Macy's raised its profit forecast for the year on Tuesday, as its new CEO's turnaround plan helped to shield the department store chain from falling sales due to a cautious consumer.

Shares of the company were up 5% in early trading after it beat estimates for first-quarter profit.

Under CEO Tony Spring, who took charge in February, Macy's has outlined a three-year investment and turnaround plan to save $100 million in costs this year by shuttering about 150 stores through 2026.

Macy's said on Tuesday it expects its full-year adjusted earnings in the range of $2.55 to $2.90 per share. It had earlier forecast earnings of $2.45 to $2.85 per share.

The company is opening 15 locations for its Bloomingdale's nameplate and at least 30 new Bluemercury cosmetics stores. Both chains have outperformed many of its Macy's department store locations.

"I'm kind of impressed with Macy's hanging in here and giving good guidance. So it remains to be seen if it can come through," said Don Nesbitt, senior portfolio manager at F/m Investments, which holds a stake in Macy's.

The department store chain is in buyout talks with activist investor Arkhouse Management in a deal valuing it at $6.6 billion. Last month, Macy's added two of Arkhouse's nominees to its board after the investor nominated nine director-candidates to the company's board in February.

Although the company's first-quarter selling, general and administrative expenses fell to $1.9 billion, a $39 million decrease from the year-ago period, its executives have struggled to find the right mix of merchandise for its Macy's stores.

On Tuesday, Macy's said it expects shoppers generally would continue to be discerning in their discretionary purchases.

"The consumer we believe will remain under pressure for the balance of the year," said Macy's CFO Adrian Mitchell in a post-earnings call.

Discounts that Macy's put in place on slow-moving clothing for warm weather pushed its gross margin to 39.2% from 40% a year earlier.

Macy's expects fiscal 2024 net sales of between $22.3 billion and $22.9 billion, compared to its prior forecast of $22.2 billion to $22.9 billion.

The company posted first-quarter adjusted profit of 27 cents per share, topping LSEG estimates of 15 cents.

Net sales fell 2.7% to $4.85 billion, compared to estimates of $4.86 billion.

"So the year seems to be off to pretty much the start that we expected, maybe a little better," said Morningstar analyst David Swartz. However, the average Macy's customer is not spending that strongly, he added.

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