Macy's has delayed its earnings release after discovering that an employee concealed up to $154 million in delivery expenses over nearly three years. The hidden costs, amounting to a significant portion of the company's reported delivery expenses, did not impact cash management or vendor payments but have led to a delay in the full financial disclosure expected by December 11. The scandal emerges as Macy's attempts a strategic turnaround amid a challenging retail environment.
Macy's, a major U.S. department store chain, is currently grappling with a significant internal financial scandal. An employee allegedly concealed between $132 million to $154 million in delivery expenses, leading to a delay in the company's third-quarter earnings release. This discovery has raised concerns about internal controls and transparency as the retailer heads into a crucial holiday shopping season.
The concealed expenses were discovered during preparations for Macy's third-quarter financial report. Initially flagged in an accrual account for small package delivery expenses, the issue prompted an independent investigation. This investigation revealed that the employee responsible had intentionally made erroneous accounting entries from the fourth quarter of 2021 through November 2024, which significantly understated the company's actual expenses. Despite the large sum, Macy's confirmed that this did not affect their cash flow or payments to vendors[1][2].
The financial discrepancies come at a time when Macy's is already facing significant challenges in the retail sector. Sales have been declining, and the company is in the midst of a strategic shift towards luxury sales and online shopping. The hidden expenses, though a small fraction of the total $4.36 billion recorded in delivery expenses during the period, exceed the net profit of $105 million reported for the last fiscal year. This scandal could potentially impact investor confidence and the company's stock price, which saw a significant drop following the preliminary report[3][4].
In response to the scandal, Macy's CEO Tony Spring emphasized the company's commitment to ethical conduct and the swift resolution of the investigation. The company aims to complete the investigation and provide a full report by December 11. Meanwhile, Macy's is focusing on its performance during the holiday season, which includes boosting sales at its top-performing stores and enhancing the customer experience. This incident underscores the challenges Macy's faces as it navigates a complex retail landscape amid economic uncertainties[5].
The revelation of hidden expenses at Macy's highlights significant issues within internal financial controls and raises questions about oversight and transparency. As the investigation continues, the retail giant remains focused on maintaining trust with its investors and customers, striving to overcome this setback as it heads into a pivotal sales period.
"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." - Tony Spring