The news: Macy’s shrugged off broader economic uncertainty and delivered its best Q1 performance in four years.

• Net sales increased 1.8% YoY to $4.68 billion in the quarter ended May 2, ahead of expectations for $4.61 billion.
• Comparable sales rose 3% YoY, led by strength at Bloomingdale’s (up 10.2%) and Bluemercury (up 6.4%).
• Adjusted earnings per share of $0.13 beat expectations for $0.03.

The retailer raised its full-year forecast. Net sales are expected to be $21.5 billion to $21.75 billion, up slightly from the $21.4 billion to $21.65 billion range Macy’s offered in March. Comparable sales are now forecast to grow 0.5% to 1.2%, compared with its prior view of -0.5% to 0.5%.

Behind the numbers: Macy’s CEO Tony Spring noted that despite rising cost pressures, “the reality is the resilience of the consumer defies what they say in the commentary about confidence.” It helps that both Macy’s and Bloomingdale’s attract a more affluent customer—the typical Macy’s shopper earns over $75,000 a year, while most Bloomingdale’s customers make over $100,000—with greater capacity for discretionary purchases.

While it benefited from tax refunds and Saks’ bankruptcy, Macy’s also cited progress in its turnaround strategy.

• Efforts to improve merchandise quality, investments in store staff, and upgrades to the store experience are helping strengthen its appeal to shoppers.
• Management said sales trends are remaining consistent so far in Q2, pointing to customers’ continued interest in new products and hot brands.

Implications for retailers: Macy’s upbeat earnings and forecast suggests that, despite growing pessimism about the financial health of the US consumer, the retailer’s core customer remains ready and willing to spend. Still, as the company repeatedly noted, success comes down to execution: offering products that people want to buy and delivering a store experience that is enjoyable and excites shoppers.

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