Macy’s Inc. jumped after raising its profit forecast as demand for high-end goods is persisting despite the highest inflation in four decades.

Earnings are now seen in the range of US$4.53 to US$4.95 a share this year, excluding some items, up from a prior forecast of US$4.13 to US$4.52, the department-store chain said Thursday as it reported first-quarter results. Analysts were looking for US$4.36, on average.

Higher pricing, lower promotions and changing shopping habits boosted margins in the three months ended April 30 and helped Macy’s blow past earnings estimates in the quarter. Same-store sales at upscale Bloomingdale’s and the cosmetics chain Bluemercury were more than twice as high as those at Macy’s-brand stores.

“We saw a notable shift back to occasion-based apparel and in-store shopping, as well as continued strength in sales of luxury goods,” Chief Executive Officer Jeffrey Gennette said in a statement.

Macy’s shares rose 13 per cent at 8:22 a.m. in early New York trading. The stock had slumped 27 per cent so far this year through Wednesday’s close, compared with a 25 per cent drop for an index of midsized consumer discretionary companies.

The upbeat forecast provides some relief to investors after retail giants Walmart Inc. and Target Corp. cut their outlooks last week, sparking a selloff in consumer stocks. The results also signal a divergence among US consumers as high-income shoppers continue to open their wallets. Retailers that cater to more affluent clients, such as Nordstrom Inc. and Ralph Lauren Corp., reported better-than-expected results this week.

Macy’s reported adjusted earnings of US$1.08 a share in the first quarter, beating the 83-cent average estimate of analysts surveyed by Bloomberg. Same-store sales on an owned-plus-licensed basis rose 12.4 per cent, trailing the 13.3 per cent average analyst estimate, though Bloomingdale’s and Bluemercury posted gains above 25 per cent on that metric. The company reaffirmed its forecast for fiscal-year sales of US$24.5 billion to US$24.7 billion.

Swelling inventories have been a recurring theme for retailers this earnings season as companies look to get ahead of potential supply-chain snarls. Macy’s said its inventories as of April 30 were 17 per cent higher than a year earlier. The company attributed the increase to a shift in consumer spending away from athleisure and home goods as people partake in more special occasions and go back to work, as well as loosening supply-chain constraints.

Macy’s has been betting on e-commerce to boost sales, including starting an online marketplace to expand its product assortment and highlight third-party merchants. The company said the digital business rose 2 per cent last quarter compared with a year ago.