Macy’s Delays Q3 Earnings Report Over Employee’s Intentional Accounting Error: Retail’s Disheartened
By Stocktwits Inc | First Published Nov 25, 2024, 7:33 PM ISTThe company identified that a single employee with responsibility for small package delivery expense accounting intentionally made erroneous accounting accrual entries to hide approximately $132 to $154 million of cumulative delivery expenses.
Shares of department stores Macy’s Inc ($M) fell over 3% in Monday’s pre-market session after the firm said it is delaying its third-quarter earnings release as it sought to complete an independent investigation after it found one of its employees intentionally hid expenses worth over $130 million.
Macy’s said that during the preparation of its unaudited financial statements for the fiscal quarter ended Nov. 2, 2024, it identified an issue related to delivery expenses in one of its accrual accounts, following which it initiated an independent investigation.
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The firm identified that a single employee with responsibility for small package delivery expense accounting intentionally made erroneous accounting accrual entries to hide approximately $132 to $154 million of cumulative delivery expenses from the fourth quarter of 2021 through fiscal quarter ended Nov. 2, 2024.
During this period, Macy’s recognized approximately $4.36 billion of delivery expenses.
“There is no indication that the erroneous accounting accrual entries had any impact on the company’s cash management activities or vendor payments. The individual who engaged in this conduct is no longer employed by the company. The investigation has not identified involvement by any other employee,” the company said in a statement.
Meanwhile, as part of its preliminary third-quarter highlights, Macy’s reported net sales declined 2.4% to $4.742 billion, with comparable sales down 2.4% on an owned basis and down 1.3% on an owned-plus-licensed-plus-marketplace basis.
The company’s first 50 locations delivered a third consecutive quarter of comparable sales growth, recording a rise of 1.9%.
Bloomingdale’s reported comparable sales growth of owned and owned-plus-licensed-plus-marketplace, up 1.0% and 3.2%, respectively. This was driven by strength in contemporary apparel, beauty and digital.
Meanwhile, Bluemercury reported comparable sales growth of 3.3% with customers continuing to respond well to the breadth of skincare offerings.
The company reported asset sale gains of $66 million, $61 million higher than last year due to the monetization of non-go-forward assets.
Following the developments, retail sentiment on Stocktwits dipped into the ‘bearish’ territory (37/100) from ‘neutral’ a day ago, accompanied by high retail chatter.
Macy’s Sentiment Meter and Message Volume as of 8:00 a.m. ET on Nov. 25, 2024 | Source: Stocktwits
Most retail investors on Stocktwits expressed pessimism on the stock in the wake of the accounting error disclosure.
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