Macy’s blames employees for hiding $154 million in expenses

An accounting irregularity involving a Macy’s employee delayed the release of the company’s quarterly earnings report, the American department store chain said Monday. As CNN reported, the unnamed accountant intentionally concealed up to $154 million in expenses over nearly three years, forcing the retailer to launch an independent forensic investigation.

The company said the employee, who no longer works at Macy’s, “intentionally made inaccurate accounting accrual entries” to conceal the cost of delivering small packages. Macy’s has not disclosed 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 releasing its earnings report until April 11. December to be postponed. However, Macy’s reassured investors that there was “no indication that the erroneous accrual entries had any impact on the company’s cash management activities or supplier payments.”

So far, the investigation has only yielded evidence of the former employee. No other individuals were identified who were involved in creating false accounting entries.

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

Shares of Macy’s fell nearly 3 percent at the open following the news.

Aside from the accounting issues, Macy’s reported a 2.4 percent decline in quarterly sales, falling to $4.7 billion. The decline was attributed to weaker performance in 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 middle market isn’t particularly strong and Macy’s is nowhere near the top in all of its stores.” But it still underscores the fact that the company as a whole is in decline.”

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

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