Macy’s is grappling with the fallout from an internal investigation into an employee who allegedly concealed $132 million to $154 million in expenses over several years. The individual, tasked with managing small-package delivery expense accounting, made fraudulent accounting entries that masked the discrepancies, the retail chain said in a press release Monday.
According to Macy’s, the unnamed employee is no longer with the company and the issue did not affect cash management or vendor payments.
Still, the company has postponed its full third-quarter and year-end outlook to December 11, 2024, pending the investigation’s findings. Shares in Macy’s (NYSE: M) were down 3.5% Monday in late-morning trading.
“At Macy’s, Inc., we promote a culture of ethical conduct,” Tony Spring, chairman and CEO of Macy’s Inc., said in a statement. “While we work diligently to complete the investigation as soon as practicable and ensure this matter is handled appropriately, our colleagues across the company are focused on serving our customers and executing our strategy for a successful holiday season.”
The incident adds to difficulties that Macy’s has faced this year, following its decision to reject a $24.80-per-share buyout offer from activist investors, a move that left the stock trading at just $16 per share—a 20% year-to-date decline.
The company is in the midst of a turnaround effort in which it is investing heavily in some stores and closing others. During its previous earnings call three months ago, it said it had planned to close 55 locations this year.
Initial Q3 Results and Holiday Outlook
According to the preliminary third-quarter earnings report, Macy’s Inc. saw a 2.4% decline in net sales, totaling $4.74 billion. Same-store sales fell by 1.3%, a smaller decline than the forecasted 1.49%.
The company’s “First 50” stores performed strongly, however, with a 1.9% year-over-year sales increase, supported by investments in staffing, merchandising, and visual presentation. Bloomingdale’s and Bluemercury also contributed positively, with 1.0% and 3.3% comparable sales growth, respectively.
Despite these promising numbers, the internal investigation has created uncertainty about Macy’s ability to maintain its momentum for the all-important holiday sales season.
Fast Company reached out to Macy’s for comment, including whether the incident will cause a delay in the holiday sales forecast as well. The company declined further comment.