Macy's Inc. is cutting 2,500 jobs as part of a reorganization to sustain its profitability.
Shares rose 5.5 percent in after-hours trading Wednesday.
The announcement comes on the heels of a strong holiday shopping season for the department store chain, which also runs the higher-end Bloomingdale's chain.
Macy's said the moves will save it $100 million per year and forecast a 2014 profit above Wall Street's forecasts.
Macy's has been a standout among its peers throughout the economic recovery and has reaped the benefits of its strategy of tailoring merchandise to local markets. But like other merchants, Macy's is grappling with a still cautious shopper. It's also trying to respond to shoppers' shift toward buying and research on their PCs and mobile devices like smart phones.
While Macy's will cut jobs, it is also planning to reassign or transfer some workers. It's also adding positions related to online shopping, a growing area for the company, and warehouses. That will leave its workforce level at about 175,000.
The Cincinnati-based company plans to close five stores and open eight others, leaving it with 844 stores nationwide once the changes are complete.
It's also shifting merchandising responsibilities for "soft home categories" like sheets and towels from the district level to the regional and national level. Macy's says that such goods change less often than clothing and accessories and are less subject to local tastes.
The moves come after a solid holiday shopping season for the chain. Revenue at stores opened at least a year, a key indicator of a retailer's health, rose 4.3 percent in November and December.
The company is optimistic about this year. It expects earnings per share of $4.40 to $4.50 in 2014, besting analysts' prediction of $4.36 per share, according to FactSet.
Shares rose 5.5 percent to $54.70 in after-hours trading after closing down 34 cents to $51.84.
AP Business Writer Sara Sell in Portland, Oregon, contributed to this report.