Rogue employee at Macy’s ‘saved’ up to $154M in expenses

Macy’s said a rogue employee intentionally hid as much as $154 million in expenses over the past few years, forcing the department store giant to delay its quarterly earnings.

The employee “intentionally made erroneous accounting entries” in an attempt to hide expenses for years — from the fourth quarter of 2021 to the most recent quarter that 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 incurred a total of $4.36 billion in delivery costs.

The company said it discovered the discrepancies while preparing its latest unaudited financial results, which showed a quarterly revenue decline 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, recently fell 3% to $15.82.

The employee — who no longer works for Macy’s — was responsible for “small package expense accounting,” the company said.

There is no indication that others were involved in the scheme or that the accounting problem affected the company’s cash management or supplier payments, Macy’s said.

“At Macy’s, we foster a culture of ethical behavior,” Chairman and CEO Tony Spring said in a statement. “While we are working diligently to complete the investigation as quickly as possible 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 report its financial results Tuesday morning, but instead released preliminary results Monday showing third-quarter sales fell 2.4% to $4.7 billion and comparable store sales fell 1. 3%.

By contrast, comparable sales at its luxury department store Bloomingdales were up 3.2%, and comparable sales at its beauty brand Bluemercury were up 3.3%.

The company expects to publish its full quarterly results on 11 December.

“We delivered third quarter sales in line with expectations as we continued to make moves 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 a third of its stores, or about 150 locations, by 2027 as consumers limit their discretionary spending due to inflation.