Shares of Macy's fell in premarket trading after the company revealed that an independent investigation and forensic analysis found an employee hid over $100 million in expenses. This news ultimately delayed Macy's release of its third-quarter earnings.
In a preliminary third-quarter 2024 update, Macy's wrote that "an independent investigation and forensic analysis" found 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 November 2, 2024."
"During this same time period, the company 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," Macy's noted.
The largest US department store retailer said, "The investigation has not identified involvement by any other employee."
Preliminary third-quarter results showed revenues of $4.74 billion, slightly exceeding the consensus estimate of $4.72 billion. Comparable sales declined by 2.4% on an owned basis and down 1.3% on an owned-plus-licensed-plus-marketplace basis.
Sales growth at Macy's First 50 locations, Bloomingdale's, and Bluemercury was offset primarily by weakness in Macy's other non-First 50 locations as well as its digital channel and cold weather categories.
Macy's shares fell 3.5% in premarket trading in New York.
The stock has lost nearly 19% since Friday's close, and it is on the cusp of a bear market. If losses hold in the premarket through the cash session, Macy's shares will enter a bear market.
