Macy’s revealed that one employee was accountable for so many accounting mistakes that the business had to postpone the publishing of its quarterly earnings report, which was scheduled for Tuesday.
The store recently conducted an independent forensic accounting inquiry after learning that the unnamed employee purposefully concealed up to $154 million in expenses over almost three years. In order to conceal minor package transportation costs, the worker, who Macy’s stated is no longer employed by the company, “intentionally made erroneous accounting accrual entries.”
Macy’s did not explain why the worker hid the expenses.
The delivery expenses Macy’s recognised between the fourth quarter of 2021 and its most recent period totalled $4.36 billion, of which the dubious costs accounted for a small portion. However, Macy’s determined that the errors were substantial enough to postpone reporting its full quarterly earnings until December 11. There was, however, “no indication that the erroneous accounting accrual entries had any impact on the company’s cash management activities or vendor payments,” according to the company.
Only one former employee has been implicated in the company’s probe thus far. No further staff members who might have contributed to the fabrication of the false accounting entries have been discovered by investigators.
Tony Spring, the CEO of Macy’s, Inc., stated in a statement that the company “promotes a culture of ethical conduct.” “Our coworkers throughout the organisation are focused on serving our customers and carrying out our plan for a successful holiday season, even as we work hard to finish the investigation as soon as possible and make sure this matter is handled appropriately.”
Accounting problems won’t help investors who have caused Macy’s stock to drop by about 20% this year.
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The accounting issue “raises the question as to the competence of the company’s auditors,” GlobalData Retail managing director and retail analyst Neil Saunders told CNN. “Investors who are already worried about the company’s performance become even more anxious as a result of such things.”
As the US saw the warmest fall on record, Macy’s reported in its interim earnings report on Monday that quarterly sales fell 2.4% to $4.7 billion due to weakness in its digital channels and cold weather categories.
Given that the middle market isn’t doing well and that Macy’s is far from leading all of its shops, the retailer’s sales dip is “to be expected.” However, it still highlights the company’s general downturn, Saunders stated.
As part of its turnaround strategy, the business has identified hundreds of stores that it intends to close. Although they did a little better, the company’s planned-to-stay-open stores saw a decline in sales.
Bloomingdale’s did better, with 1.4% growth in sales for its upscale stores. Sales of bluemercury increased 3.2%.
In July, the 165-year-old retailer chose to pursue its own plan to restructure the network instead of accepting negotiations with private investors who wanted to acquire the business.