Macy’s shares surged 18% as the department chain signaled its turnaround plan is starting to pay off after years of dismal sales.

The company on Wednesday reported quarterly sales growth for the first time in three years, excluding newly opened or closed locations.

“We are seeing some green shoots,” Macy’s CEO Tony Spring, who took the helm last year after running Bloomingdale’s, told the Wall Street Journal. 

“We are celebrating the progress but our ambition is to do much better.”

Spring launched a three-year plan last February with goals of shuttering 150 struggling stores and reinvesting in high-potential locations with better product mix and improved displays.

He also hired more workers for the fitting rooms, made shoe departments less cluttered and added new brands, like DKNY and Khloe Kardashian’s Good American.

It’s an attempt to reverse Macy’s reputation for messy stores with bland product selection – and it seems to be working.

Macy’s now expects annual adjusted profit per share of $1.70 to $2.05 – above previous expectations of $1.60 to $2.00.

It also hiked its annual net sales forecast to $21.15 billion to $21.45 billion, up from $21 billion to $21.4 billion.

The company’s outlook is still lower than it was before President Trump announced a slew of tariffs on foreign nations.

Macy’s on Wednesday also hiked its estimated tariff impact to 40 to 60 basis points off its full-year gross margins, above previous projections of 20 to 40 basis points.

Thomas Edwards, Macy’s chief financial officer, said the company has been making “surgical” price increases across the chain to offset the tariff costs.

While it’s too soon to know the exact impact, Spring said he expects shoppers to become more “choiceful” due to tariffs and other economic pressures.

Macy’s said its unit sales were soft in a potential sign that customers are already struggling with tariff-related price increases.

In some cases where Macy’s felt products were too expensive, it bought fewer or didn’t buy them at all, Spring said.

He has also been pushing Macy’s to focus on its Bloomingdale’s and Bluemercury brands, which cater to higher-income customers and consistently perform better than Macy’s namesake stores.

Bloomingdale’s reported comparable sales growth of 3.6% on an owned basis, while Bluemercury saw comparable sales rise 1.2%.

Macy’s reported comparable sales growth of 0.8% – its best reading in 12 quarters.

A group of 125 stores that Macy’s remodeled under its turnaround plan outperformed with comparable sales growth of 1.1% on an owned basis.

Macy’s reported $4.81 billion in net sales, above estimates of $4.76 billion, according to LSEG data.

Adjusted earnings per share of 41 cents also beat projections of 18 cents.

Net income was $87 million, or 31 cents per share, down from $150 million, or 53 cents per share, the year before. 

The company also reported a $28 million increase in credit card net revenue to $153 million.