Macy’s Concludes Investigation into Employees’ Misconduct, Cuts Profit Forecast
Macy’s, a department store chain, has concluded its investigation into an employee who intentionally hid more than $150 million in expenses over nearly three years. The employee, who was responsible for keeping track of small package delivery expenses, entered erroneous accounting figures to conceal the costs.
The company discovered the issue last month, which delayed its quarterly earnings report. The investigation found that the employee’s actions were not material to Macy’s previously filed financial statements, and the questionable expenses were a small fraction of the company’s total delivery expenses.
The employee is no longer with the company, but Macy’s has not disclosed whether they were fired or left voluntarily. The company has strengthened its controls to prevent similar incidents in the future, according to CEO Tony Spring, who said, “We’ve concluded our investigation and are strengthening our existing controls and implementing additional changes designed to prevent this from happening again… Our focus is on ensuring that ethical conduct and integrity are upheld across the entire organization.”
Despite the conclusion of the investigation, Macy’s stock fell more than 11% in premarket trading after the company reduced its profit forecast. The company now expects earnings between $2.25 and $2.50 a share, down from its previous forecast of $2.55 to $2.90 per share. Quarterly sales also fell 2.4% to $4.7 billion, driven by weakness in digital sales and warm weather affecting demand for cold-weather items like winter coats.
Macy’s is struggling to stay afloat, with many investors calling for drastic changes, including the potential closure of all its stores and sale of its real estate. The company has rejected takeover bids and is pursuing its own turnaround plan, which includes closing hundreds of stores.