Macy's boosts forecasts as vaccines encourage in-store shopping

to its stores to upgrade their wardrobes after being stuck at home for more than a year.

The New York-based retailer's shares gained about 2% after a surprise first-quarter profit and comparable sales that beat Wall Street estimates.

"As the weather warms up and vaccines are more readily available, customers are feeling increasingly confident to get dressed up and venture outside. They're also starting to attend events again," Chief Executive Officer Jeff Gennette told analysts.

Consumers, flush with cash from additional stimulus, are also splurging on expensive fragrances, shoes, fine jewelry and dresses, Macy's said, as pajamas and t-shirts give way to more formal wear.

With more Americans readying to travel as restrictions also ease, summer travel essentials including sandals, swimsuits and luggage are also in demand.

Macy's forecast adjusted earnings per share between $1.71 and $2.12 for 2021, compared with its earlier outlook of 40 cents to 90 cents.

It expects sales between $21.73 billion and $22.23 billion, much higher than the $19.75 billion to $20.75 billion it forecast earlier.

"We don't see this as a short-term pop. There are pent-up demand opportunities," Gennette said.

The owner of Bloomingdale's and beauty store chain Bluemercury, however, was cautious on tourist spending.

International tourism, which historically has made up for 4% of Macy's and Bloomingdale's business, is not expected to improve until next year, Gennette said.

"(Macy's) has improved in very difficult times. In many ways Macy's is in much better shape than pre-pandemic times," said Craig Johnson, president at retail consultancy Customer Growth Partners.

The company earned 39 cents per share on an adjusted basis, compared with expectations of a 41-cent loss, according to IBES data from Refinitiv.