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Macy's Delays Q3 Earnings After Employee Hid $154M in Delivery Expenses; Stock Falls Up to 8%

Nov 25, 2024, 02:36 PM

Macy's Inc. announced a delay in the release of its third-quarter earnings after discovering that a single employee, responsible for small package delivery accounting, intentionally hid between $132 million and $154 million in delivery expenses over a span of nearly three years. The employee, who has since been dismissed, made erroneous accounting accrual entries to conceal the expenses from the fourth quarter of 2021 through the third quarter of 2024. The concealed expenses represent about 3% to 4% of delivery expenses over the period. As a result, the company has initiated an independent forensic investigation into the matter. In preliminary results, Macy's reported net sales of $4.74 billion for the third quarter, a 2.4% decline from the previous year but in line with analysts' expectations of $4.72 billion. Comparable sales on an owned basis declined by 2.4%, and by 1.3% on an owned-plus-licensed basis. Macy's expects to report its full third-quarter results and provide an outlook by December 11th. The revelation of the accounting issue caused Macy's stock to drop by as much as 8% in premarket trading. The concealed expenses are significant given that Macy's net profit year-to-date in 2024 is $141 million.