Macy’s Earnings Delay Linked to Major Financial Misstep

Macy’s has postponed its Q3 earnings announcement due to an internal inquiry regarding an employee accused of concealing expenses totaling hundreds of millions of dollars.

Currently, shares of Macy’s, Inc. M are trading down, with indications that this downward trend could persist.

This concern makes it our Stock of the Day.

The employee, who was in charge of accounting for small package delivery expenses, reportedly made deliberate “erroneous accounting accrual entries.” During the period from Q4 2021 to the current third quarter, about $154 million might have been misappropriated. Macy’s has stated that there is “no indication that the accounting error had any impact on the cash management activities or vendor payments,” and confirmed that the employee is no longer part of the organization.

Related Coverage: Understanding the Decline of Macy’s Stock

Before this revelation, Macy’s stock was already appearing susceptible to decline. Technical analysis showed that it faced resistance around the $16.40 price point. Historically, stocks tend to experience a sell-off upon hitting resistance levels, which occurred for Macy’s in mid-October and early November.

In stock trading, when prices rise, demand can outstrip supply, forcing buyers to increase their bids to attract sellers. This dynamic reflects a rising market trend. However, once a stock hits resistance, the equation flips. An excess supply of shares allows sellers to meet demand, which can stop price increases altogether.

Sometimes, investors who have placed sell orders at resistance levels may become unsettled. They recognize that buyers will seek out the lowest prices available. This fear can lead to a chain reaction where sellers lower their asking prices, causing even more price drops in the market.

This scenario contributed to the downturn the last two times Macy’s reached the $16.40 resistance level, and it may be unfolding again.

Next Steps: Stay Updated on Macy’s Performance

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