U.S. department store chain Macy's (Macy's) discovered late that an accounting employee had intentionally omitted approximately $150 million (about 210 billion KRW) in shipping-related expenses over several years, leading to a two-week delay in the announcement of its Q3 earnings report. Macy's stock price fell by more than 2%.
On the 25th (local time), Macy's disclosed preliminary Q3 earnings and announced that the formal earnings report, originally scheduled for the 26th, will be released on November 11. This follows the discovery that an accounting employee responsible for the courier shipping expense account intentionally failed to record between $132 million and $154 million in expenses from Q4 2021 to recently.
Macy's has launched an internal investigation and plans to disclose detailed information about this issue when it releases the quarterly earnings report on November 11. No additional individuals have been identified as involved in the internal investigation. It is also understood that the employee did not personally benefit from the funds. The employee has since been terminated.
Furthermore, the Wall Street Journal (WSJ) noted that KPMG, the accounting firm auditing Macy's since 1988, also failed to detect this error. KPMG declined to comment on WSJ's request. Jeffrey Johannes, Associate Professor of Accounting at the University of Texas at Austin, pointed out, "It is clear that there was a breakdown in the company's internal controls."
However, Macy's confirmed that this accounting error does not affect the company's liquidity management or payments to suppliers. In its preliminary earnings announcement, Macy's reported Q3 sales of $4.74 billion, a 2.4% decrease compared to the previous year. This figure exceeds Wall Street's consensus estimate of $4.72 billion compiled by FactSet.
Due to the accounting error incident, Macy's stock closed down 2.21% compared to the previous session on the New York Stock Exchange. Macy's stock price has fallen more than 20% so far this year.
Founded in 1858, Macy's operates about 500 department store locations across the United States. It is well known for the annual Thanksgiving Day Parade and Independence Day fireworks held in New York. However, the rise of e-commerce companies such as Amazon amid the expansion of online shopping has led to a contraction in recent years.
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