Macy’s, Inc. (NYSE:M) has not only delivered better than expected earnings and top line numbers for the fourth quarter but also offered an upbeat earnings forecast for the current year. Investors have reacted to the positive news by lifting its stock as high as 5%. Shares are now trading close to 4% higher. The company indicated that it was well placed to stabilize its sales levels this year.

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Outlook For 2016

Macy’s expects earnings between $3.80 and $3.90 a share for the year 2016. The mid-point of $3.85 a share is higher than the Street analysts’ expectation of $3.83 a share for the same period. The retailer sees its comparable sales of its own stores plus licensed stores to fall about one percent while it expects a fall of 50 basis points on fully-owned stores.

Macy’s also sees sales falling by about 2% whereas the Street analysts predicted a 2.10% drop for the same period. The company is planning capital expenditures of $900 million, which would be lower than the $1.1 billion spent in the last year. It is also planning to add 42 Bluemercury locations besides opening new stores in Kapolei, Hawaii.

Q4 Results

Macy’s reported net income of $544 million, down 31.4% from $793 million while earnings fell 23.5% to $1.73 a share from $2.26 a share in the year-ago quarter. On an adjusted basis, earnings were $2.09 a share, which was higher than the Street analysts’ expectations of $1.89 a share.

Macy’s top line dipped 5.3% to $8.869 billion from $9.364 billion in the previous quarter. This was slightly ahead of the Street predictions of $8.83 billion. The retailer’s comparable store sales on its owned and licensed basis witnessed a 4.3% drop in the fourth quarter. Fully owned comparable sales fell 4.8%. The company’s gross margin and operating margin dipped to 37.4% from 40.3% and 10.6% from 14.6% respectively in the comparable period. The retailer closed the quarter with cash and cash equivalents of $1.109 billion.