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Macy’s reported weaker-than-expected preliminary sales for its fiscal third quarter and said it was delaying the release of its quarterly earnings results after discovering an accounting problem of up to US$154 million ($236 million).
An independent investigation and forensic analysis revealed that an employee responsible for accounting for small package shipping charges intentionally made false accounting entries to hide approximately $132 million to $154 million in costs from the fourth quarter of 2021 through the fiscal quarter that ended Nov. 2.
The company recognized about US$4.36 billion (US$6.69 billion) in delivery costs during the same period.
Macy’s said there was no indication that the erroneous accounting entries had any impact on its cash management or supplier payment activities.
The company said the person behind the conduct was no longer an employee and that the investigation did not reveal the involvement of any other workers.
Macy’s said it was delaying reporting third-quarter earnings results to complete an independent investigation. It expects to release its full financial results for the third quarter by December 11.
“At Macy’s Inc, we promote a culture of ethical behavior,” Chairman and Chief Executive Officer Tony Spring said in a statement.
“While we are working diligently to complete the investigation as quickly as possible and ensure that this matter is handled appropriately, our colleagues across the company are focused on serving our customers and executing on our strategy for a successful holiday season.”
The company reported some preliminary results for its third quarter, including that net sales fell 2.4 percent to $4.74 billion, just above the average analyst estimate of $4.72 billion.
Macy’s comparable sales – sales from established brick-and-mortar and online channels – fell 2.4 percent, excluding licensed businesses such as cosmetics.
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By department, Macy’s comparable sales fell 3 percent, while Bloomingdale’s comparable sales rose 1 percent. Bluemercury’s comparable sales rose 3.3 percent,
Shares of Macy’s were largely unchanged in premarket trading after falling more than 3 percent earlier Monday morning.
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