Macy’s says employee hid up to $154 million in expenses, delaying Q3 earnings

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This article was published 25/11/2024 (288 days ago), so information in it may no longer be current.

Macy’s reported stronger-than-expected sales for the third quarter and said it’s delaying the release of its full quarterly results after it discovered an employee intentionally hid up to $154 million of expenses over several years.

The department store chain, which also operates Bloomingdale’s and Bluemercury cosmetics chain in addition to its namesakes stores, was expected to report quarterly results on Tuesday.

The retailer said Monday that it identified an issue related to delivery expenses in one of its accrual accounts earlier this month. An independent investigation and forensic analysis found that a single employee with responsibility for small package delivery expense accounting intentionally made erroneous accounting accrual entries to hide roughly $132 million to $154 million of expenses from the fourth quarter of 2021 through the fiscal quarter ended November 2.

The company recognized about $4.36 billion of delivery expenses during the same time period.

Macy’s said that there’s no indication that the erroneous accounting accrual entries had any impact on its cash management activities or vendor payments.

The company added that the person behind the conduct is no longer an employee and that the investigation didn’t identify involvement by any other worker.

Macy’s said is it delaying reporting its third-quarter earnings results to complete an independent investigation. It anticipates reporting its full third-quarter financial results by Dec. 11.

“At Macy’s Inc., we promote a culture of ethical conduct,” Chairman and CEO Tony Spring said in a statement. “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.”

The company did provide some preliminary results for its third quarter, including that net sales fell 2.4% to $4.74 billion, slightly above the average analyst estimate of $4.72 billion.

Macy’s Inc.’s comparable sales — sales from established physical and online channels — were down 2.4%, excluding licensed businesses like cosmetics. By division, Macy’s comparable sales were down 3%, while Bloomingdale’s comparable sales rose 1%. Bluemercury’s comparable sales rose 3.3%,

Macy’s so-called First 50 stores – which are the ones Macy’s has renovated and put more effort into with extra customer service — produced a comparable sales gain of 1.9% in the latest quarter.

Shares fell 3.3%, or 53 cents, to $15.77 in afternoon trading Monday.

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AP Retail Writer Anne D’Innocenzio in New York contributed to this report.

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This story has been corrected to show that quarterly sales were better than expected, not worse.