(Reuters) - Bloomingdale's owner Macy's raised its annual profit forecast on Tuesday, signaling that efforts to reduce costs by closing underperforming stores and trimming jobs were starting to pay off.

Shares of the New York-based company were up 3% before the bell after it also beat first-quarter profit estimates.

Macy's in February decided to shutter about 150 stores through 2026 as part of a new plan, which is expected to help save $100 million in costs this year.

The company is also opening 15 Bloomingdale's locations and at least 30 new Bluemercury stores as it banks on its better performing brands to drive growth.

Macy's now expects annual adjusted earnings per share to be in the range of $2.55 to $2.90, compared with its prior forecast of $2.45 to $2.85.

The company, which continues to see 2024 as a transition and investment year, said the outlook also accounts for consumers being discerning in their discretionary purchases.

The company expects fiscal 2024 net sales to be in the range of $22.3 billion to $22.9 billion compared to a prior forecast of $22.2 billion to $22.9 billion.

Still, merchandise margin declined 100 basis points due to additional discounting for slower-moving warm weather products, pushing its gross margin rate to 39.2% from 40% a year earlier.

Macy's net sales fell 2.7% to $4.85 billion. Analysts on average had expected sales to drop 2.42% to $4.86 billion, according to LSEG data.

(Reporting by Anuja Bharat Mistry and Ananya Mariam Rajesh in Bengaluru; Editing by Sriraj Kalluvila)