Byline: Jennifer Brady

NEW YORK — Expectations for a solid Christmas season keep building.
Nordstrom Inc. said Monday that its third-quarter profits climbed 15.6 percent, while May Department Stores Co. and Mercantile Stores Co. said that despite costly expansions, they came through with decent, 6 to 7 percent profit gains, and the store openings will pay off next quarter.
The results at May Co. might not have been completely up to Wall Street estimates. However, its figures, along with Mercantile’s and Nordstrom’s, provide further hope that the upcoming holiday season should be strong for retailers.
Economists and retail analysts, citing the positive effects of low inflation, low unemployment and rising consumer confidence related to the presidential election, are forecasting mid-to-high-single-digit gains for the Christmas quarter.
May Co.’s earnings rose 7.3 percent to $118 million, or 44 cents a share, against Wall Street average estimates of 46 cents.
“May’s operating earnings were not quite as strong as anticipated, largely because of some expense impact from the Strawbridge & Clothier acquisition,” said Kimberly Walin, retail analyst at Furman Selz.
Yet Walin added that women’s apparel — particularly the sportswear segment — kept gross margins steady, there was good top-line growth, and “May is in a good position for the fourth quarter.”
Sales in the period ended Nov. 2 gained 11.6 percent to $2.77 billion from $2.48 billion, and same-store sales were up 3.9 percent.
Furman Selz’s Walin shaved her full-year per-share estimate on May Co. by 1 cent to $2.84 against $2.61 from continuing operations a year earlier.
During the third quarter, the St. Louis-based retailer opened two Lord & Taylor stores, in Gaithersburg, Md., and Fairfax, Va.; a Foley’s in Laredo, Tex.; a Kaufmann’s in Strongsville, Ohio, and a Famous-Barr in Evansville, Ind.
May Co. has opened 24 stores this year, including 13 acquired from Strawbridge & Clothier, and plans to open four more this month. The chain currently operates 364 stores in 30 states and the District of Columbia.
Nordstrom posted $34 million in profits, or 42 cents a share, beating average Wall Street estimates of 36 cents.
“We are encouraged by our earnings results,” said John Goesling, Nordstrom’s executive vice president. “Our third-quarter performance reflects an improvement in merchandise margins and expense management.”
Sales in the quarter ended Oct. 31, rose 8.6 percent to $984.4 million from $906.8 million. Nordstrom has been realigning its departments, relocating brands and taking steep markdowns. “It looks like most of the merchandise reconfiguration is complete,” said Jennifer Black Groves, analyst at Black & Co., Portland, Ore. “They bit the bullet, and now they have set the stage to be extremely successful.”
Groves noted that the retailer saw improved margins, continued strength in men’s wear, cosmetics and shoes, and a pickup in children’s apparel, lingerie and activewear.
During the quarter, Nordstrom completed its expansion for the year with openings in Detroit and Denver, bringing the chain to 83 stores in 17 states.
Mercantile said third-quarter profits rose a respectable 6.4 percent to $31.1 million, or 85 cents, matching Wall Street estimates.
Based in Fairfield, Ohio, Mercantile said pre-opening costs for four stores in October sliced per-share earnings by 2 cents, but the new stores should lift fourth-quarter results. Stores opened in Columbia, S.C.; Orlando, Fla.; Spartanburg, S.C., and Dayton, Ohio, bringing the chain to 105 units.
Another store will open in Murfreesboro, Tenn., near Nashville, on Nov. 20.
Revenues, including $21 million in finance charge income, rose 4.7 percent to $727.7 million from $694.8 million.
Same-store sales were up 4.9 percent.
The company said sales from the new units opened in October were offset by two store closings at the end of 1995.
“The 1996 store expansion program represents the largest in the company’s history,” said David L. Nichols, Mercantile’s chairman and chief executive officer, in a statement. He acknowledged that pre-opening costs hurt earnings for the quarter, but added, “We are very pleased with the initial reception extended to these units and feel that, in the aggregate, they will be accretive to fourth-quarter earnings.”
On the New York Stock Exchange, May shares dropped 1 1/8 to 48 1/4, and Mercantile stock was up 1/4 to 51 7/8. Nordstrom, which reported its figures after the close of the market, was unchanged at 40 3/8 in over-the-counter trading.