By Sarah Very

Despite unfavorable weather conditions and stiff competition from online retailers during the holiday season, Macy’s Inc. turned in better-than-expected year-end earnings Tuesday.

The Cincinnati, OH-based retailer, which also operates the upscale Bloomingdale’s, said net income sank in the fourth quarter ended Jan. 30 to $544 million, or $1.73 per diluted share, from $793 million, or $2.26 per diluted share, in the year-ago quarter.

Sales in the quarter were down 5.3 percent to $8.87 billion from $9.36 billion in the year-ago period.

The company’s adjusted results, excluding certain expenses like store closings and re-structuring charges, solidly bested Wall Street expectations. Macy’s said adjusted earnings per share were $2.09 per diluted share, down from last year’s $2.44 per diluted share but well-above the $1.89 that analysts surveyed by Yahoo Finance predicted and the company’s $1.85 to $1.90 most recent guidance.

Shares in the company climbed 1.95 or 4.75 percent to $43.01 in trading early Wednesday afternoon, a day when the broad market was in retreat.

Karen Hoguet, Macy’s Chief Financial Officer, said in a conference call Tuesday morning that Macy’s fourth quarter success, despite an overall weakness in sales, was attributable to the onset of colder winter weather and continued growth in the company’s digital business.

“As we announced in early January, we had a disappointing November-December,” she said. During this time period, Macy’s faced a 4.7 percent sales decline, its largest in five years, and was forced to close 40 stores. “Fortunately, with the cold weather in the new year, business did improve in January and we did better than expected at the time of our January announcement,” Hoguet added.

In a statement accompanying the earnings release, Macy’s President and CEO Terry J. Lundgren said the retailer benefited as the warm winter turned cold and “Macy’s and Bloomingdale’s were well-stocked in coats, boots, sweaters, gloves, hats and other seasonal goods.” Macy’s saw new growth in product categories including cosmetics, fragrances and athletics, and from several pilot initiatives, including an acquisition of up-scale beauty and spa company Bluemercury.

Macy’s, like most other brick and mortar retailers, has been investing in its online presence, faced with intense competition from online platforms like Amazon.com and more trendy “experiential” spending options for consumers like technological devices and restaurants.

Macy’s digital business continues to grow, used heavily by consumers for browsing and researching as well as purchasing. Sales on mobile devices more than doubled for Macy’s in 2015.

According to Hoguet, Macy’s, as an omnichannel retailer, benefits by how “customers are increasingly going back and forth between digital devices and stores.” In addition, Macy’s has invested in their use of “BOPs,” or buying online, pick up in-store capabilities.

Still, Macy’s could face challenges in 2016. International tourist sales continue to slump due to the strong dollar and consumers consistently spend on items other than clothes. Macy’s predicts sales will decline by 1 percent in the upcoming year.

For the year 2015, Macy’s Inc. had net income of $1.07 billion, or $3.22 per diluted share, down 29.8 percent from $1.53 billion, or $4.22 per diluted share, in the previous year. Revenues slumped to $27.08 billion from $28.11 billion in the year-ago period.