New York, NY – Macy’s, the iconic department store chain, announced robust sales for the third quarter but disclosed a troubling financial discovery that has prompted a delay in releasing its full quarterly results. The company revealed that an employee deliberately concealed up to $154 million in expenses over several years, leading to the postponement of the earnings report.
The issue was uncovered earlier this month when an irregularity in delivery expenses was identified in one of Macy’s accrual accounts. Subsequent investigation revealed that a single employee responsible for small package delivery expense accounting intentionally misstated entries, hiding millions of dollars in expenses from the fourth quarter of 2021 through the fiscal quarter ended November 2. The company acknowledged approximately $4.36 billion in delivery expenses during the same period.
Despite the financial discrepancy, Macy’s assured stakeholders that the accounting irregularities did not impact its cash management activities or vendor payments. The company affirmed that the employee involved in the misconduct is no longer with the organization and that no other employees were implicated in the matter.
As a result of the ongoing investigation, Macy’s has postponed the release of its third-quarter earnings report, aiming to complete an independent review before sharing its financial results by December 11. Although the official earnings report is pending, Macy’s did provide some preliminary figures for the third quarter, indicating a 2.4% decline in net sales to $4.74 billion, slightly surpassing analyst expectations.
Additionally, Macy’s comparable sales experienced varying performance across its retail divisions, with overall comparable sales down 2.4% when excluding licensed businesses such as cosmetics. Notably, Bloomingdale’s reported a 1% rise in comparable sales, while Bluemercury saw a 3.3% increase. Macy’s First 50 stores, which have undergone renovation and customer service enhancements, achieved a comparable sales growth of 1.9% in the latest quarter.
The disclosure of the financial irregularities has impacted Macy’s stock performance, with shares declining by 3.3% during Monday’s afternoon trading session to $15.77. The company’s Chairman and CEO, Tony Spring, emphasized Macy’s commitment to ethical conduct and highlighted the dedication of employees to serving customers and executing holiday season strategies amidst the ongoing investigation.
