at $15.93 in New York last night.
Macy’s expects to report its full third-quarter financial results and hold its earnings conference call, in which it will provide its fourth-quarter and annual outlooks, by December 11.
The announcement comes as retailers extend their Black Friday discount deals in an attempt to attract cautious consumers. Macy’s and other retailers such as Amazon, Target and Walmart have already begun offering steep discounts, days before Friday November 29, the day after Thanksgiving which is known as Black Friday.
David Swartz, senior equity analyst for Morningstar, said the expenses incident “would have virtually no impact on the company’s bottom line profit”.
He added: “So from a financial perspective, it’s probably not that significant. It makes the management look bad.”
Macy’s did not disclose the employee’s suspected motivation for accounting inaccuracies. Swartz said: “It sounds kind of strange, because why would somebody at the company do that?..An accountant at the company would have no particular reason one would think to under-report numbers unless their bonus was based on them.”
Macy’s was contacted for comment.