macy said Investigating Accounting Problems A rogue employee was found to have hidden more than $151 million in expenses by concealing a bookkeeping error and was not motivated by personal or financial gain, according to a report.
News of the accounting coverup in late November delayed the company’s quarterly earnings report and sent its shares plunging.
Shares of the department store giant fell more than 11% on Wednesday after Macy’s cut its profit outlook for the year.
The ex-employee hid delivery expenses over a three-year period, knowingly made “false accounting entries and [falsifying] Underlying documentation to understate delivery expenses,” the company said in a securities filing.
“The employee acted alone and did not commit these acts for personal gain,” Macy’s CEO Tony Spring told analysts in a Wednesday conference call. A Macy’s spokesperson declined to comment further.
The employee told investigators she mistakenly underreported the amount of small parcel delivery expenses at the end of 2021, according to the Wall Street Journal, citing a source briefed on the investigation.
To conceal the error, the employee, who was not identified by Macy’s, “continued to knowingly make false accounting entries and falsify the underlying documents until the misstatements were discovered this fall,” the source told The Journal. Told to.
Macy’s, which previously estimated that the erroneous entries obscured between $132 million and $154 million, said the employee hid expenses from the fourth quarter of 2021 to the third quarter of 2024.
The company said its revenue, cash, inventory or vendor payments were not affected.
“The individual responsible is no longer with the company after his actions were discovered,” Spring said. “We have also identified and begun implementing additional controls to become a stronger and more disciplined organization so that actions like this cannot happen again.”
Macy’s delayed its third-quarter earnings report by two weeks after an accounting error was discovered in late November.
The fired former employee told Macy’s he made an accounting mistake, then tried to hide it and did not do it for personal gain, the Wall Street Journal reports.
Meanwhile, Macy’s cut its earnings guidance to $2.25 to $2.50 per share from its previous outlook of $2.34 to $2.69 per share.
Macy’s net income fell to $28 million, or 10 cents a share, from $41 million, or 15 cents a share, in the same period a year earlier.
Macy’s also expects its full-year sales to be lower than last year’s sales of $23.09 billion. This year the company estimates that its sales will not exceed $22.5 billion.
The company is experiencing “positive sales trends from the third quarter,” Spring said on the call.
Macy’s sales fell 2.4% to $4.7 billion for the three months ended Nov. 2, compared with the same period last year. Sales at stores open for at least a year declined 2.4%.
The company is closing about 150 underperforming stores by 2027 and reducing its number of locations to 350, the company previously announced. It said Wednesday it expects to close 65 stores next year.
The company said that a large number of markets have been closed, including other stores.
One of those stores is in Downtown Brooklyn, where Macy’s is closing its Fulton Street store and selling it at a deep discount, The Post reported. informed,
