Macy’s on Monday said an employee responsible for managing accounting for small package deliveries concealed up to $154 million in expenses over the course of nearly three years.
The person who allegedly hid the money is no longer with the company, the department store operator said Monday morning, ahead of its third-quarter earnings report. The company, whose statement on the matter didn’t say when the person left the job, declined to comment beyond the announcement.
The news comes at a difficult time for Macy’s, which is indelibly tied to the holiday season through the film “Miracle on 34th Street” and the Macy’s Thanksgiving Day Parade, while investors look for clues about how consumers are shopping for the holidays. Macy’s sales have slumped as the company has underperformed for the past decade.
The company was due to deliver results before U.S. stock markets opened Tuesday morning, but it has delayed releasing its full results until Dec. 11 to allow an independent investigation to wrap up.
Macy’s said it discovered the issue while preparing its financial report for the quarter ending Nov. 2. It did release preliminary findings for the period, saying overall net sales declined 2.4% year-over-year.
The company said the employee, who was responsible for the accounting of small package delivery expenses, ‘intentionally made erroneous accounting accrual entries’ to hide about $132 million to $154 million from the fourth quarter of 2021 through the most recently completed quarter. That is small relative to the $4.36 billion in overall delivery expenses Macy’s recorded during that period. However, it is greater than the $105 million in net profit the company recorded for its full fiscal year that ended Feb. 3.
The independent investigation hasn’t identified any other Macy’s employee, the company said.
‘At Macy’s, Inc., we promote a culture of ethical conduct. 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,” CEO Tony Spring said in a statement Monday morning.
Macy’s is attempting a turnaround amid broader shifts in the retail industry, particularly as shoppers buy more online. In February, the retail chain said it would close 150 stores nationwide in a reorganization initiative to focus on luxury sales.
The move will leave 350 Macy’s locations, as well as Bloomingdale’s and Bluemercury beauty and skin care stores, which the company said have been “outperformers” within the Macy’s portfolio.