Macy’s said today that an employee had “intentionally” misstated and hidden up to $154 million in delivery expenses over the past few years, forcing the retailer to delay a much-anticipated earnings report that Wall Street uses to gauge the strength of holiday shopping.

The department store chain rushed to release an abridged set of financial results, which were a mixed bag, with signs of weakness and pockets of strength.

Macy’s shares fell more than 8% in premarket trading after the surprise preliminary report. But it quickly pared back some of its losses, as investors tried to make sense of the mixed results along with the company’s reassurance that the employee error, which Macy’s said spanned the fourth quarter of 2021 through the most recent quarter, did not affect its cash flow management or vendor payments.

Macy’s sales in the third quarter fell 2.4% — below analysts’ expectations — to $4.74 billion. The company’s overall sales were dragged down by weak performance at Macy’s stores and its digital business.

But sales at 50 locations that represent the company’s future — based on geography, staffing and other factors — rose 1.9%, the third consecutive quarter of growth. And comparable sales rose at both Bloomingdale’s and Bluemercury, the company’s luxury brands. Those results are early signs that Macy’s latest strategy of investing in these parts of the business may be working.

Macy’s said it had found the accounting error while preparing its results for the quarter, which ended Nov. 2. The results had been set to be released Tuesday. An investigation was opened, and the employee, who was responsible for small package delivery expense accounting, is no longer with the company, Macy’s said. The investigation has not identified involvement by any other employee.

In the same three-year period of the accounting issue in which the employee hid up to $154 million, the retailer said it had recorded about $4.36 billion in delivery expenses — the cost to a business in order to transport goods. Macy’s declined to comment further. A spokesperson for KPMG, Macy’s auditor, declined to comment.

While amounting to a small percentage of the retailer’s total delivery expenses, the millions of dollars that the employee misstated is comparable to Macy’s total net income in 2023: roughly $105 million. The retailer reported a profit of $150 million for the second quarter of 2024, a figure that fell within the range of the hidden delivery costs.

“It is so strange because I’m trying to imagine why an accountant, who’s responsible for this small package delivery expense account, would do this,” said Blake Oliver, a certified public accountant and founder of the mobile app Earmark. “It doesn’t make sense to me. Could it have been a mistake? Could they have been making the wrong journal entry for years, and it just went completely unnoticed? It’s a mystery.

“This just is strange because I don’t see a motive,” he said.

Oliver also said that with a large company like Macy’s, which does billions of dollars in sales in a year, small errors can compound over time and become big issues.

The chain said it would report earnings by Dec. 11.

Neil Saunders, managing director at the retail consulting firm GlobalData, said the delay in the results was “not a good look.”

“While Macy’s cannot control the actions of every employee, it is worrying that these are intentional accounting errors that go back to 2021,” Saunders said in a statement. “Such things create more nervousness for investors who are already concerned about the company’s performance.”

As part of a turnaround plan announced in February, Macy’s said it would close 150 of its stores over the next three years. The company said it had recorded asset gains of $66 million from the sale of closed stores. That was more than the company had expected.

Macy’s decision to delay its full-year guidance added to uncertainty about winners and losers in the upcoming holiday shopping season. U.S. consumers are still spending, but executives at some of the biggest retailers, including Target, have recently flagged shoppers’ continuing cautious spending patterns, with many trading down to lower-priced items. The National Retail Federation projected U.S. holiday sales to grow as much as 3.5% this year, in line with averages before the pandemic.

This article originally appeared in The New York Times.

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