Macy’s has started getting in benefits of healthy consumer spending after a strong holiday season.

The department store has kept its clearance racks in check and has less stale inventory on the floor.As a result, Macy’s managed to cross the first quarter earnings and sales expectations of the analysts. The company has, basically, brought out its full year outlook.

According to the trading reports on Wednesday, the company’s shares shot up more 7 percent to $32.16 a piece, which was on pace for their best day since Nov. 29, when the stock gained 8.16 percent.

As per the survey of the analysts, the expected earnings was 37 cents which actually rose to 48 cents. The revenue of the company rose to $5.5 billion while the expected revenue was $5.4 billion. The sales of the store got an increase of 4.2 percent compared to the expected 1.4 percent.

The company said all three of its divisions — Macy’s, Bloomingdale’s and Bluemercury — exceeded expectations during the first quarter of fiscal 2018.

The company also saw a boost from international tourism but said it would be ending its joint venture with Fung Retailing Limited in China. Instead, Macy’s will remain on TMall platform of Alibaba and focus its efforts there. The retailer’s top markets overseas include China, the United Kingdom and Brazil.

As per Neil Saunders of GlobalData Retail, “After a good holiday season, there was a question as to whether Macy’s could continue to deliver a recovery. Today’s results answer in the affirmative … suggesting that Macy’s recovery is gaining momentum.”

Net income climbed to $139 million, or 45 cents per share, in the period ended May 5, from $78 million, or 26 cents a share, a year ago. Excluding one-time items, Macy’s earned 48 cents a share, 11 cents better than what analysts had expected.

Revenues rose roughly 3.6 percent to $5.5 billion, again surpassing analysts’ expectations. The company said some of its best-selling categories were fine jewelry and dresses.

Same-store sales on an owned plus licensed basis were up 4.2 percent, nearly 3 percentage points higher than the Street’s forecast. Part of the jump can be attributed to the fact that Macy’s shifted a friends and family promotional event to the first quarter from the second quarter this year.

The retailer now expects full-year earnings per share to fall within a range of $3.75 to $3.95, 20 cents higher than a prior forecast. Analysts were calling for earnings of $3.61 a share, according to a Thomson Reuters survey.

Total sales in 2018 are predicted by Macy’s to climb as much as half a percent. Same-store sales on an owned plus licensed basis could rise as much as 2 percent.

Just last week, the shares of Macy’s Morgan were downgradedbg Morgan Stanley, citing declining sales and profit “pressure” from online players for the ratings change. A few days prior, Deutache Bank commented saying that there’s “limited upside” for investors in the department store space.

But the results from Macy’s on Wednesday paint a better-than-expected picture, and the company said momentum will continue into the latter half of the year. Its online sales increased by a double-digit percentage during the first quarter alone.

To combat rivals, the department store chain has been focused on rolling out new concepts in stores, like branded pop-up shops, and expanding its off-price business, Macy’s Backstage. In the first quarter alone, Macy’s opened about 20 Backstage locations, with plans to open 100 this fiscal year.

Last week, Macy’s opened up its loyalty program to all customers, which used to be limited to the chain’s credit card holders. It allows shoppers to rack up points on purchases that can them be redeemed at Macy’s stores or online.

On Wednesday, the CEO of the Macy’s, Jeff Gennette, said, “Our best customer is responding well to the improvements we’ve made to her experience in our stores, on .com and through the Macy’s app.

Including Wednesday’s gains, Macy’s shares are up about 25 percent so far this year.

Mia Noles
Mia Noles is a writer at the Ode Magazine. She holds a Bachelor of Arts English Literature Degree from Leeds University. Her specialty is Celebrity News, History, and World News. She is also a life enthusiast who loves traveling the world and taking part in humanitarian courses. You can contact her at mia@odemagazine.com.

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