Macy’s says employee hid up to $154 million in costs, delays Q3 returns

Macy’s reported weaker-than-expected preliminary sales for the budgetary third quarter and said it’s delaying the release of its budgetary third-quarter returns results after it discovered an up to $154 million bookkeeping-related issue.

The department store chain, which also operates Bloomingdale’s and Bluemercury cosmetics chain in addition to its namesakes stores, was expected to update quarterly results on Tuesday.

The retailer said Monday that it identified an issue related to delivery costs in one of its accrual accounts earlier this month. An independent investigation and forensic analysis found that a single employee with responsibility for tiny package delivery outlay bookkeeping intentionally made erroneous bookkeeping accrual entries to hide roughly $132 million to $154 million of costs from the fourth quarter of 2021 through the budgetary quarter ended November 2.

The corporation recognized about $4.36 billion of delivery costs during the same period period.

Macy’s said that there’s no indication that the erroneous bookkeeping accrual entries had any impact on its liquid assets management activities or vendor payments.

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

Macy’s said is it delaying reporting its third-quarter returns results to complete an independent investigation. It anticipates reporting its packed third-quarter budgetary results by Dec. 11.

“At Macy’s Inc., we promote a population 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 corporation are concentrated on serving our customers and executing our schedule for a successful holiday period.”

The corporation 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 approximate of $4.72 billion.

Macy’s overall comparable sales — sales from established physical and online channels — were down 2.4%, excluding licensed businesses like cosmetics. By division, Macy’s comparable sales were down 3%, while Bloomingdale’s comparable sales rose 1%. Bluemercury’s comparable sales rose 3.3%,

Macy’s ownership declined more than 3.3% before the economy open.