Macy's Says Employee Allegedly Hid Up to $154 Million in Expenses Since 2021
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11/25/2024 11:45 AM
The accounting irregularities prompted the company to delay reporting its full third-quarter results for 2024
Deb Cohn-Orbach/UCG/Universal Images Group via Getty
Macy's flagship department store in New York CityAhead of the busy holiday shopping season, popular department store chain Macy's said that an employee allegedly hid between $132 million and $154 million in delivery expenses, resulting in a delay of the release of the company's full third quarter earnings for this year.
Macy's made the announcement on Monday, Nov. 25, in a news release as the company shared its preliminary financial results for the third quarter of 2024.
The department store said that during the preparation of its report of its financial statements for the fiscal quarter ending on Nov. 2, it discovered "an issue related to delivery expenses in one of its accrual accounts." That prompted the company to conduct an investigation.
"As a result of the independent investigation and forensic analysis," Macy's said, per the release, "the company 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 fiscal quarter ended November 2, 2024."
Macy's said that the suspected employee is no longer with the company. The company also added that there is no sign that the questionable accounting accrual entries made any impact on its cash management activities or vendor payments.
The investigation into the matter postponed reporting of the full third quarter 2024 financial statements and earnings conference call until Dec. 11, the company shared.
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"At Macy's, Inc., we promote a culture of ethical conduct," Tony Spring, chairman and CEO of Macy's, Inc., said in a press 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."
PEOPLE contacted Macy's on Nov. 25 for additional comment.
Following Monday's announcement, the company's shares fell over 8% in premarket trading, but Macy's subsequently was able to reduce a number of the losses, the New York Timesreported.
Related: Macy's Thanksgiving Day Parade Will Include Minnie Mouse Balloon for the First Time
Based on preliminary third quarter results, Macy's said that its net sales fell 2.4% to $4.742 billion, per Monday's press release. However, its 50 locations "delivered third consecutive quarter of comparable sales growth, up 1.9%."
"Our Macy's First 50 locations achieved their third consecutive quarter of comparable sales growth," Spring said. "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."
According to the National Retail Federation, holiday sales for 2024 are forecasted to grow 2.5% and 3.5% from the previous year — meaning somewhere "between $979.5 billion and $989 billion in total holiday spending in November and December, compared with $955.6 billion during the same timeframe last year."
