Macy’s holds employee responsible for hiding $154 million in expenses

An accounting irregularity by a Macy’s employee has delayed the publication of the company’s quarterly earnings report, the US department store chain said on Monday. The unnamed accountant deliberately concealed up to $154 million in expenses over nearly three years, forcing the retailer to launch an independent forensic investigation, CNN reported.

The company explained that the employee, who was no longer with Macy’s, “intentionally made false accounting entries” to hide small package delivery costs. Macy’s has not said why the employee chose to hide the expenses.

While the hidden expenses represented only a small portion of Macy’s $4.36 billion in delivery costs between the fourth quarter of 2021 and the most recent period, the company found the errors serious enough to delay the release of its earnings report until Dec. 11. However, Macy’s reassured investors that there was “no indication that the erroneous accounting entries had any impact on the company’s cash management activities or vendor payments.”

So far, the investigation has only pointed to the former employee, with no other individuals identified as involved in creating false accounting records.

“At Macy’s, Inc., we foster a culture of ethical behavior,” Macy’s CEO Tony Spring said in a statement. She added that while the investigation is ongoing and will be handled appropriately, the focus across the organization remains on serving customers and executing the strategy for a successful holiday season.

Shares of Macy’s fell nearly 3 percent when the market opened after the news.

Aside from the accounting issues, Macy’s reported a 2.4 percent drop in quarterly sales, which fell to $4.7 billion. The decline was attributed to weaker performance in its digital channels and cold weather categories as the country experienced an unusually warm fall.

Retail analyst Neil Saunders of GlobalData Retail noted, “The decline in sales is to be expected given that the mid-market is not great and that Macy’s is far from on the front foot in all of its stores. But it still underscores that the company is generally in decline.” “

As part of its restructuring plans, Macy’s is preparing to close hundreds of underperforming stores. Some of the company’s better performing locations experienced a less severe sales decline. Bloomingdale’s reported a 1.4 percent increase in sales, while Bluemercury saw a 3.2 percent increase.

In July, Macy’s rejected offers from private investors seeking to take over the company, opting to pursue its strategy of revitalization.