Macy’s, an American department store with a 165-year history, announced on November 25 that it would delay its quarterly financial report.
The company explained that the delay was due to an accounting department employee intentionally concealing approximately $154 million in expenses over the past three years. Macy’s had initially scheduled the earnings release for the 26th.
According to reports from CNN Business and The Wall Street Journal, Macy’s disclosed that an external auditing firm is investigating this accounting fraud case.
Macy’s clarified that the employee responsible, who is no longer with the company, “deliberately omitted small shipping costs.” The company did not provide any explanation for the intentional accounting omission.
The employee failed to report these shipping costs from the fourth quarter of 2021 to the present. While this amount is relatively small compared to Macy’s total shipping costs of $4.36 billion during that period, the company deemed it significant enough to delay its earnings announcement until December 11.
However, Macy’s assured that all shipping costs were paid in full despite the accounting omission.
It appears that the former employee is solely responsible for the omitted shipping costs. Investigators found no evidence suggesting anyone else was involved in the accounting manipulation.
This accounting error will likely further impact Macy’s stock price, which has already fallen nearly 20% this year as the department store sector continues to struggle.
Neil Saunders, a retail analyst at GlobalData, criticized the situation, stating that the accounting error raises questions about the competence of Macy’s auditing firms and further alarming investors who are already concerned about the company’s poor performance.
In response to ongoing challenges, Macy’s is restructuring and has decided to close hundreds of stores. While the remaining locations are performing better than those slated for closure, they, too, have not been able to avoid declining sales.
