Macy’s announced Monday that it will delay its quarterly earnings report, originally scheduled for Tuesday, due to the discovery of significant accounting irregularities perpetrated by a single employee, CNN reports.
The company revealed that the unnamed former employee intentionally concealed about $154 million in expenses over nearly three years.
The erroneous entries, described as “intentionally made erroneous accounting accrual entries,” masked small package delivery expenses. While representing a small fraction of Macy’s total delivery expenses ($4.36 billion between Q4 2021 and the most recent period), the errors were deemed substantial enough to necessitate a comprehensive independent forensic accounting investigation and a delay in the earnings report, now expected on December 11. Macy’s emphasized that the accounting issues did not affect cash management or vendor payments.
The investigation, so far, implicates only the former employee, with no evidence suggesting broader complicity. The individual is no longer employed by Macy’s.
The accounting scandal comes amidst a challenging year for Macy’s, with its stock price falling nearly 20%. Retail analyst Neil Saunders of GlobalData Retail expressed concern, stating that the incident raises questions about the competence of Macy’s auditors and will likely heighten investor anxieties about the company’s overall performance.
Macy’s released preliminary earnings data, reporting a 2.4% drop in quarterly sales to $4.7 billion, attributed to weakness in digital channels and cold-weather categories during an unusually warm fall. While this decline reflects broader challenges in the middle-market retail sector, Saunders noted it underscores Macy’s ongoing struggles.
The company’s turnaround plan includes significant store closures; however, even the stores slated to remain open experienced sales declines. Bloomingdale’s and Bluemercury, Macy’s higher-end brands, fared comparatively better, with sales increases of 1.4% and 3.2%, respectively.
Macy’s rejected a takeover bid from private investors in July, opting instead to pursue its own restructuring strategy. Following the announcement of the accounting issues, Macy’s stock fell nearly 3% in early trading.
