Macy's profit beats estimates on store closures, lower costs

Department store operator Macy's reported a better-than-expected quarterly profit, helped by the sale of some of its stores and lower costs and taxes, sending the company's shares up 3.3 percent in premarket trading on Tuesday.

Up to Friday's close, Macy's shares had fallen 10 percent since it reported dismal sales for November and December, and announced store closures and job cuts.

Macy's said on Tuesday it sold its Union Square Men's store building in San Francisco for $250 million.

The company sold 66 stores last year, which helped bring costs down. The company's tax payments in the fourth quarter fell 14.7 percent to $256 million.

Macy's plans to close an additional 34 stores in the next few years, as the company, like rivals Kohl's Corp  and Nordstrom Inc, struggles with a drop in demand for clothes and accessories, and competition from online rivals including Amazon.com.

Canadian retailer and Saks Fifth Avenue owner Hudson's Bay had made a takeover approach for Macy's, Reuters reported this month.

Sales in Macy's stores open at least a year, including sales in departments licensed to third parties, fell 2.1 percent, compared with the 2.2 percent drop analysts polled by research firm Consensus Metrix had expected.

The owner of the Macy's and Bloomingdale's chains said net income attributable to its shareholders fell to $475 million, or $1.54 per share, in the fourth quarter ended Jan. 28, from $544 million, or $1.73 per share, a year earlier.

Excluding items, the company earned $2.02 per share, beating the average analysts' estimate of $1.96, according to Thomson Reuters.

The company's net sales fell 4 percent to $8.52 billion, the eighth straight quarter of decline, and coming in below estimates of $8.62 billion.

Macy's said it expects comparable sales on an owned plus licensed basis to fall 2-3 percent in the year ending January 2018.

In contrast, Wal-Mart Stores reported a 2.8 percent rise in U.S. sales in the fourth quarter, helped by higher store traffic and strong online sales.