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Macy's delays Q3 earnings after employee conceals $154M in expenses

By Chris Williams
Published  November 25, 2024 11:55am CST
Business
FOX TV Digital Team

How Macy's makes sure their balloons fly high on Thanksgiving

Almost nothing in the parade’s nearly 100-year history has stopped the balloons from being brought to life, save for one exception.

The Brief

    • Macy's delayed its Q3 earnings report after discovering an employee hid $132M-$154M in expenses since 2021.
    • The company says the misconduct didn't impact cash management or vendor payments; the employee is no longer with Macy's.
    • Preliminary results show Q3 net sales fell 2.4% to $4.74B, slightly beating analyst estimates of $4.72B.

Macy's announced weaker-than-expected sales for the third quarter, saying it’s delaying the release of its full quarterly results after it discovered an employee intentionally hid up to $154 million of expenses over several years.

The report was expected to come out Tuesday. 

The retailer said Monday that it identified an issue related to delivery expenses in one of its accrual accounts earlier this month. 

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An independent investigation and forensic analysis found that a single employee with responsibility for small package delivery expense accounting intentionally made erroneous accounting accrual entries to hide roughly $132 million to $154 million of expenses from the fourth quarter of 2021 through the fiscal quarter ended November 2.

Macy's logo is seen on a store in Manhattan, New York, United States of America, on July 5th, 2024. (Photo by Beata Zawrzel/NurPhoto via Getty Images)

The company recognized about $4.36 billion of delivery expenses during the same time period.

Macy's said that there's no indication that the erroneous accounting accrual entries had any impact on its cash management activities or vendor payments.

The company added that the person behind the conduct is no longer an employee and that the investigation didn't identify involvement by any other worker.

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Macy's said it is delaying reporting its third-quarter earnings results to complete an independent investigation. 

It anticipates reporting its full third-quarter financial results by Dec. 11.

"At Macy’s Inc., we promote a culture of ethical conduct," Chairman and CEO Tony Spring said in a 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."

The company did provide some preliminary results for its third quarter, including that net sales fell 2.4% to $4.74 billion, slightly above the average analyst estimate of $4.72 billion.

The Source

  • The Associated Press contributed to this report. Information also came from a public announcement by Macy’s, which detailed the discovery of intentionally hidden expenses following an independent investigation and forensic analysis. Statements from Macy’s Chairman and CEO Tony Spring, as well as preliminary third-quarter financial data and updated timelines for the full earnings report, were included in the release. This story was reported from Los Angeles.