NEW YORK (AP) — Macy’s sales and profits fell during the first quarter as higher costs and other financial challenges had customers pulling back on spending.

Yet the quarterly results Tuesday beat Wall Street expectations. And Macy’s, which also operates upscale Bloomingdale’s and beauty chain Bluemercury, said it is seeing a positive impact from its turnaround efforts that include closing underperforming stores and upgrading others. Macy’s also raised its annual outlook.

Americans are still spending but they’re getting more selective and are also more likely to wait until something goes on sale. Retailers are also seeing higher delinquency rates in their credit card businesses.

CEO Tony Spring, who took over in February, said that all income groups are being more thoughtful with their spending. Bloomingdale’s, for example, registered weaker sales in luxury handbags and shoes as consumers shift to less expensive collections.