Macy’s stock is down nearly 30% in 2019.

On Wednesday, Macy’s released its first-quarter earnings report with sales that topped investor expectations. The company has focused on updating its stores and increasing its mobile app usage. So far, these initiatives seem to be paying off.

However, the company’s sales were still lower than they were a year ago. Increasingly, department stores are struggling to stay relevant as online retailers continue to take off.

The company’s stock rose more than 7% in premarket trading. But it soon dropped after CEO Jeff Gennette said that increased tariffs would hurt the consumers.

A breakdown of Macy’s earnings report

Macy’s reported earnings of 44 cents per share as opposed to the 33 cents expected by investors. Revenue was slightly lower than expected but same-store sales were up by 0.7%. Investors had expected they would drop by 0.2%.

The same-store sales growth is impressive, given that Macy’s had a number of factors working against it. Easter fell later than usual this year and most of the U.S. was hit with colder weather. Both of these factors hurt the company’s sales.

Macy’s sales were largely influenced by its strong base of loyal customers. Transactions grew by 5.7% during the first quarter and this was mostly fueled by loyal customers shopping more frequently. The company also reported strong e-commerce growth, which was fueled by the company’s mobile app.

The company expects its sales to remain mostly flat for the remainder of 2019. Macy’s is continuing to implement a number of initiatives to draw in new customers.

For instance, the company is growing Macy’s Backstage, a discount clothing business designed to rival stores like TJ Maxx. Macy’s already opened 120 locations within its existing department stores and plans to open 50 more locations this year.  

Final thoughts

While Macy’s earnings beat investor expectations, it can’t be ignored that revenue is down from a year ago. And Macy’s shares have fallen nearly 30% in 2019 alone.

The company does have strong brand recognition but it’s unclear whether this will be enough to give it the boost it needs. Macy’s has made many of the right moves but still struggles to attract and retain millennial and Gen Z customers. And overall consumer sentiment toward department stores isn’t positive.

Goldman Sachs did upgrade the stock which is something, considering it previously said Macy’s turnaround plans were “insufficient.” However, the analyst upgraded the stock to a sell rating and lowered her price target.