Macy's Inc posted a smaller-than-expected quarterly loss on Wednesday as cost cuts eased the pain of declining sales at its department stores, and its shares rose 1.6 percent in premarket trade.

Its net loss widened to $88 million, or 21 cents per share, in the first quarter ended May 2, from a loss of $59 million, or 14 cents per share, a year earlier.

Excluding restructuring costs, its loss of 16 cents a share was smaller than analysts' average forecast for a loss of 20 cents, according to Reuters Estimates.

Sales fell 9.5 percent to nearly $5.2 billion.

Department store chains have been among the sectors hit hardest in the recession as U.S. consumers steadfastly stick to shopping lists and spend only on essential items such as food and medicine.

Last week Macy's posted a 9.1 percent decline in April sales at stores open at least a year.

Macy's said it was prudent to leave its full-year forecast unchanged, given the economic uncertainty. It still expects earnings of 40 cents to 55 cents a share, excluding consolidation costs, on a sales decline of 6 percent to 8 percent.

Macy's shares rose 1.6 percent to $12.55 in premarket trading. They closed Tuesday at $12.35.

(Reporting by Aarthi Sivaraman, editing by Dave Zimmerman and John Wallace)