New York (AFP) – Macy’s disclosed Monday that an employee had hidden up to $154 million in expenses through false accounting entries over more than three years. The department store chain, which is set to host its annual Thanksgiving Day parade later this week in Manhattan, delayed a full release of third-quarter results in light of the revelation.
Following an independent investigation and forensic analysis, Macy’s “identified that a single employee with responsibility for small package delivery expense accounting intentionally made erroneous accounting accrual entries to hide approximately $132 to $154 million of cumulative delivery expenses from the fourth quarter of 2021 through the fiscal quarter ended November 2, 2024,” Macy’s said in a news release.
Macy’s stated that there is no evidence the erroneous entries affected vendor payments or the company’s cash position. The responsible employee is no longer with the company, it added. “The investigation has not identified involvement by any other employee,” the company said.
“The company is delaying its earnings release and conference call relating to the third quarter of 2024 to allow for the completion of the independent investigation.” Macy’s did not immediately respond to questions from AFP about the matter, including whether it had been referred to law enforcement.
The chain, which has shuttered hundreds of stores in recent years in the wake of shifting consumer behavior, reported that overall sales declined 2.4 percent to $4.7 billion in the third quarter, based on preliminary data.
“The delay in Macy’s full third quarter results is not a good look,” commented Neil Saunders, retail analyst at GlobalData. “While Macy’s cannot control the actions of every employee, it is worrying that these are intentional accounting errors that go back to 2021,” Saunders said in a note.
The problem “also raises the question as to the competence of the company’s auditors,” he added. “Such things create more nervousness for investors who are already concerned about the company’s performance.”
Saunders described Macy’s preliminary results as “mixed,” noting encouraging figures at units Bloomingdales and Bluemercury in spite of declining sales at namesake stores. Macy’s “deserves credit” for steps to refresh the brand; however, he noted that “the new strategy is akin to turning around an oil tanker. It is not something that can be done quickly, or rushed.”
© 2024 AFP
