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Macy’s says single employee was responsible for hiding up to $154m in expenses

Largest US department store chain delays release of quarterly earnings report to investigate ‘erroneous accounting entries’

A Macy’s store in Vernon Hills, Illinois, on 3 June 2024. Photograph: Nam Y Huh/AP

A Macy’s store in Vernon Hills, Illinois, on 3 June 2024. Photograph: Nam Y Huh/AP

Macy’s revealed on Monday that a single employee was responsible for hiding up to $154m in expenses over the course of nearly three years, prompting the company to delay the release of its quarterly earnings report.

The US’s largest department store chain, which owns other brands such as Bloomingdale’s and Bluemercury, found so many internal accounting irregularities that they were forced to conduct an independent forensic accounting investigation. Their full quarterly earnings report, originally planned for release on Tuesday, will now not roll out until 11 December.

“At Macy’s, Inc, we promote a culture of ethical conduct. While we work diligently to complete the investigation as soon as practicable 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,” said Macy’s CEO, Tony Spring, in a statement. An independent investigation found the individual “with responsibility for small package delivery expense accounting intentionally made erroneous accounting accrual entries” between the fourth quarter of 2021 and the fiscal quarter which ended on 2 November 2024.

The entries reportedly hid between roughly $132m to $154m of expenses during a time period in which Macy’s had $4.36bn of delivery expenses.

Macy’s said the individual is no longer employed with the company and it does not appear that any other individuals were involved. Additionally, it remains unclear why the employee hid the expenses.

Notably, the department store chain has been in financial decline in recent years. A preliminary earnings report released on Monday showed that compared to the third quarter of 2023, quarterly sales slipped 2.4% to $4.7bn, with same-store sales falling 2.4%.

Spring told CNBC in an August interview that part of their decline was due to people not spending like they once did.

“We see that there is definitely a softness, a carefulness, a delay in the conversion of purchasing,” he said. “And people on the things that they want, the things that are priced sharply, on the newness, they’re responding, but even the affluent consumer is not spending like they were a year ago.”

In contrast, Macy’s other brands have been performing better: net sales at Bloomingdale’s were up 1.4%, with same-store sales up 1.0%, while Bluemercury net sales were up 3.2% and same-store sales were up 3.3%.

Macy’s announced this year that it plans to close 150 stores over the next three years. After downsizing, Macy’s expects to have 350 stores – nearly half compared with before the pandemic.

Author: Erum Salam

Source: The Guardian

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