Macy’s said a rogue employee intentionally concealed as much as $154 million in expenses over the past few years, forcing the department store giant to delay its quarterly earnings release.
The employee “intentionally made erroneous accounting” entries in an effort to hide expenses for years — from the fourth quarter of 2021 through the most recent quarter ended Nov. 2, the company said.
Macy’s estimates the missing expenses between $132 million and $154 million. During the three-year period in question, Macy’s said it had incurred a total of $4.36 billion in delivery expenses.
The company said it discovered the discrepancies while it was preparing its latest unaudited financial results, which showed a quarterly revenue drop of 2.4%, reflecting weaker-than-expected sales at Macy’s stores and online.
Shares of Macy’s, which is gearing up for the crucial holiday shopping season, were recently off 3% at $15.82.
The employee — who no longer works for Macy’s — was responsible for “small package delivery expense accounting,” the company said.
There is no indication that anyone else was involved in the scheme, or that the accounting problem affected the company’s cash management or vendor payments, Macy’s said.
“At Macy’s, we promote a culture of ethical conduct,” chairman and chief executive Tony Spring said in a statement. “While we work diligently to complete the investigation as soon as practicable and ensure this matter is handled appropriately, our colleagues across the company are focused on serving our customers and executing our strategy for a successful holiday season.”
The company added that it is completing an independent investigation into the matter and declined to comment further.
The nation’s largest department store was poised to announce its financial results Tuesday morning, but instead released preliminary results Monday, showing that sales for the third quarter fell 2.4% to $4.7 billion and comparable store sales dropped by 1.3%.
By contrast, comparable sales at its luxury department store Bloomingdales rose by 3.2% and comparable sales by its beauty brand Bluemercury increased by 3.3%.
The company expects to release its full quarter results on Dec. 11.
“We delivered third quarter sales in line with expectations as we continued to make traction on our Bold New Chapter strategy initiatives,” Spring said in a statement. “Importantly, November comparable sales are trending ahead of third quarter levels across nameplates.”
In February, the company said it would close about one-third of its stores or about 150 locations by 2027 as consumers curb their discretionary spending due to inflation.