Macy’s revealed on Monday that a former employee, responsible for overseeing accounting for small package deliveries, concealed expenses amounting to between $132 million and $154 million over nearly three years. The department store’s announcement comes as it prepares for its third-quarter earnings report and follows the departure of the individual involved, although specifics regarding their exit have not been disclosed.
This revelation emerges at a challenging juncture for Macy’s, particularly as it gears up for the holiday season—a period synonymous with the store, prominently featured in “Miracle on 34th Street” and the Macy’s Thanksgiving Day Parade. Investors are keen to assess consumer spending patterns during this critical time, especially given the company’s disappointing sales figures over the past decade.
Originally scheduled to release its earnings results before the U.S. stock markets opened on Tuesday, Macy’s has postponed this announcement until December 11 to permit the completion of an independent investigation into the financial irregularities.
The discrepancy came to light while the company was finalizing its financial report for the quarter ending on November 2. Preliminary figures indicate a 2.4% decline in overall net sales year-over-year. The employee is accused of making erroneous accounting entries that misrepresented delivery expenses, which, while significant, pales in comparison to the total $4.36 billion in delivery costs recorded during the same period. Notably, the concealed amounts exceed the company’s $105 million net profit for its fiscal year concluded on February 3.
Macy’s has stated that the investigation has not identified any other employees involved in this matter. CEO Tony Spring emphasized the company’s commitment to ethical conduct and operational integrity, assuring stakeholders that while the investigation proceeds, their workforce remains dedicated to customer service and strategizing for a successful holiday season.
Amid broader changes in the retail environment, Macy’s is pursuing a revitalization strategy, which includes the planned closure of 150 stores nationwide to shift focus toward luxury sales. This initiative will leave 350 Macy’s locations, alongside the successful Bloomingdale’s and Bluemercury brands, which have consistently outperformed expectations.
In summary, while Macy’s faces significant challenges following the financial misconduct discovery, it is taking proactive steps to restore integrity and build a more resilient business model in a rapidly evolving retail landscape. This determination to address issues head-on bodes well for the company’s future potential, especially as it embraces new consumer buying trends.