U.S. retail giant Macy’s has discovered that a former employee intentionally concealed between $132 million and $154 million (all figures U.S.) in delivery expenses over nearly three years, leading the retailer to delay its third-quarter earnings report. The discovery was made during the preparation of financial statements for the fiscal quarter ended Nov. 2, the company announced Monday.
The employee, responsible for small package delivery expense accounting, made erroneous accounting accrual entries from the fourth quarter of 2021 through the latest quarter. “The individual who engaged in this conduct is no longer employed by the company,” Macy’s said, adding that there is no indication the fraudulent entries affected cash management activities or vendor payments. The investigation has not identified involvement by any other employee.
To complete an independent investigation and forensic analysis, Macy’s is delaying its earnings release and conference call. The company expects to report full third-quarter financial results and provide fourth-quarter and full-year outlooks by Dec. 11.
“At Macy’s, Inc., we promote a culture of ethical conduct,” said Tony Spring, chairman and chief executive officer. “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.”
The discovery comes as Macy’s reported preliminary third-quarter net sales of $4.742 billion, a decrease of 2.4% compared to the same period last year. Its “Macy’s First 50” locations achieved a third consecutive quarter of comparable sales growth, up 1.9%, while luxury brands Bloomingdale’s and Bluemercury reported positive comparable sales.
Macy’s assured stakeholders that the erroneous accounting did not impact cash flow or vendor payments, suggesting the fraud was contained within accounting records. The company ended the quarter with $315 million in cash and cash equivalents and voluntarily retired $220 million of debt during the period.
The retailer stated it will provide an update on its fiscal 2024 outlook when it reports full third-quarter financial results.
