Dive Brief:

• Macy’s on Tuesday said Thomas J. Edwards — currently the CFO and COO of fashion luxury group Capri Holdings — will become the New York department store chain’s CFO and chief operating officer, effective June 22, according to a release. Edwards will replace Adrian Mitchell, who has been Macy’s CFO since joining the company in November 2020. Edwards rose to the expanded role of COO and CFO in 2023. 
• The change in financial leadership comes as the company is in the midst of a multi-year turnaround initiative and a little over four months after the company revealed that an employee made “erroneous accounting accrual entries” that were determined to have hidden about $151 million in delivery expenses in a period from the fourth quarter of 2021 through the fiscal quarter ended Nov. 2, 2024. 
• In December, the company said a completed investigation into the matter determined that there was “no material impact to financial results for any historical annual or interim period” and that the company was strengthening its existing controls and making additional changes to “prevent it from happening again.”

Dive Insight:

Some experts said the responsibility and repercussions for such accounting missteps typically lies within a CFO’s purview and could have led to the leadership change, but Macy’s said there was no connection. 

“While we don't discuss business rationale regarding any leadership transition or change, this decision is not related to the accounting issue. We have been transparent and our disclosures are complete,” the company said in statement emailed to CFO Dive. 

But Ed Ketz, an associate professor of accounting at Penn State University, said it is likely that the board would have been under pressure to change the CFO leadership, noting that waiting several months to take an action could have had benefits as a more positive messaging strategy. 

“If much sooner, Macy’s would be practically admitting an error,” Ketz said in an email. “This far apart one can provide alternative explanations.”

Shawn Cole, president of executive search firm Cowen Partners, also said financial chiefs typically face consequences for such mistakes.  

“The unfortunate reality of being CFO is that once the mistake was found, the board had to act as he [Mitchell] was ultimately responsible for overseeing and controlling such errors,” Cole wrote in an email. 

Cole believes that Macy’s publicly pinned the blame on a low-level accountant to frame the problem as a smaller isolated incident, buying some time to find a new finance chief and “avoiding the immediate need for Mitchell to resign,” he wrote in an email.  

In contrast, while acknowledging that the accounting problems were embarrassing for the company, David Swartz, senior equity analyst with Morningstar, said the time that has passed since the issue arose suggests it isn’t related to the CFO change. 

“The accounting issue has been sort of forgotten, and if [Mitchell] was going to take the fall for it it probably would have happened before,” Swartz said in an interview. Then too, he said the fact that the transition will not occur until June suggests that there’s no rift. 

At the same time, the new CFO does fit into the company’s push to highlight its luxury offerings as it looks to cut costs and reposition itself. “I don’t know why this move was made, but Macy’s certainly has problems that are much bigger than who the CFO is,” Swartz said, noting that the company is in downsizing mode and closing stores.

“It’s a company that has a business model that doesn’t work anymore — the department store model is broken,” he said.