Macy’s disclosed that an employee hid approximately $151 million of expenses over the last year, but said the discovery didn’t have a “material impact” on its financial results.
The discovery of the hidden expenses caused Macy’s to postpone the release of its third-quarter financials from late November to Dec. 11. Macy’s said it has since concluded its investigation into the incident and the individual has since left the company.
“A single employee with responsibility for small package delivery expense accounting intentionally made erroneous accounting accrual entries and falsified underlying documentation to hide approximately $151 million of cumulative delivery expenses from the fourth quarter of 2021 through the third quarter of 2024,” the company said in an SEC filing.
The individual “acted alone and did not pursue these acts for personal gain,” CEO Tony Spring said on the company’s third-quarter earnings call, according to a Seeking Alpha transcript.
“We promote a culture of ethical conduct,” he added. “When discovered, we move quickly to investigate and address the issue.… We’ve also identified and begun to implement additional controls to be a stronger and more disciplined organization so that an action like this could not happen again.”
In an SEC filing, Macy’s said that it had “identified a material weakness in its internal control over financial reporting related to the design of existing internal control activities involving manual journal entries over delivery expenses and certain other non-merchandise expenses.”
It said the weakness is being rectified.
The news came as the company announced its third quarter net sales fell 2.4% to $4.7 billion, with comp sales dropping 2.4%.
(Photo courtesy of Macy’s)
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