Macy's: Can same-day delivery deliver results?

Macy's (M), the largest department store chain, announced plans today to expand its successful test market of same-day delivery, which Web-based rivals such as Amazon (AMZN) and eBay (EBAY) are also providing. Macy's declined to provide any details, and investors were more focused on the mixed earnings report the retailer also announced today, pushing the stock down more than 3 percent.

The Macy's same-day delivery service began in eight major metropolitan areas in September and in four others under its Bloomingdale's brand. However, analysts point out that implementing same-day deliveries won't be cheap. Amazon reportedly has spent billions adding some 50 new warehouses over the past few years.

Indeed, Macy's announced earlier this year that it was planning to move its fulfillment center in West Sacramento, California, to a larger facility. The retailer expects capital expenditures to hit $1.2 billion this year compared with $1.07 billion in 2014.

But like other traditional bricks-and-mortar retailers, Macy's is adapting to a digital age in which people are growing accustomed to getting what they want when they want it. The chain probably has little choice but to face this new reality and take a risk on same-day delivery.

"It might be great when they kick it off, but I don't know if it's going to pay off in the long run since everybody is going to do it," said Paul Swinand, an analyst at Morningstar. He believes the company's shares are now fairly valued. "To me, it's still a business model that's a work in progress."

Shares of the Macy's, which operates 840 stores in 45 states, the District of Columbia, Guam and Puerto Rico under the Macy's and Bloomingdale's name, closed down $2.06, or 3.2 percent lower, to $62.10 on Tuesday in response to a generally disappointing earnings report. The shares have gained more than 15 percent over the past year.

Net income in the quarter ending Jan. 31 fell to $793 million, or $2.26 per share, compared with $811 million, or $2.16, a year earlier. Excluding one-time items, profit would have been $2.44 per share. On that basis, Wall Street was predicting earnings of $2.42. However, quarterly sales fell short of Wall Street's expectations of $9.4 billion, coming in at $9.36 billion, but still an increase of 1.8 percent. Same-store sales, a closely watched retail metric of performance at locations opened at least a year, rose 2.5 percent.

"While we theoretically missed the Wall Street estimates for topline sales, that is an irrelevant number for a retailer like us," wrotes Jim Sluzewski, a spokesman for the Cincinnati-based company, in an email to CBS MoneyWatch. "We believe our numbers are strong."

Macy's, which traditionally has been a Wall Street favorite, also gave disappointing guidance for fiscal 2015 of between $4.70 and $4.80 per share, below analysts' forecasts of $4.83. The company has been cutting costs and earlier this year announced plans to shutter more than a dozen stores and lay off more than 2,000 workers. It closed 22 stores in 2014 and opened five.

"Their apparel -- especially their women's apparel -- has been challenged lately," said Stacie Rabinowitz, an analyst with Consumer Edge Research, adding that many other retailers have the same problem. She thinks the stock is a long-term buy. "Women are buying less clothes. ... Macy's is definitely not a position to accelerate their topline overnight. They have a lot of ideas percolating right now. ... We are going to see some surprising and positive things from them down the line."

One of those things may be same-day delivery, if Macy's strategy works out as planned.