Macy’s announced on Monday that an employee, previously responsible for managing the accounting related to small package deliveries, concealed between $132 million and $154 million in expenses over nearly three years. This revelation comes just before the department store prepares to report its third-quarter earnings.
The employee in question is no longer with the company, although Macy’s did not specify when they departed. The company refrained from offering further comments beyond the initial announcement. This troubling news arrives at a pivotal time for Macy’s, as it has significant ties to the holiday season—often depicted in iconic films like “Miracle on 34th Street” and major events such as the Macy’s Thanksgiving Day Parade. Investors are closely monitoring how consumer spending will unfold during this crucial period, especially as Macy’s revenues have been declining during the past decade.
Due to these developments, Macy’s has postponed the release of its full earnings report, now slated for December 11, to complete an independent investigation. Initial findings disclosed that while total net sales fell by 2.4% year-over-year, the company identified the discrepancies in its financial reporting during preparations for its earnings report covering the period that ended on November 2.
The alleged misconduct involved the employee making “erroneous accounting accrual entries” intentionally to hide substantial sums from the company’s overall delivery expenses, which were reported at $4.36 billion during the same timeframe. Notably, the mishandled amount exceeds Macy’s total net profit of $105 million for its fiscal year ending in February.
Macy’s stated that the independent investigation has not linked any other employees to these actions. CEO Tony Spring emphasized the company’s commitment to ethical conduct, assuring stakeholders that, while the investigation continues, the focus remains on providing excellent customer service and ensuring a successful holiday season.
As Macy’s works to navigate this challenging period, it is also implementing significant changes to adapt to the evolving retail landscape. In February, the company announced plans to close 150 stores across the country as part of a reorganization strategy emphasizing luxury sales. Following these closures, Macy’s will maintain 350 locations, including its Bloomingdale’s and Bluemercury beauty and skincare outlets, which have shown stronger performance.
This investigation reflects the importance of accountability in corporate governance, highlighting the necessity for companies to maintain transparency to foster investor confidence. As Macy’s realigns its focus and resources, there remains hope that it can restore its footing and capitalize on the potential for revival, particularly during the festive shopping season.
Summary: Macy’s revealed that a former employee concealed between $132 million and $154 million in delivery expenses, prompting an independent investigation and causing the company to postpone its third-quarter earnings report. This comes as Macy’s seeks to adapt to changing retail dynamics and prepare for a successful holiday season after a decade of declining sales. CEO Tony Spring reaffirmed the commitment to ethical conduct and highlighted ongoing strategies for recovery.