Shares of Macy's (M) climbed in morning trading but have since gone flat after the department store overhauled its loyalty program to specifically reward customers who spend more.

REVAMPED LOYALTY PROGRAM: Macy's this morning introduced its revamped loyalty program, Star Rewards. Based on annual spend, customers with a Macy's credit card will be enrolled into Silver, Gold or Platinum levels, with rewards being tiered by level. The department store chain said Macy's "best" customers will receive benefits including free shipping, earned points and additional savings. Top-tiered customers, who spend $1,200 or more annually at Macy's with their Macy's credit card, will receive 5% back in rewards on every purchase, along with free two-day shipping and 25% off "any day they choose." Once Platinum members spend $200, they will be issued issued $10 in Star Money that can be used immediately with no merchandise exclusions, Macy's said. Macy's said it will roll out more features to Star Rewards throughout 2018, including "more experiential benefits" where members can win access to "unique" experiences.

WHAT'S NOTABLE: Macy's and other mall-based retailers and department stores have been hurt by the increasing popularity of fast-fashion retailers like Zara, Forever 21 and H&M, as well as competition in beauty from Ulta (ULTA) and Sephora and an increase in online shopping on sites such as Amazon (AMZN). In August, the retailer reported another quarter of declining comps, though its EPS and revenue were above analysts' estimates. While Macy's backed its guidance for FY17, it forecast third quarter comp sales on an owned plus licensed basis down 2.5% "or worse" and fall season comp sales on an owned plus licensed basis to be down 0.8% to down 2.6%. Gross margin for the year is expected to be down 50-70bps vs. last year, better than previous guidance. At the time, Macy's president and CEO Jeff Gennette said that the company expected the launch of its new loyalty program and marketing strategy to "further improve our sales trend in the back half of the year." In an interview with Fortune's Phil Wahba, Gennette said that Macy's is seeing customer spending shifts "that we needed to stop," adding that the previous version of the Star Rewards program was underwhelming. The overhaul of the loyalty program is Gennette's first major efforts to revamp the company since he took the helm earlier this year. In its attempt to return to growth, Macy's said in August that it will cut 100 jobs and consolidate its merchandising, planning and private-label functions into a single department. The retailer is also expanding its customer insights and data analytics to include inventory replenishment and pricing capabilities.

PRICE ACTION: Macy's is near flat in morning trading at $21.88. Year-to-date, however, shares are down about 39%.

OTHERS TO WATCH: Peers trading higher this morning include J.C. Penney (JCP), Sears (SHLD), and Dillard's (DDS), while Kohl's (KSS) and Nordstrom (JWN) are down fractionally.