As Macy's (M - Get Report) reportedly mulls buyout offers, its shares fell slightly to $32.29 on Tuesday after the department store reported full-year profits ahead of expectations.

For the fourth quarter, ending Jan. 28, Macy's booked sales of $8.515 billion, down 4% year over year from total sales of $8.869 billion in last year's fourth quarter. Full-year sales of $25.778 billion were down 4.8% from 2015. Adjusted fourth-quarter earnings per diluted share, excluding store closings and other costs, also fell about 3% year over year to $2.02, while full-year earnings dropped to $3.22 a share from $3.77.

The bottom-line results beat the analyst estimates of $1.96 a share, while revenues missed the forecast $8.62 billion.

Macy's expects total sales to fall 3.2% to 4.3%, "reflecting the 66 stores closed in 2016," despite the extra 53rd week of sales in 2017. Excluding real estate and pension plan adjustments, Macy's expects adjusted diluted earnings per share of $2.90 to $3.15, with $900 million in capital expenditures.

On a conference call with analysts, Macy's CEO Terry Lundgren sounded like an executive searching for answers on how to address the shift to online shopping. Lundgren promised Macy's would step up tests of new store formats and focus on private label brands, among other initiatives designed to lure in shoppers to stores. 

"We have to convert the traffic in our physical stores," stressed Lundgren. 

In January, Macy's reported lackluster holiday sales and said it would close stores, affecting 3,900 employees and costing the company $575 million, to focus on e-commerce.

Lundgren told TheStreet that the company is making strides to shift its business with consumer preferences, pointing out that Macy's is "the third-largest online business in the country after Amazon (AMZN - Get Report) and Walmart (WMT - Get Report) in our categories. So we are benefiting from the consumer that is shopping online, but it just can't offset where the majority of the business—not just for us but also the country—takes place, which isn't online but in stores."

Effective March 23, Lundgren will be succeeded as CEO by Macy's president Jeff Gennette, as per the company's June 23 announcement. Lundgren will remain executive chairman.

Macy's has fended off activist investor Starboard, which urged the company to spin off its real estate assets. The retailer, which has said it won't sell its real estate into a REIT, said in the earnings report that its partnership with Brookfield Asset Management generated cash proceeds of $675 million in 2016.

Deutsche Bank analyst Paul Trussell estimated that Macy's could be conservatively worth $53 per share, or $16.4 billion, with its real estate alone at least $40 per share.

Canadian department store operator Hudson's Bay reportedly is in early talks with Macy's. Hudson's Bay already owns American department stores Saks Fifth Avenue and Lord & Taylor, which Macy's predecessor Federated Department Stores sold to a private equity firm for $1.2 billion in 2006. Hudson's Bay picked up the chain in 2012, investing $427 million to pay down its debt.

And Macy's, like all other retailers, will enter fiscal 2017 battered from poor brick-and-mortar sales and facing uncertainty about the possibility of a border adjustment tax under the GOP tax plan. Macy's joined fellow retailers, including Nike (NKE - Get Report) and Target (TGT - Get Report)  and Saks and Lord & Taylor, in the Americans for Affordable Products coalition, which warned that such a tax could increase consumer prices by up to 20%.