Analysts see much bigger challenges for the retailer than lax accounting.
With just two weeks until Christmas, Macy’s has been operating under a cloud. The retailer shocked Wall Street last month when it said that an employee had “intentionally” hidden more than $150 million over the past few years, forcing the company to delay an earnings report that analysts use to gauge its health as it enters the most important selling season.
On Wednesday, Macy’s gave investors a full look at its financials and provided more information about the accounting snafu that involved how it measured the cost of delivering small packages. It found “no material impact” on its previous results, but nonetheless had to revise its accounts going back a few years and lower its forecast for profits this year.
Macy’s confirmed in a filing that a single employee, who is no longer with the company, “intentionally made erroneous accounting entries and falsified underlying documentation, to understate delivery expenses” from late 2021 through the third quarter of this year. On a call with analysts, Adrian Mitchell, Macy’s finance chief, said the error was not made for personal financial gain.
“This was not theft,” he said. “There was no impact to revenues, and there was no impact to cash or inventories as all vendors were fully paid.”
Macy’s said it was taking measures to improve its financial controls, including “re-evaluating the risk of employee circumvention of controls.”
Concerns still remain about how the company will turn around its falling sales and fend off activist investors pushing for major changes.
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Source: Elections - nytimes.com
