Macy's said same-store sales rose 3.9% compared with the same quarter the year before.
The company's stock rose almost 10% in premarket trading as Macy's blew away many estimates.
As per the survey of the analysts, the expected earnings was 37 cents which actually rose to 48 cents.
Macy's good quarter suggests that many consumers are still willing to actually go to stores to shop instead of just buying clothes on their phones and tablets.
CEO Jeff Gennette said in the company's earnings release that the solid results were proof that "the winning formula" for Macy's is "a healthy brick & mortar business, robust e-commerce and a great mobile experience".
The company also saw a boost from worldwide tourism but said it would be ending its joint venture with Fung Retailing Limited in China. The retailer's top markets overseas include China, the United Kingdom and Brazil.
For the thirteen-week period ended May 5, Macy's earned US$139mln, or US$.045 per share, which was more than a third higher than the year-ago quarter, when it earned US$78mln or US$.026 per share. Consensus estimates call for $3.61 in EPS on $24.73 billion in revenue for the year. The company said some of its best-selling categories were fine jewelry and dresses.
The retailer's 4.2 per cent rise in same-store sales in the first quarter easily topped Wall Street's 1.4 per cent estimate.
The quarter also benefited from a change in accounting that shifted its Friends & Family promotional programme from the second quarter to the first, the company said. During the quarter, analysts expected that the company would generate revenue in the amount of $5.4 billion.
Macy's expects full-year earnings in the range of $3.75 to $3.95 per share. Over the last three months, insiders sold 107,392 shares of company stock worth $3,173,164.
Deutsche Bank analysts also hit a sour note on the sector, writing in a report last week that department stores may already be overvalued by investors, as the "fundamental upside is limited" for the sector. Jefferies Group reiterated a "hold" rating on shares of Macy's in a report on Tuesday, February 27th. This compares to $80 million, or 1.5 percent of sales, in the first quarter of 2017, apart from premiums on the early retirement of debt. Delpha Capital Management LLC purchased a new position in shares of Macy's in the fourth quarter valued at $117,000. In recent weeks, the company acquired the retail concept Story, an acquisition that brought with it a much-talked-about innovator in founder Rachel Shechtman, and also announced it has broadened its loyalty program beyond credit card holders and expanded its off-price Backstage business.
Chief Executive Jeff Gennette said in prepared remarks that Macy's "saw continued healthy consumer spending and significant improvements in global tourism".
Macy's isn't the best day trading stock but with a move like this in the premarket we should see plenty of opportunity on this name today.
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