Macy’s delays earnings results after employee hides $236m expenses
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The news: US department store Macy’s delayed its Q3 earnings results and briefing after uncovering that a single employee intentionally hid up to USD154 million ($236 million) in delivery expenses between Q4 2021 and Q3 2024.
The numbers: In a preliminary release, the company showed a 2.4% drop in net sales to USD4.74 billion, below market estimates of USD4.77 billion, according to LSEG.
Comparable sales fell 1.3% in owned and licensed stores but rose at luxury brands Bloomingdale’s (3.2%) and Bluemercury (3.3%).
The largest department store chain in the US said it expected to release its full quarterly earnings result and full year outlook by 11 December.
The delay was because it had discovered that a single employee with responsibility for small package delivery expense accounting intentionally made erroneous accrual entries to hide about USD132 million to USD154 million of cumulative delivery expenses from 4Q of 2021 through 3Q 2024. That is up to 3.5% of the USD4.6 billion delivery expenses recognised over that period.
The context: The Wall Street Journal noted the incident comes amid a growing shortage of qualified accountants in the US, driven by declining enrolments in accounting programs and an increasing number of retirements, leaving key positions unfilled for longer periods.
This is coming at a time the retail sector is facing cautious consumers that are increasingly prioritising value for money, while competition from major players like Walmart and Amazon intensifies during the critical holiday season.
What they said: CEO Tony Spring said Macy’s investigation found no evidence the accounting issue impacted cash management or vendor payments, and the employee is no longer with the company.
He added that November sales were “trending ahead” of Q3 levels approaching the holiday season.
“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,” Spring said.
The sources: Macy’s release , The Wall Street Journal, Reuters
