Macy’s Employee Hides Up to $154 Million in Expenses, Delaying Q3 Earnings Report

Things certainly got a bit more interesting for Macy’s investors as news emerged that a single employee had hidden up to $154 million in expenses, according to CNN.

The employee in question, who no longer works for the company, as reported by CNBC, was responsible for fudging between $132 million and $154 million in small package delivery expenses between Q4 2021 and the present.

Macy’s Employee Spurs Independent Forensic Accounting Investigation

In response to the situation regarding its now-former employee having cooked the books, Macy’s decided it was prudent to push its official earnings report to Dec. 11, indicating that there was no evidence in place suggesting the “erroneous accounting accrual entries” had any impact on vendor payments or cash management activities.

“At Macy’s, Inc., we promote a culture of ethical conduct,” Macy’s CEO Tony Spring said in a statement. “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.”

Some observers indicated that the company’s slip may have deeper implications, however.

“[The accounting problem] raises the question as to the competence of the company’s auditors,” Neil Saunders, RetailWire BrainTrust member and managing director at GlobalData Retail, told CNN. “Such things create more nervousness for investors who are already concerned about the company’s performance.”

Macy’s has not yet revealed the former employee’s motive for engaging in these behaviors, nor has the company discovered evidence suggesting that the former employee had any accomplices.

Macy’s Preliminary Report Indicates Sales Slip, Despite Bright Spots

According to a preliminary report issued in lieu of the full version, Macy’s continued to see some challenges over the past quarter, particularly concerning sales.

Sales dipped by 2.4% to $4.7 billion, which the company indicated largely came due to softness in its digital channels as well as sales of cold weather items during an unseasonably warm fall. Underperformance by some of its non-First 50 stores (the stores Macy’s had targeted for various upgrades and improvements, according to PYMNTS) also contributed to underperformance in terms of sales.

Macy’s continues to plan for the closure of about 150 underperforming stores, as CNBC outlined.

On a more positive note, some arms of the business performed quite well. First 50 locations saw comparable sales growth for the third consecutive quarter, up 1.9%, while beauty brand Bluemercury climbed 3.2% in comparable sales. Furthermore, Bloomingdale’s saw a net sales increase of 1.4%, driving home the notion that the company’s pivot to focus on trimming underperforming locations and investing in its more attractive brands has paid at least some dividends.

And November looked to be bolstering company hopes as well, according to Spring.

“We delivered third quarter sales in line with expectations as we continued to make traction on our Bold New Chapter strategy initiatives,” Spring said in the preliminary report.

“Our Macy’s First 50 locations achieved their third consecutive quarter of comparable sales growth. At the same time, our luxury brands, Bloomingdale’s and Bluemercury, reported positive comparable sales. Importantly, November comparable sales are trending ahead of third quarter levels across nameplates,” he added.