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Macy's notes consumers are picky this holiday season

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Shares fall nearly 6% premarket

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Company beats Q3 sales estimates, posts surprise profit

(Adds details on quarterly profit in paragraph 1, updates

shares in paragraph 2, analyst comment in paragraph 4)

By Juveria Tabassum

Dec 3 (Reuters) - Macy's on Wednesday raised its

annual targets for the second time this year and posted surprise

quarterly profit, as the department store operator begins to see

returns from its months-long turnaround efforts.

However, Macy's shares reversed course to fall nearly 6% in

premarket trading after the company said its guidance assumed a

"more choiceful" consumer in the key holiday shopping period as

inflation pressures spending on non-essential goods.

Macy's expects 2025 net sales to be between $21.475 billion

and $21.625 billion, compared with its earlier forecast of

$21.15 billion to $21.45 billion. It also sees annual adjusted

earnings per share to be between $2 and $2.20, up from $1.70 to

$2.05.

"It appears that they are striking a more cautious tone

based on the guide," said Charles Grom, analyst at Gordon

Haskett Equity Research.

Rival Kohl's has also raised its annual forecast for

a second time this year, but executives noted that consumers

remained under pressure and were seeking value.

Macy's, like other retailers, has leaned heavily on

promotions this holiday season, with deals events running all

through November for Black Friday and Cyber Monday.

Department store operators have invested heavily in

refreshing their stores and product offerings to revive demand

and align with changing shopping trends after several years of

losing out to online retailers and off-price chains.

Macy's shut underperforming outlets under its namesake

banner, tested smaller store formats and broadened its online

product assortment, among other measures, as part of an effort

led by CEO Tony Spring.

For the quarter ended November 1, Macy's reported net sales

of $4.71 billion, beating analysts' average estimate of $4.62

billion, according to data compiled by LSEG.

On an adjusted basis, it reported a surprise profit of 9

cents per share, compared with estimates of a loss of 14 cents

for the third quarter.

(Reporting by Juveria Tabassum in Bengaluru; Editing by

Shinjini Ganguli)