CINCINNATI, United States — Department store chain Macy's raised its annual earnings forecast on Wednesday, signalling a strong holiday shopping season ahead, as it benefits from a growing online business and a revamped loyalty program.

Macy's also reported a much better than expected profit for the third quarter ending November 3 after double-digit growth at its online shopping service.

Like its peers, Macy's is battling lower customer interest as shoppers increasingly prefer to buy online and hunt for bargains.

In response, the 160-year old retailer has shut hundreds of stores, controlled its inventory to avoid excess discounting and has been investing heavily in its mobile app and website.

"We have the right merchandise, the right marketing and the right customer experiences in place to deliver a strong fourth quarter," chief executive Jeff Gennette said in a statement.

Macy's now expects adjusted earnings of between $4.10 and $4.30 per share in fiscal year 2018, compared with an earlier forecast of $3.95 to $4.15 per share.

Sales from Macy's stores and third-party licensees open for more than 12 months rose 3.3 percent in the third quarter ended Nov. 3, Macy's said. The figure topped analysts' average estimate of a 2.82 percent increase, according to IBES data from Refinitiv.

The owner of the Macy's and Bloomingdale's chains said net income attributable to shareholders rose to $62 million in the third quarter from $30 million a year earlier.

Excluding one-time items, Macy's earned 27 cents per share, nearly two times analysts' average estimate of 14 cents.

Net sales rose 2.3 percent to $5.40 billion, matching expectations.

Shares of Macy's have surged 42 percent this year.

By Aishwarya Venugopal; editor: Sai Sachin Ravikumar