Macy’s Inc reported a small decline in holiday same-store sales on Wednesday, surprising investors who were bracing for a sharper drop following an earlier profit warning.
The company, which cut its annual profit forecast in November blaming weak international tourism and sluggish mall traffic, reported a 0.6% decline in holiday sales during November and December.
Macy’s is among the first major corporate names to report sales for the holiday season, which is seen as a barometer for the health of U.S. consumer spending.
The retailer also plans to shutter 28 Macy’s locations and one Bloomingdale’s store in the coming weeks, a Macy’s spokeswoman said.
She said the closures were part of a routine review of the company’s store portfolio. Macy’s operates about 860 stores in the United States.
For the full quarter, analysts were expecting a 1.8% decline in same-store sales, according to IBES data from Refinitiv.
“It’s bit of a relief for investors, as they were concerned sales were going to be down more than that,” Ken Perkins, founder of research firm Retail Metrics told Reuters.
Given the traffic at stores did not look particularly great during the holidays, the sales number looks good, Perkins said.
He cautioned, however, that heavy discounting during the season could dent the company’s margins.
Chief Executive Officer Jeff Gennette said Macy’s holiday sales benefited from online purchases and demand for gift products, as well as a complete revamp of about 150 stores with fresh interiors and better merchandise.
U.S. consumers are increasingly spending more money online rather than queuing up at physical stores during the holiday season, forcing traditional brick-and-mortar retailers to invest in more shopping and delivery options.
U.S. e-commerce sales in the period from Nov. 1 through Christmas Eve rose 18.8%, according to a Dec. 25 report by Mastercard Inc, while overall holiday retail sales, excluding autos, rose just 3.4%.
Consumer spending in the country is benefiting from wage growth and the lowest unemployment rate in nearly half a century.
Shares of the company, which rose as much as 5%, were marginally up at $17.78.