Macy's raises profit outlook, shares soar

STORY: Shares of Macy's soared more than 16% Thursday morning, after the department store chain raised its profit forecast for the year, even as red-hot inflation saps consumer spending power.

Macy's, which also owns Bloomingdale’s, reported strong demand for high-end apparel and luxury items from consumers returning to weddings and other social events.

With its outlook, Macy's joins rival department store chain Nordstrom in bucking a trend of profit warnings from major retailers such as Walmart and Target who are seeing consumers prioritize spending on household essentials.

High-end fashion has been relatively insulated from the effects of inflation so far this year and Macy's sees affluent consumers continuing to spend.

But Gary Schlossberg, global strategist for the Wells Fargo Investment Institute, says it might not last.

"There are parts of the economy where sales gains are coming under some pressure - the lower end of the market perhaps. The up... the luxury end of the market is still doing quite well. But, overall, we do see some slowing at the margin and in that sales growth, and we expect that to become more evident over the course of the second half of this year.

Macy's also said consumers were shifting back to in-store shopping from online faster than expected as they ditched casual and athleisure apparel for more expensive dresses, formal wear and shoes...

In fact, the company has also been stocking up on evening gowns, expecting to benefit from social events gathering steam and ahead of what is predicted to be the biggest U.S. wedding season since 1984.