Macy’s Concludes Investigation into Employee Who Concealed $150 Million in Expenses
Macy’s has wrapped up its investigation into an accounting employee who deliberately concealed more than $150 million in delivery expenses over nearly three years. The company has since strengthened its internal controls to prevent a recurrence of the issue.
The investigation revealed that the unnamed employee, tasked with tracking small package delivery expenses, entered inaccurate accounting accrual figures, masking $151 million in costs between the fourth quarter of 2021 and the third quarter of 2024. Despite the scale of the error, Macy’s determined that the misreported data was not significant enough to materially affect its previously filed financial statements.
Tony Spring, Macy’s CEO, affirmed the company’s commitment to corporate governance, stating: “We’ve concluded our investigation and are strengthening our existing controls and implementing additional changes designed to prevent this from happening again.”
Macy’s first disclosed the issue last month, which caused delays in its quarterly earnings report. The retailer has not provided further details regarding the employee’s motivations, nor clarified whether they were terminated or resigned.
Stock Plunge and Financial Outlook
Despite concluding the investigation, Macy’s continues to face challenges. The company’s shares dropped by over 11% in premarket trading after it slashed its earnings forecast for the year to between $2.25 and $2.50 per share, a sharp decline from its previous estimate of $2.55 to $2.90.
Macy’s also reported a 2.4% drop in quarterly sales to $4.7 billion, citing weak digital performance and unseasonably warm weather that dampened demand for winter merchandise.
The retailer remains under pressure from activist investors pushing for drastic changes. Barington Capital and Thor Equities recently urged Macy’s to unlock its real estate value, which they argue exceeds the company’s market worth. This comes as Macy’s stock price has fallen more than 15% this year.
In response to its ongoing struggles, Macy’s has initiated a turnaround strategy, which includes closing underperforming stores. The remaining “go-forward” locations showed improved performance but still recorded a decline in sales.
On a brighter note, Macy’s higher-end segments performed better. Sales at Bloomingdale’s increased by 1%, while luxury beauty chain Bluemercury posted a 3.3% gain.
The 165-year-old retailer, which recently rejected takeover proposals, continues to focus on revamping its operations to regain stability and investor confidence.
