NEW YORK (Source : AP) — Macy’s reported stronger-than-expected sales for the third quarter, but the retailer is delaying the release of its full quarterly financial results following the discovery of a significant accounting issue. The company revealed Monday that an employee intentionally hid up to $154 million in delivery expenses over a period of several years.
The department store chain, which operates Macy’s, Bloomingdale’s, and Bluemercury, was initially scheduled to report its third-quarter earnings on Tuesday. However, Macy’s disclosed an issue related to delivery expenses in one of its accrual accounts earlier this month, prompting an internal investigation.
An independent forensic analysis revealed that a single employee, responsible for small package delivery expense accounting, had deliberately made erroneous entries to conceal between $132 million and $154 million of expenses from the fourth quarter of 2021 through the fiscal quarter ending November 2. During this period, Macy’s reported approximately $4.36 billion in delivery expenses.
The company stressed that the employee’s actions did not appear to affect cash management or vendor payments. Macy’s also confirmed that the individual responsible for the misconduct is no longer employed by the company, and no other employees were found to be involved.
As a result of the ongoing investigation, Macy’s has postponed the release of its full third-quarter results, now expecting to report its earnings by December 11.
Macy’s Chairman and CEO Tony Spring addressed the issue in a statement, emphasizing the company’s commitment to ethical conduct. “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,” Spring said.
Despite the accounting issue, Macy’s provided preliminary results for the third quarter, reporting net sales of $4.74 billion, a 2.4% year-over-year decline, but slightly better than the $4.72 billion analysts had expected. Comparable sales, which measure performance across established physical and online stores, also fell 2.4%, excluding licensed businesses like cosmetics.
By division, Macy’s saw a 3% drop in comparable sales, while Bloomingdale’s posted a 1% increase and Bluemercury saw a 3.3% rise in comparable sales. Additionally, Macy’s “First 50” stores — which the company has renovated and enhanced with additional customer service — saw a 1.9% gain in comparable sales.
Macy’s stock took a hit in Monday’s trading, with shares falling 3.3%, or 53 cents, to $15.77.
The retailer’s delay in reporting its financial results and the discovery of the accounting discrepancies come at a critical time as Macy’s enters the holiday season, traditionally the most lucrative period for retailers. The company is working to ensure the issue is resolved promptly, allowing it to focus on its strategy for the coming months.
As Macy’s navigates this challenge, the company is under pressure to maintain consumer confidence while addressing the internal misconduct that has raised concerns among investors and analysts.
Comments