Macy’s topped Wall Street estimates for quarterly same-store sales and profit on Wednesday, benefiting from increased online sales and higher demand for items sold at its off-price stores.
Macy’s shares, which have so far lost more than a quarter of their value this year, rose about 3% to $22.46 in early trading.
Like its peers, the Cincinnati, Ohio-based department store chain faltered in the past few years as it struggled to adjust to a fiercely competitive retail landscape where shoppers buy more goods online at places like Amazon.
In response, the 160-year old retailer has closed more than 100 stores since 2015 and cut thousands of jobs as mall traffic plummeted.
Macy’s has poured money into building up its private label clothing as well as expand its off-price venture, Backstage, by adding 45 more stores this year.
The company in February said it would also invest in categories where Macy’s has a strong market position such as dresses, jewelry, women’s shoes and beauty products.
“Our brick & mortar sales trend improved sequentially in the first quarter, supported by … Backstage,” Chief Executive Jeff Gennette said in a statement.
Gennette also said the company saw double-digit growth in its digital business and that mobile continues to be the retailer’s fastest-growing channel for sales growth.
Sales at Macy’s stores open more than 12 months, including sales in department stores licensed to third parties, rose for the sixth straight quarter. They were up 0.7 percent, above the average analyst estimate of a 0.3% rise, according to research firm Consensus Metrix.
Last quarter, Macy’s announced a plan focused on cost cuts for 2019 to speed up decision-making and result in an annual savings of $100 million.
The company earned $136 million, or 44 cents per share, in the first quarter ended May 4, compared to $139 million, or 45 cents per share, a year ago. That exceeded the average analyst estimate of 33 cents.
Net sales fell to $5.50 billion, roughly in line with analysts expectations, according to IBES data from Refinitiv.
“With comp results coming in better-than-feared, we’d expect a modest relief rally out of Macy’s today, but would not be chasing the stock,” Gordon Haskett analyst Chuck Grom said in a note.
The company also repeated its previously issued financial forecast for the year.