Macy’s on Tuesday said revenues in the fourth quarter fell more than expected, however, adjusted earnings topped analysts’ estimates as the department store chain continues to right the ship and earned $675m in cash proceeds from its real estate transactions.

The company, which has received a takeover approach from Hudson’s Bay, said it expects comparable sales to slide between 2.2 per cent and 3.3 per cent in fiscal 2017. Meanwhile, it expects total sales for the year to slide between 3.2 per cent and 4.3 per cent reflecting the closure of 66 stores last year.

For the fourth quarter, profits slid to $472m or $1.54 a share in line with estimates and compared with $544m or $1.73 in the year ago period. Analysts had forecast earnings of $1.54 a share. Adjusting for one-time items, earnings of $2.02 topped expectations of $1.96.

Its full-year earnings of $3.11 a share were ahead of the downwardly revised outlook of $2.95 to $3.10 Macy’s unveiled last month.

Net sales fell 4 per cent to $8.5bn in the fourth quarter below expectations of $8.6bn, following disappointing holiday sales. Like-for-like sales slid 2.1 per cent but were modestly better than expectations for a 2.2 per cent slide. The news saw Macy’s shares, which have declined 10 per cent so far this year, rise 3 per cent in pre-market trading.

Terry J. Lundgren, Macy’s outgoing CEO, said:

While 2016 was not the year we expected, we made significant progress on key initiatives that are starting to bear fruit. These include continued improvement in our digital platforms, the rollout of our new approach to fine jewelry and women’s shoes, an increase in exclusive merchandise and the refinement of our clearance and off-price strategy. We also took a big step forward in rightsizing our physical footprint and restructuring our entire organization. The combination of these initiatives will help us gain market share, return to growth and drive enhanced value for our shareholders over time.

The Cincinnati-based company, which also owns Bloomingdale’s, has said it could lay off as many as 10,000 workers as part of an effort to boost efficiency and lower costs in a challenging retail environment.

Online retailers like Amazon and off-price retailers like TJX — that buy branded products from designers like Badgley Mischka and Marchesa at discounted prices and the sell them to customers for cheap — have served up fierce competition to department stores like Macy’s that have also seen sales hurt by weaker tourist spending as the US dollar has strengthened.

Under activist pressure, Macy’s has also moved to monetise its real estate portfolio and some analysts have argued that Canadian rival Hudson’s Bay’s approach could partly be a real estate play. The company said its real estate transactions in fiscal 2016 generated cash proceeds of about $675m, which is helping fund reinvestment in its business.

Looking ahead, the company said it will look to improve customer experience at its stores by featuring new merchandise and “entertainment options” alongside technology to make shopping easier.

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