Accounting Snafu Forces Macy’s to Delay Q3 Results
Employee’s Erroneous Entries Hide Delivery Expenses
Macy’s has pushed back the release of its third-quarter financial results due to an accounting issue related to delivery expenses. Preliminary results show the department store chain missed Wall Street expectations, with net sales dropping 2.4% to $4.74 billion, short of analysts’ estimates of $4.77 billion.
A Single Employee’s Misconduct
The accounting problem stems from a single employee who intentionally made incorrect accounting accrual entries to conceal approximately $132 million to $154 million in cumulative delivery expenses from the fourth quarter of 2021 to the third quarter of 2024. During this period, Macy’s recorded around $4.36 billion in delivery expenses. The employee responsible is no longer with the company, and an independent investigation found no involvement by other employees.
No Impact on Cash Management or Vendor Payments
Fortunately, the accounting error did not affect the company’s cash management activities or vendor payments. Macy’s is working to complete the investigation as soon as possible and ensure the matter is handled appropriately.
Shares Take a Hit
As a result of the news, Macy’s shares fell 4.4% in premarket trading. The company now expects to report its full third-quarter financial results and hold its earnings conference call by December 11.
Focus on the Holiday Season
Despite the setback, Macy’s CEO Tony Spring emphasized that the company remains focused on serving customers and executing its strategy for a successful holiday season. “Our colleagues across the company are working diligently to ensure we’re prepared for the holidays, even as we work to resolve this matter,” Spring said.
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