Macy’s on Monday delayed the publication of its third-quarter results due to an accounting issue tied to delivery expenses and instead posted preliminary results in which its sales missed Wall Street expectations.
A single employee “intentionally made erroneous accounting accrual entries” to hide about $132 million to $154 million of delivery expenses from the fourth quarter of 2021 through third quarter of 2024, the department store chain said.
Macy’s had recorded about $4.36 billion as delivery expenses in this period.
Shares of the Bloomingdale’s parent, which was set to report results on Nov. 26, fell 3% before the bell, as the company expects third-quarter sales to be down 2.4%.
The company said the employee is no longer with the company and that an independent investigation showed no involvement by any other employee and there was no sign of the error affecting cash management activities or vendor payments.
Macy’s preliminary results showed net sales fell to $4.74 billion compared to $4.77 billion based on estimates compiled by LSEG, a sign that steep promotions have failed to draw customers who have turned selective on purchases for the holidays.
But CEO Tony Spring said November comparable sales were trending ahead of third-quarter levels, in the run-up to the crucial shopping season, where retailers offer big discounts.
Macy’s surprise announcement has amplified concerns of an uncertain holiday season, which is likely to favor large retailers such as Walmart and Amazon.
Target and several other department store chains, however, may see muted sales due to their skewness toward more slightly pricey non-essential items.
Macy’s expects to report its full third-quarter financial results and hold its earnings conference call, in which it will provide its fourth quarter and annual outlooks, by Dec. 11.
“While we work diligently to complete the investigation as soon as practicable and ensure this matter is handled appropriately, our colleagues are focused on…executing our strategy for a successful holiday season,” Spring said.