Macy’s, the renowned department store chain, has delayed the release of its third-quarter earnings following the discovery of an employee hiding up to $154 million in expenses over several years. Initially scheduled to report its results on Tuesday, the retailer uncovered discrepancies earlier this month related to delivery expenses in one of its accrual accounts.
An independent investigation revealed that a single employee, responsible for small package delivery expense accounting, deliberately made erroneous accrual entries between the fourth quarter of 2021 and the fiscal quarter ending November 2, 2024. This manipulation concealed expenses ranging between $132 million and $154 million. Despite the oversight, Macy’s clarified that the accounting irregularities did not affect its cash management or vendor payments. The individual behind the misconduct is no longer employed, and no other employees were found to be involved.
Impact on Macy’s Reporting and Performance
Macy’s has announced a delay in its full quarterly earnings report as it continues the independent investigation. The company anticipates releasing its complete third-quarter financial results by December 11. While this scandal has raised concerns, Macy’s provided a glimpse into its preliminary results, reporting net sales of $4.74 billion—a 2.4% decline but slightly above analyst expectations of $4.72 billion.
Comparable sales, which include established physical and online stores, fell 2.4%, excluding licensed businesses like cosmetics. The performance varied across divisions: Macy stores saw a 3% decline in comparable sales, while Bloomingdale’s posted a 1% increase, and Bluemercury’s sales rose by 3.3%. Notably, Macy First 50 stores, which have been renovated and equipped with enhanced customer service, achieved a 1.9% sales increase, indicating the effectiveness of the company’s investment in these locations.
Leadership Response and Market Reaction
In response to the situation, Macy’s Chairman and CEO, Tony Spring, emphasized the company’s commitment to ethical conduct. “At Macy Inc., we promote a culture of ethical conduct,” Spring stated. He assured stakeholders that the company is diligently working to complete the investigation while maintaining its focus on customer service and holiday season strategies.
Despite these reassurances, Macy’s shares took a hit, dropping 3.3% to $15.77 during Monday afternoon trading. The company’s ability to navigate this accounting issue while sustaining customer trust and operational performance will be closely watched as it approaches the holiday season, a critical period for retail success.
