“It is almost always the cover-up rather than the event that causes trouble.” - Tennessee Senator Howard Baker, in reference to the Watergate scandal

Whether you shop at Macy’s or not, you surely know the brand. In 2023, Macy's was the leading department store in the United States by revenue, with sales of approximately $23 Billion.

On November 25, 2024, Macy’s delayed an earnings announcement planned for the next day. They had discovered some “creative accounting” and wanted to conduct an internal investigation. Two weeks later, they announced that small parcel delivery expenses had been mishandled - approximately $150 Million worth.

As we then learned, what started as a mistake turned into a coverup, eventually leading to a share selloff, and one accounting employee being terminated.

In this episode of the Art of Supply podcast, Kelly Barner:

Explains what happened and how the issue was uncovered
Shares the role that the commonly-used accrual accounting method may have played
Review some of the speculation that has emerged in the absence of specifics
And flag ongoing concerns for the company and their auditing firm

Links:

Misfortune on 34th Street: Accounting Issues at Macy’s