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Macy’s finally released its third-quarter earnings on Wednesday after having to delay it due to a massive accounting scandal caused by one employee. The employee, who no longer works for Macy’s made one mistake that led to years of coverup.
We’re right in the middle of the holiday season, and Macy’s is making news—not just for its Thanksgiving Day parade and Black Friday sales—but for finally closing the book on a massive accounting error. On Wednesday, Macy’s announced it had just completed an investigation into a $151 million accounting error, and pinned it on a single employee.
In late November, the department store chain announced it would delay its third-quarter earnings release and conference call to complete an investigation and forensic analysis into delivery expenses in one of its accrual accounts. The investigation revealed that one employee “intentionally made erroneous accounting accrual entries,” ultimately hiding more than $150 million in delivery expenses from Q4 2021 through the fiscal quarter that ended Nov. 2.
The investigation found the employee (who is no longer working at Macy’s), had made one accounting mistake in late 2021, which snowballed into years of coverup, a person briefed on the probe told The Wall Street Journal.
“We’ve concluded our investigation and are strengthening our existing controls and implementing additional changes designed to prevent this from happening again and demonstrate our strong commitment to corporate governance,” Tony Spring, chairman and CEO of Macy’s, said in a statement. “Our focus is on ensuring that ethical conduct and integrity are upheld across the entire organization.”
The employee told investigators they had mistakenly understated the amount of small parcel delivery expenses in late 2021, the person briefed on the probe told WSJ, and they continued to intentionally make erroneous accounting entries to mask the mistake. Macy’s confirmed in a statement the employee worked on small package delivery expense accounting, but didn’t provide further information about them.
The employee “didn’t act out of personal or financial gain,” the person briefed on the probe told WSJ, and Macy’s confirmed on Wednesday this investigation didn’t impact Macy’s revenue, cash, inventory, or vendor payments.
“This was not theft,” Adrian Mitchell, Macy’s chief financial officer and chief operating officer, said during an analyst call. “There was no impact to revenues, and there was no impact to cash or inventories as all vendors were fully paid.”
Macy’s didn’t immediately respond to Fortune’s request for comment as to how its auditor, KPMG, didn’t catch the errors. KPMG declined Fortune’s request for comment.
