New York: Macy’s revealed Monday that a single employee had concealed up to $154 million in expenses, prompting the company to delay its quarterly earnings report, initially set for Tuesday.
The unnamed employee, now no longer with the company, manipulated accounting records over nearly three years. Macy’s discovered the employee’s actions included intentionally hiding small package delivery costs through false accounting entries. The company has launched an independent forensic accounting investigation into the matter.
Macy’s did not specify why the employee took such actions. However, the questionable expenses, although small compared to the retailer’s total delivery costs of $4.36 billion, were serious enough to delay Macy’s earnings report until December 11. Despite the irregularities, Macy’s assured investors that the errors did not affect cash management or vendor payments.
The investigation, so far, has found that only one individual was involved, with no evidence of other employees being implicated in the fraudulent accounting activities. Macy’s CEO Tony Spring emphasized the company’s commitment to ethical conduct, stating, “While we work diligently to complete the investigation and resolve this matter, our team remains focused on serving our clients and executing our system for an effective Christmas season”.
In addition to the accounting issue, Macy’s also reported a 2.4% drop in quarterly sales, reaching $4.7 billion. Weakness in digital sales and unseasonably warm fall weather affected key product categories, like outerwear.
Following the declaration, Macy’s stock (M) fell 2% in premarket exchanging.. The company is now working to finalize its earnings and resolve the financial discrepancies.
