Macy’s Inc. (NYSE: M) reported fourth-quarter and full-year 2017 results before markets opened Tuesday. The department store giant posted quarterly adjusted diluted earnings per share (EPS) of $2.82 on revenues of $8.67 billion. In the same period a year ago, Macy’s reported EPS of $2.02 on revenues of $8.52 billion. Fourth-quarter results also compare to consensus estimates for EPS of $2.71 and $8.68 billion in revenue.

For the full year, Macy’s reported revenues of $24.84 billion and adjusted EPS of $3.77 compared with fiscal 2016 revenues of $25.78 billion and EPS of $3.11. Analysts had estimated EPS of $3.66 and revenues of $24.88 billion.

Comparable store sales for owned plus licensed stores rose 1.4% in the quarter, and they rose 1.3% on the company’s owned stores. For the full year, same-store sales fell 2.2% in company-owned stores and dropped 1.9% in owned plus licensed stores.

The company noted that the increase in net sales was due to an extra week in the fourth quarter and an extra week in the fiscal year.

Operating income as reported totaled $1.21 billion, representing a margin of 14%, compared to operating income of $815 million or 9.6% of sales in the year-ago quarter. Excluding restructuring and other costs, fourth-quarter operating income totaled $1.4 billion, or 16.1% of sales, compared with year-ago operating income of $1.062 billion, or 12.5% of sales.

For fiscal 2018, Macy’s expects comparable sales on both an owned and an owned plus licensed basis to be flat to up 1%. Total sales are expected to dip between 0.5% and 2%. Adjusted earnings per diluted share of $3.55 to $3.75 are expected in fiscal 2018, excluding anticipated settlement charges related to the company’s defined benefit plans. Adjusted earnings per diluted share include anticipated asset sale gains of $300 million to $325 million in fiscal 2018, compared to $544 million in asset sale gains for fiscal 2017. The company anticipates an effective annual tax rate of 23.25% for the year.

Consensus estimates call for first-quarter EPS of $0.28 on revenues of $5.31 billion. For the full year, analysts were looking for EPS of $3.04 on sales of $24.31 billion.

CEO Jeff Gennette said:

We are committed to returning Macy’s, Inc. to comparable sales growth in 2018 and will build on the momentum we created in the fourth quarter of 2017. Macy’s, Inc. had a solid fourth quarter, including strong performance in January, and the full year exceeded our expectations for annual comparable sales and adjusted earnings per diluted share. We are encouraged to see a trend improvement in our brick & mortar business, and we had the 34th consecutive quarter of double-digit growth in our digital business. … On the path to growth in 2018, we will continue to improve our execution, strengthen our product offerings and make the necessary investments to be competitive with today’s demanding consumer.

The company beat EPS and met revenue estimates for 2017 and guided 2018 EPS well above analysts’ expectation. Most important, perhaps, was the strong uptick in same-store sales. Analysts had been looking for a gain of just 0.4%. The relatively cautious outlook for 2018 same-store sales appears to have been swamped by the good news.

Shares traded up around 10% in Tuesday’s premarket session, at $30.00 in a 52-week range of $17.41 to $33.67. The 12-month consensus price target on the stock was $26.75 before results were announced. The high price target was $38 and the low was $20.

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