A tale of two retailers: Macy's and Barnes & Noble
Investigations are like Goldilocks' porridge: Too long screams cover-up, but too short strains credibility. When claims are that a lone-wolf is responsible, issuers and advisors need to show the work.
“It’s the wanting to know that makes us matter.” Tom Stoppard , Arcadia
November 25, 2025 marked one year since Macy’s announced via a press release, in Nov. 2024, that it was delaying its third quarter 2024 earnings release and conference call. In an 8-K filing that otherwise looked like an earnings press release, the company delivered a page and a half of preliminary results before noting on the second half of page 2 that there were “Other Corporate Developments.”
The company also reported today that, during the preparation of its unaudited condensed consolidated financial statements for the fiscal quarter ended November 2, 2024, it identified an issue related to delivery expenses in one of its accrual accounts.
The company consequently initiated an independent investigation. As a result of the independent investigation and forensic analysis, the company identified that a single employee with responsibility for small package delivery expense accounting intentionally made erroneous accounting accrual entries to hide approximately $132 to $154 million of cumulative delivery expenses from the fourth quarter of 2021 through fiscal quarter ended November 2, 2024. During this same time period, the company recognized approximately $4.36 billion of delivery expenses.
There is no indication that the erroneous accounting accrual entries had any impact on the company’s cash management activities or vendor payments. The individual who engaged in this conduct is no longer employed by the company. The investigation has not identified involvement by any other employee.
In 2023, the results for the third quarter ending October 28, 2023 had been issued via press release on November 16 and the 10-Q filed November 28.
The 2025 3rd Quarter earnings report, published December 3, 2025, went off without a hitch, sort of, and there is no mention of last year’s troubles. That’s all behind them.
I say “sort of without a hitch” because the first 8-K earnings report was filed with the SEC at 6:59:58 on the morning of December 3rd but had to be corrected 6 hours later.
CORRECTION...by Macy’s, Inc.
NEW YORK--(BUSINESS WIRE)--In the table below heading “2025 Guidance,” column “Guidance as of December 3, 2025,” row “Core Adjusted EBITDA as a percent of total revenue”: 7.5% to 7.7% (instead of 7.5% to 7.8%).
The news, otherwise, was pretty good.
Macy’s, Inc. net sales and Adjusted diluted EPS exceeded guidance, driven by Bold New Chapter momentum
Macy’s, Inc. delivered its strongest comparable sales1 growth in 13 quartersMacy’s go-forward business achieved its second consecutive quarter of comparable sales growth, fueled by Reimagine 125 stores and digital strength
Bloomingdale’s achieved its fifth consecutive quarter of comparable sales growth
In this newsletter I’m going to compare the disclosures and apparent resolutions of the Macy’s case with another one that made news recently, Barnes & Noble. The facts and conclusions are eerily similar.
I am going to look at how well, or not, Macy’s and Barnes & Noble, have handled bad news. My analysis is based on what I tell my students, and have told Directors at Stanford and Columbia in the past, about what to expect when a potential material misstatement is uncovered whether due to error or fraud, based on one of the potential sources of this kind of revelation these days: internal tips and whistleblowers, activist short research reports, journalist exposé, and external auditors.
What does a good corporate investigation look like when executives, external auditors, and the Board become aware of a potential material misstatement, whether due to error or fraud?