Macy's employee steals $151 million by hiding delivery expenses
- An employee at Macy's hid more than $151 million in delivery expenses over nearly three years due to an initial accounting error.
- The investigation, which concluded recently, revealed the employee acted alone and was not motivated by personal gain.
- Macy's is taking steps to strengthen internal controls and is closing about 150 stores while lowering its profit outlook.
In late 2021, an employee at Macy's mistakenly understated the value of small parcel delivery expenses, which eventually resulted in the employee hiding $151 million in those expenses over nearly three years. The misstatement was uncovered in November 2024, leading to an independent investigation, which found that the employee acted alone, intentionally making erroneous accounting entries and falsifying documentation to conceal the initial mistake. During this period, Macy's experienced significant fluctuations in its stock prices and had to delay its third-quarter earnings report. Following the investigation, the company revised its historical financial reports and took steps to strengthen internal controls. As a consequence of this incident, Macy's experienced a notable decline in share prices, which prompted the firm to lower its earnings outlook. The company adjusted its expectations for adjusted earnings per share and predicted a slight decline in sales for the upcoming fiscal year, while still anticipating a full-year revenue range of $22.3 billion to $22.5 billion. Executives acknowledged that consumer spending habits and economic pressures affected sales, contributing to the overall decline in performance at the department store chain. The rogue employee responsible for this financial mismanagement was not motivated by personal or financial gain; rather, the actions were a misguided effort to mask the initial unintended accounting error. This individual has since been terminated from the company. Macy's management, including CEO Tony Spring, affirmed their commitment to maintaining integrity and ensuring ethical conduct within the organization. They also initiated enhancements to existing controls to prevent future occurrences of similar accounting issues and emphasized the importance of corporate governance. In light of its financial struggles and the impact of the hidden expenses, Macy's announced the closure of around 150 underperforming stores by early 2027 as part of a broader strategy to streamline operations and maintain profitability. The company is focused on repositioning itself amidst shifting consumer habits and increasing cost of living, as it navigates through the complexities of its turnaround efforts.