Macy’s Inc., continuing to aggressively close underperforming department stores, reported drops in profits and sales for the first quarter of 2025 but said the performance was better than expected.

Net income dropped to $38 million, or $0.13 per diluted share in the quarter ended May 3, from $62 million, or $0.22 per diluted share, in the year-ago quarter.

Operating income declined to $94 million last quarter, from $125 million in the year-ago period.

Net sales slipped to $4.6 billion in the latest quarter, from $4.85 billion in the year-ago period.

Based on the dynamic situation with tariffs, and what the company sees as some moderation in discretionary spending and a heightened competitive promotional landscape, Macy’s reduced its earnings guidance for the year, but maintained its sales projection and stated it feels “confident” it can adapt to the changes.

“We continued to execute against our Bold New Chapter strategy during the quarter, scaling key initiatives that improved our customer experience and contributed to stronger than expected performance across all three of our nameplates,” Tony Spring, Macy Inc.’s chairman and chief executive officer, said in a statement issued Wednesday morning.

“Our first quarter results give us confidence that we have the right strategy and team in place to navigate the current environment while we continue to invest in our customer on the path to returning Macy’s Inc. to sustainable profitable growth.”

Officials also indicated that the results reported beat previously-issued guidance on sales and earnings per share.

Macy’s Bold New Chapter, introduced in February 2024, strategy involves investing in “go-forward” stores with increased staffing in high-traffic areas such as women’s shoes and fitting room areas, fresher products and improved visuals. Macy’s has designated 350 go-forward department stores. The strategy also calls for closing about 150 poor-performing department stores over a three-year period, while “accelerating and differentiating luxury,” striving for organic growth and store expansion at both Bloomingdale’s and Bluemercury, including opening Bloomie’s units, which are scaled down, specialized versions of the full-line Bloomingdale’s department stores.

By division last quarter, Macy’s net sales, including owned and licensed and through the store’s marketplace format, were down 0.9 percent. For the Macy’s “go-forward” department stores, comparable sales were down 1.9 percent.

Bloomingdale’s comparable sales rose 3.8 percent on an owned, licensed and marketplace basis.

Bluemercury’s net sales rose 0.8 percent, and on a comparable basis were up 1.5 percent.

Macy’s now expects adjusted earnings before interest, taxes, depreciation and amortization, as a percent of total revenue, to range between 7.4 percent to 7.9 percent, down from its previous forecast of 8.4 percent to 8.6 percent. Adjusted diluted earnings per share are seen coming in at $1.60 to $2, down from the previous forecast of $2.05 to $2.25 per diluted earnings per share.

However, the company’s forecast for sales is unchanged at $21 billion to $21.4 billion for this year.