Shares of Macy's, Inc. (NYSE:M), one of the largest U.S. department stores under brands such as Macy's, Bloomingdale's, Bloomingdale's Outlet, and Bluemercury, popped 11% as of 3:00 p.m. EST, after the retailer beat earnings estimates and had a positive outlook for the upcoming holiday season.
Despite the uptick in Macy's shares today, it was far from a blockbuster third quarter. Comparable-store sales, those at stores open more than 12 months, dropped 3.6% which was worse than the anticipated 2.6% decline. That, in combination with store closings, drove Macy's total sales 6.1% lower to $5.28 billion during the third quarter compared to the prior year. Despite the sales headwinds, Macy's did report adjusted earnings per share of $0.23, topping analysts' estimates calling for $0.19 per share.
"Overall, we're pleased with the results for the third quarter and we remain on track to meet our full-year sales and earnings guidance for 2017. Importantly, we also saw better gross margin performance primarily due to our tightly controlled inventory position," said Macy's Inc. CEO Jeff Gennette in a press release.
The silver lining driving the share price higher today is management's optimism heading into the critical holiday season. Management believes Macy's is still a destination retailer during the holidays and that its loyalty program, in-store experiences, and a stronger online presence will help boost holiday sales this year. Simply put, Macy's shares rising on a mostly disappointing third quarter emphasize just how far its stock has fallen over the past year. The share price is down nearly 50% alone over the past 12 months and roughly 67% over the past three years. At this point, any positive momentum at all is enough to perk up spirits and convince some investors to take some risk and buy shares.