Macy's Inc. has delayed its third-quarter earnings release after discovering that a single employee intentionally concealed up to $154 million in delivery expenses over nearly three years.
The department store chain announced Monday that the issue, tied to erroneous accounting entries, has prompted an independent investigation.
The irregularities were uncovered earlier this month during a review of delivery expense accruals.
Macy's revealed that the employee manipulated accounting records to hide between $132 million and $154 million in expenses from the fourth quarter of 2021 through the fiscal quarter ending Nov. 2, 2024.
It is believed the individual, who is no longer employed, acted alone.
When Will Macy's Q3 Earnings Be Released?
The accounting issue has not affected Macy's cash management or vendor payments, the company said.
No other employees are believed to be involved in the scheme.
Macy's has postponed its earnings release, originally scheduled for Tuesday, and now plans to report full third-quarter results by Dec. 11.
During the affected period, Macy's recognized $4.36 billion in delivery expenses.
"At Macy's Inc., we promote a culture of ethical conduct," said Chairman and CEO Tony Spring.
"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."
Preliminary Results Indicate 2.4 Percent Sales Decline
Macy's stock showed little movement in premarket trading Monday after initially falling more than three percent.
Preliminary Q3 results show net sales dropped 2.4 percent to $4.74 billion, slightly exceeding analysts' expectations of $4.72 billion. Comparable sales (sales from established physical and online channels) fell 2.4 percent overall, with Macy's stores reporting a three percent decline.
Macy's so-called First 50 stores—locations Macy's has renovated and put more effort into with extra customer service—produced a comparable sales gain of 1.9 percent in the latest quarter.
Sister brands Bloomingdale's and Bluemercury saw increases in comparable sales of one percent and 3.3 percent respectively.
The company has been working to adapt to shifting consumer preferences by closing underperforming stores—in February, they revealed plans to close around 150 of its namesake stores, nearly one-third of its total.
The closures, expected to be completed by early 2027, include some mall anchor stores, though the company has not specified which locations are affected.
Impact of Macy's Q3 Report on Thanksgiving
Alongside this, the discovery comes as Macy's enters its brand-defining holiday shopping season, a period that accounts for a significant portion of its annual revenue.
The annual New York Thanksgiving Day Parade begins at 8:30 a.m. on Nov. 28.
Beginning in Manhattan's Upper West Side and concluding at Macy's Herald Square flagship store on 34th Street, the parade will feature 17 character balloons, 22 floats, and performances by Jennifer Hudson, Kylie Minogue, and Billy Porter.
This article includes reporting from The Associated Press
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