NEW YORK — Robust activity at its retail stores allowed St. John Knits International Inc. to record increases in sales and earnings in the fourth quarter, but the bankruptcy of Jacobson Stores dragged down figures for the full year.
This story first appeared in the February 3, 2003 issue of WWD. Subscribe Today.
The Irvine, Calif.-based manufacturer of women’s apparel and accessories also announced that Philip Miller, former chairman and chief executive officer of Saks Fifth Avenue, had been elected to its board of directors.
For the fourth quarter ended Nov. 3, St. John’s net income increased 5.8 percent, to $5.4 million, or 80 cents a diluted share, from $5.1 million, or 57 cents, in the comparable prior-year period. Operating income rose 20.1 percent to $14.8 million.
Sales picked up 7.6 percent, to $93.9 million from $87.3 million.
The increase was mainly attributable to a $5.2 million, or 18.2 percent, pick up in sales at St. John’s company-owned stores, where comparable-store sales moved ahead 4.4 percent.
The increase in retail sales, coupled with improved margins in the Sport product line, helped boost quarterly gross margins by 250 basis points to 58.2 percent of sales. The firm opened two boutiques during the fourth quarter, in Short Hills, N.J., and Orlando, Fla., raising its unit count to 29. During the first quarter, it has opened a boutique in San Jose, Calif., and an outlet store in Lakewood, Colo. Home furnishings stores in Palm Desert and Costa Mesa, Calif., have been closed.
“Given the weak retail environment and unpredictable economic conditions, the company will continue to focus its efforts on maintaining tight control over inventory levels and expenses,” the firm said in a statement attributed to co-chief executives Kelly Gray and Bruce Fetter. “However, the company will continue to expand its retail division.”
The company completed a review of accounting practices during the fourth quarter and determined that it needed to make adjustments for deferred rent expense, doubtful accounts, inventory balance and “certain liability accounts.”
However, St. John said the various adjustments “did not have a material effect on the previously issued financial statements for fiscal year 2002.”
Although sales and earnings were both up in the final two quarters of the fiscal year, St. John’s net income for the year declined 6.1 percent, to $24.3 million, or $3.14 a diluted share, from $25.9 million, or $3.17. Sales eased 1 percent, finishing at $362.2 million versus the $365.9 million recorded in the fiscal year ended in 2001.
While sales for the year were down $3.7 million, the decrease in revenue generated with domestic wholesale customers was $23.9 million, of which about $10.1 million were attributable to the Jacobson bankruptcy and liquidation. Retail sales increased 15 percent for the year, to $140.1 million, and were up 6.8 percent on a comp basis.
Although now privately held, some of St. John’s stock remains in public hands and it continues to report its financial results.