Macy's provided an update on the former employee who was responsible for hiding approximately $151 million of cumulative delivery expenses over the past three years.
On Wednesday, Macy's CEO Tony Spring said the company concluded its investigation and "determined that the individual responsible for the issue intentionally made erroneous accounting accrual entries beginning in Q4 2021 and in subsequent periods, acted alone and did not pursue these acts for personal gain."
Chief Financial Officer Adrian Mitchell added: "This was not theft."
MACY'S SAYS EMPLOYEE 'INTENTIONALLY' HID UP TO $154M IN EXPENSES
Macy's said the erroneous entries between the end of fiscal year 2021 through Nov. 2, 2024, "had no impact on the company’s reported net cash flows, inventories or vendor payments." The $151 million is only a portion of the approximately $4.36 billion of delivery expenses Macy's said it earned during the same period.
Spring told analysts on an earnings call that the "responsible individual is no longer with the company following the discovery of their actions," and that Macy's has already implemented "additional controls to be a stronger and more disciplined organization, so that an action like this could not happen again."
Still, the company was forced to delay its full financial results for the third quarter by a few weeks after discovering accounting errors late last month. The department store chain revealed that while preparing its financial statements, it found discrepancies in the delivery expenses of one account, which led to a drop in its stock price.
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During the early stages of the investigation, Macy's initially estimated that the hidden erroneous accounting accrual entries totaled between approximately $132 million to $154 million.
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The incident was discovered all while Macy's was trying to turn around its operation as it struggled to compete with rivals. Activist investor Barington Capital Group said Macy’s valuation has suffered a massive blow with shares down about 70% over the past decade due to "long-term challenges in the department store sector and previous management missteps."
On Wednesday, Macy's reported that sales during the third quarter fell 2.4% to $4.7 billion from weakness in certain Macy’s locations as well as its digital channel and cold weather categories.
The company also cut its earnings forecast. Earnings per share will be in the range of $2.25 to $2.50, down from the range of $2.55 to $2.90 it reported in August.
FOX Business' Breck Dumas contributed to this report.
