Macy’s quarterly profit drops on higher discounts

(Reuters) -Macy’s posted a drop in quarterly profit on Tuesday, dragged down by heavy discounting and higher promotions to clear spring and early summer merchandise.

Shares of the retailer, whose stock has lost nearly 30% of its value this year, rose 5.9% to $15.6 in premarket trading as the company’s net sales beat expectations for the second quarter.

The department store chain logged net sales of $5.13 billion, beating analysts’ average estimate of $5.09 billion, according to Refinitiv data.

Like other retailers such as Target and Coach parent Tapestry (NYSE:), Macy’s (NYSE:) has witnessed a sharp drop in demand from middle-income customers cutting back their spending on apparel and handbags to cover for food and services.

A preemptive move to convert its merchandise for the spring and early summer season in March has dampened demand at Bloomingdale’s parent, forcing it in June to cut its full-year sales and earnings forecasts. The department store chain posted an adjusted net income of $71 million, or 26 cents per share, in the quarter ended July 29, compared with $277 million, or $1 per share, a year ago.