Macy’s, the largest department store in the United States, has announced a delay in the release of its third-quarter financial report scheduled for November 26th, after discovering that an employee concealed expenses amounting to as much as $154 million.
The announcement by Macy’s on Monday (25th) stated that due to accounting irregularities by an employee, the company was forced to postpone the quarterly earnings report originally set for Tuesday.
Macy’s recently uncovered that an accounting employee intentionally concealed expenses totaling up to $154 million over the course of nearly three years, prompting the retailer to launch an independent forensic accounting investigation.
The department store stated that the employee in question is no longer with Macy’s and pointed out that the employee “deliberately made incorrect accounting entries to hide the shipping costs of small packages.”
Macy’s did not disclose the reason behind the employee concealing expenses nor reveal the identity of the employee.
Between the fourth quarter of 2021 and the most recent quarter, Macy’s recognized $4.36 billion in shipping costs. The intentionally concealed expenses account for only a small portion of this amount. However, Macy’s believes that these errors warrant an independent investigation, leading to the postponement of the quarterly earnings report to December 11th.
The company stated, “There are no signs that the erroneous accounting entries had any impact on the company’s cash management activities or payments to suppliers.”
So far, the investigation by the company only involves one former employee. Investigators have not found any other employees potentially involved in accounting fraud.
“At Macy’s, we advocate for a culture of ethical behavior,” said Macy’s CEO Tony Spring in a statement. “We will expedite the investigation and ensure that this matter is handled properly. Colleagues throughout the company are focused on serving customers and executing our strategy to successfully navigate through the holiday season.”
On Monday, Macy’s released a preliminary profit report, showing that due to weak performance in the digital channels and cold-weather categories, combined with the historically hot fall experienced in the U.S., quarterly sales declined by 2.4% to $4.7 billion.
In pre-market trading, Macy’s stock price fell by 2%.