“And just like that, Macy’s just made the “No one’s gonna know” meme popular again… 

Well, it looks like Macy’s just pulled a not-so-miraculous stunt on Accounting Street, and no, it’s not the feel-good holiday story most were hoping for. Turns out, one lone employee managed to bury up to $154 million in delivery expenses over nearly three years. Yes, one person. No elaborate scheme, no team of conspirators—just one overly ambitious accountant who apparently thought no one would notice. Spoiler: they did.

(Source: Imgflip) 

What’s more is that the timing of this couldn’t have been worse. This little accounting mindf**k went off just as Macy’s was prepping to drop its third-quarter earnings. Instead, the department store chain (also parent to Bloomingdale’s and Bluemercury) is now dropping an independent investigation. Earnings are delayed until December 11 while they try to figure out how this all went unnoticed for so long. In the meantime, they’ve tossed us some preliminary numbers. And as you can expect, they’re about as thrilling as the accounting fiasco. 

(Source: CNN) 

From what we could gather, Macy’s says net sales fell 2.4% to $4.74 billion in Q3, which barely edged out analyst expectations of $4.72 billion. Sales at Macy’s stores were down 3%, though Bloomingdale’s posted a modest 1% increase and Bluemercury saw a 3.3% gain. Which means it’s screaming clear that while the flagship Macy’s brand is struggling, its luxury and beauty divisions are doing their best to carry the weight.

(Source: Barrons) 

But again, the real issue is that between Q4 2021 and this quarter, a rogue employee hid $132 million to $154 million in delivery costs. Macy’s insists this didn’t impact cash flow or vendor payments, but it’s thrown their financial reporting into chaos. The employee has since been fired, and an outside investigation found no evidence that others were involved. So, no Ocean’s Eleven-style heist here—just bad accounting and worse oversight (sorta like the Department of Labors rounding error this summer LOL).

Of course, let’s not forget that in the midst of this happening, Macy’s is already closing 150 stores as part of an ongoing turnaround plan, trying to reverse slumping sales and convince investors it still has a place in 2024’s retail landscape. Their stock is down 21% this year, and the addition of an accounting scandal only adds to the company’s demise.

But, but, but… naturally, CEO Tony Spring tried to put a positive spin on things, emphasizing Macy’s commitment to “ethical conduct” and reassuring everyone that the company is focused on delivering results during the all-important holiday shopping season. Additionally, he also highlighted a small bright spot: Macy’s “First 50” stores, which are getting extra investment, saw a 1.9% increase in comparable sales. Which is not much, but at this point, Macy’s will take what it can get.

Now with that said, the big unanswered question is how this accounting mess will affect past and current earnings. Macy’s has yet to disclose the full impact, but you can bet investors are waiting nervously for the December 11 report. This mistake raises serious questions about the company’s internal controls and overall stability, especially as it faces declining sales, store closures, and a struggling middle-market customer base. 

(Source: Giphy) 

For now, Macy’s is leaning on Bloomingdale’s, Bluemercury, to carry the team through the holiday season. But still, even with that, it’s hard to shake the sense that they’re in damage-control mode, trying to salvage both their reputation and their bottom line. Investors may not be so easily convinced. Meaning, it’s going to take more than a friggin’ Thanksgiving parade to clean this ish up. 

In the meantime, “BTFD”! LOL, just kidding. Don’t be dumb, and place your bets accordingly. As always stay safe and stay frosty, friends! Until next time…

P.S. I hope you enjoyed this article, but in reality “just reading it” can only get you so far in your investing journey. It’s one thing to read these and get valued insights on the market, but it’s a whole different game to turn that knowledge into action. Which is why, if you haven’t checked out Stocks.News premium yet, what are you waiting for? Our team is absolutely killing it with 100%+ opportunities nearly every single week. So why not accelerate your knowledge and your results? It’s a no-brainer—especially with the Black Friday deal’s we are offering for a limited time right here. 

Stocks.News does not hold positions in companies mentioned in the article.