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.
"We’ve concluded our investigation and are strengthening our existing controls and implementing additional changes designed to prevent this from happening again and demonstrate our strong commitment to corporate governance," Macy's CEO Tony Spring said in a statement.
One employee created erroneous entries between the end of fiscal year 2021 through Nov. 2, 2024.
MACY'S SAYS EMPLOYEE 'INTENTIONALLY' HID UP TO $154M IN EXPENSES
Macy's said this loss "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.
TARGET SHARES PLUNGE AFTER LACKLUSTER SALES AHEAD OF HOLIDAY SEASON
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.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
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. It now projects the share price to fall between $2.25 to $2.50, which is down from the range of $2.55 to $2.90 it reported in August.
FOX Business' Breck Dumas contributed to this report.
