Updated from 11:39 a.m. with financial details and analyst comments.

Department store Macy's (M - Get Report) , which has battled sluggish sales the past year and cries for big changes from an activist investor, has finally set in motion a long-awaited succession plan for its CEO post.

The company announced on Thursday morning that current Macy's president, Jeff Gennette, who has spent 33 years at the company, will assume the role of CEO in the first quarter of 2017. Gennette was previously elevated to president in 2014.

Gennette will take the baton from long-time Macy's chief Terry Lundgren, who helped create the modern-day Macy's as its CEO since 2004. Lundgren will continue to serve as executive chairman. 

"I have been the CEO of Macy's for 13 years, and by the time I turn it over to Jeff next year it will be 14 years, and I will be 65 years old -- how many CEOs of Fortune 500 companies do you know have been around for as long as I have -- I would say very, very few," Lungren told TheStreet in an interview when asked if the announcement was a surprise.

Added Lundgren, "We have planned this for over two years when we made Jeff president of the company, it was all part of our succession plan." Lundgren said he will stay on as executive chairman for as long he could be helpful to Gennette and the company.

Current Macy's President and soon-to-be CEO Jeff Gennette.

Gennette reinforced that philosophically, there aren't many differences between him and Lundgren when it comes to envisioning the future for Macy's. If anything, the department store retailer may be quicker to launch new ideas, hinted Gennette. 

Shares of Macy's were up 3.1%, to $33.83, in afternoon trading on Thursday. The company's shares are down about 53% over the past year, compared to a 1.1% decline in the S&P 500. 

"We anticipate the transition to be seamless as Gennette and Lungdren have been working together for a number of years," said Stifel analyst Richard Jaffe in a note, adding, "We view the change as a positive given Lundgren's continued involvement in the business and Gennette's experience at the organization."

The news comes on the heels of another challenging quarter for Macy's.

First-quarter sales fell 7.4% year over year to $5.77 billion, missing forecasts for $5.94 billion. Same-store sales declined for the fifth straight quarter, falling 5.6% compared to estimates for a 3.8% decline. Store traffic fell an alarming 7%.

The company slashed its full year same-store sales guidance to a decline in a range of 3% to 4% vs. a previous estimate for a 1% drop. For the year, Macy's now sees earnings of $3.15 to $3.40 a share, down from $3.80 to $3.90 a share offered back in February.

This story is breaking and will be updated.