Macy’s announced on Monday that an employee responsible for managing the accounting of small package deliveries had concealed between $132 million and $154 million in expenses over nearly three years. The employee is no longer with the company, although Macy’s did not specify when they left. This revelation came just ahead of the department store’s third-quarter earnings report.
The announcement is particularly concerning for Macy’s, a brand closely associated with the holiday season through events like the Macy’s Thanksgiving Day Parade and the classic film “Miracle on 34th Street.” As investors closely monitor consumer trends for the upcoming holidays, the company has faced a recent decline in sales and has struggled in the retail market over the past decade.
Macy’s was scheduled to announce its financial results before the U.S. stock markets opened on Tuesday but has postponed the release until December 11 to allow for an independent investigation into the matter. Preliminary findings indicated that Macy’s net sales decreased by 2.4% year-over-year for the quarter ending November 2.
The company disclosed that the hidden expenses, attributed to erroneous accounting entries made by the former employee, occurred from the fourth quarter of 2021 through the most recent quarter. While the amount is significant, it is relatively small compared to the total $4.36 billion in delivery expenses recorded during that timeframe. Notably, it surpasses the $105 million in net profit Macy’s reported for its fiscal year ending February 3.
Macy’s confirmed that the ongoing investigation has not implicated any other employees. “At Macy’s, Inc., we promote a culture of ethical conduct,” CEO Tony Spring stated, emphasizing the company’s commitment to resolving the matter swiftly while ensuring that employees remain focused on providing exceptional customer service during the crucial holiday season.
The retailer is also working to revitalize its business amid changing shopping habits, especially as more consumers turn to online purchases. Earlier this year, Macy’s announced plans to close 150 stores nationwide as part of a reorganization strategy aimed at prioritizing luxury sales. This initiative will leave 350 locations, along with Bloomingdale’s and Bluemercury beauty stores, which have performed well within the Macy’s brand portfolio.
In summary, while Macy’s faces challenges involving hidden expenses and declining sales, the company appears to be taking necessary steps to address internal issues and adapt to the evolving retail landscape. With a focus on ethical practices and a streamlined approach to its operations, there may be potential for recovery and growth in the upcoming holiday season. This presents an opportunity for Macy’s to strengthen its commitment to customers and enhance its market presence.