(Reuters) -Macy’s Inc raised its annual profit forecast on Thursday, helped by strong demand for high-margin apparel from consumers returning to weddings and other social events, even as red-hot inflation saps consumer spending power.
The department store’s shares rose 15.7% to $22.22 in premarket trading as the company joined rival Nordstrom Inc in bucking a trend of profit warnings from major retailers who are seeing consumers prioritize spending on household essentials.
Macy’s, which was hit hard by store closures during the pandemic, has seen sales rebound sharply with the reopening of offices and resumption of social events, as demand for expensive dresses, formal wear and shoes booms.
“While macroeconomic pressures on consumer spending increased during the quarter, our customers continued to shop,” Macy’s Chief Executive Officer Jeff Genette said.
“We saw a notable shift back to occasion-based apparel and in-store shopping, as well as continued strength in sales of luxury goods.”
High-end fashion has been relatively insulated from the effects of inflation so far this year and companies including Nordstrom and Ralph Lauren Corp see consumers continuing to spend despite even more planned price increases.
Macy’s said it expects fiscal 2022 adjusted earnings per share of $4.53 to $4.95, compared with its previous forecast of $4.13 to $4.52.
The company’s net sales rose to $5.35 billion in the first quarter ended April 30, from $4.71 billion a year earlier. Analysts had expected sales of $5.33 billion, according to Refinitiv data.
Macy’s adjusted net income more than doubled to $315 million, or $1.08 per share, in the first quarter.
(Reporting by Uday Sampath in Bengaluru; Editing by Shounak Dasgupta)
