Macy’s announced on Monday that an employee, previously responsible for overseeing accounting related to small package deliveries, allegedly concealed between $132 million to $154 million in expenses over nearly three years. The employee is no longer with the company, although Macy’s did not specify when the departure occurred.
This news arrives just as Macy’s prepares for the critical holiday shopping season, known for its historic ties to “Miracle on 34th Street” and the iconic Thanksgiving Day Parade. The retailer has been struggling in recent years, with a notable decline in sales leading up to this pivotal time for the company.
While the company is set to release its earnings report, it has postponed the full disclosure until December 11 to complete an independent investigation into the financial discrepancies discovered while finalizing its quarterly report for the period ending November 2. Preliminary findings show a 2.4% decrease in overall net sales compared to last year.
The alleged misconduct involved the intentional misreporting of accounting accrual entries by the former employee, which was significant but accounted for a small fraction of Macy’s total delivery expenses of $4.36 billion during that timeframe. Notably, the hidden amount exceeds the company’s $105 million net profit for the fiscal year that wrapped up on February 3.
As of now, the investigation has not implicated any other Macy’s employees. In light of these developments, CEO Tony Spring emphasized the company’s commitment to ethical business practices and the focus of employees on customer service and preparations for the holiday season.
In its effort to revitalize its business amidst a shifting retail landscape, Macy’s has already announced plans to close 150 locations, aiming to enhance profitability by focusing on more lucrative luxury sales, leaving it with 350 active stores, along with its successful Bloomingdale’s and Bluemercury brands.
This situation serves as a cautionary tale for retailers regarding the importance of transparency and accountability, especially during such a vital period in the holiday shopping calendar. Nonetheless, Macy’s commitment to investigating these issues and its strategic pivot towards luxury sales may offer hope for recovery in an evolving market.
In summary, while facing a challenging situation, Macy’s determination to address accountability and adapt its business model reflects a positive step towards overcoming obstacles and potentially revitalizing its brand in the future.