What happened

Shares of Macy's (M 0.69%) popped this morning, rising as much as 11% before giving back most of those gains, after the department store specialist reported second-quarter earnings. The stock is up less than 1% as of 3 p.m. EDT.

So what

Q2 revenue fell by 36% to $3.56 billion as the COVID-19 pandemic wreaked havoc on retailers. That top-line result beat the consensus estimate of $3.51 billion in sales. Macy's posted an adjusted net loss of $251 million, or $0.81 per share, which was significantly better than the $1.80 per share in red ink that analysts were bracing for. Strength in digital sales, which increased 53%, helped offset the drop in physical sales.

Exterior of a Macy's store

Image source: Macy's.

"Restarting our stores' business was our top priority, and we successfully accomplished that while also ensuring that our digital business remained strong," CEO Jeff Gennette said in a statement. "Going into this crisis, we had a well-developed digital business and we're seeing that thrive as we attract new and welcome existing customers back to our brands."

Now what

Macy's was able to reduce its inventory by 29% and said it finished the quarter with a "a clean inventory position." The company ended Q2 with $1.4 billion in cash and $3 billion of available liquidity through a credit facility.

Gennette added that Macy's top priority right now is to "successfully execute" over the holiday shopping season. The company previously withdrew guidance for 2020 due to ongoing uncertainty related to the coronavirus outbreak and did not provide an updated outlook.