NEW YORK — Richard Cohen, chief executive officer of St. John for the past 18 months, has left the company.
Cohen, 51, who had a turbulent time trying to shore up the fortunes of the $400 million Irvine, Calif.-based firm, couldn’t be reached for comment Monday, but a statement issued by Jim Kelley, chairman of St. John and president of Vestar Capital Partners, said he resigned for “family reasons.”
Asked if Cohen resigned or was pushed, Kelley declined to comment beyond the company statement.
St. John board member Philip B. Miller, the 67-year-old former chairman and ceo of Saks Fifth Avenue, has been named ceo until a replacement is named, according to Kelley.
Miller, the 67-year-old former chairman and ceo of Saks Fifth Avenue, has been named ceo until a replacement is named, according to Kelley.
“I am truly sorry to be leaving St. John,” Cohen said in a statement. “I have enjoyed my time here and wish all of the great, hardworking employees that are the real backbone of this company the best. As well, I would also like to thank the board for their understanding of my decision.”
St. John was acquired by Vestar Capital Partners in 1999, a private equity fund, for $520 million. The Gray family, which founded the company 43 years ago, remains a minority stockholder in the company.
Cohen appeared to be struggling on several fronts. According to sources, two of his children have special needs, and the family’s medical requirements were said to be better served on the East Coast. That, coupled with what sources said was a too-slow turnaround of St. John for investors, was believed to have led to his resignation.
However, Kelley told WWD that St. John’s situation wouldn’t be classified as a turnaround.
“First of all, this is not a turnaround. Sales have grown by $100 million since we purchased the company in 1999. So, all in all, we are pleased with the business. The response to the new advertising and branding initiatives has been generally positive. There has been some softness at retail this past season and, to a certain extent, we anticipated it. The process of taking a very large, successful apparel brand and expanding the client base takes time, and a few bumps along the road are expected.”Kelley added that there were no plans to recruit a big-name designer, nor for the Grays to take a more active role in the company. “No, we are happy with the work Tim Gardner and his design studio are doing. Bear in mind, Marie Gray is the vice chairman of the board and we certainly have and will continue to rely on her for occasional guidance.”
Ron Frasch, vice chairman and chief merchant of Saks Fifth Avenue, which has a huge St. John business, said he was upset by Cohen’s resignation.
“He was heading in the right direction, and it doesn’t happen overnight. I feel very badly about it. Things take time to turn around. It’s a huge company to turn around, and it wasn’t trending well before he arrived,” said Frasch.
“It’s another example of the fast turnaround expectations that shareholders have for a company in this industry. It takes time to create a turnaround. Most likely, things are going to go down before they go up. For me, it’s devastating. It’s a huge loss for St. John and a huge loss for Saks Fifth Avenue,” added Frasch.
For the past year-and-a-half, Cohen has been an agent of change — for better or worse — at a company that was steeped in tradition. He arrived at St. John after a 16-year tenure as ceo of Ermenegildo Zegna’s U.S. operations, where he had spearheaded the growth of that business from $15 million in sales to $175 million. At St. John, he was charged with guiding the overall corporate strategy of the women’s luxury and accessories business, and taking the brand global. Despite the company’s popularity with a loyal following of customers, it had begun to hit a wall, in terms of growth, and profits had begun to slide.
He quickly began making changes, overhauling the executive ranks, bringing in his own team, firing scores of people, slashing sales staff commissions, and shaking up the company’s culture. Cohen named a new executive vice president of sales and marketing; a new executive vice president of operations, and a new executive vice president of human resources. He decided to revamp St. John’s ad campaign featuring creative director Kelly Gray, where she had been a campy fixture for more than 22 years, and signed an outside agency, Lipman, to develop a new one. Gray was initially replaced by Gisele Bündchen, but then last September, St. John created a huge buzz by tapping tabloid favorite Angelina Jolie, who is known for her edginess and unorthodox personality, as the company’s new spokesmodel, beginning with the spring 2006 ads. It seemed to be an unusual choice for the brand, which has built its reputation on dressing the Ladies Who Lunch, as well as high-ranking executive and political women.In perhaps the most dramatic move, Cohen severed ties with co-founder and designer Marie Gray, who retired from her design role at the company in July. Earlier last year, Cohen brought in industry veteran Gardner as a consultant to work with the design team.
In another break with company tradition, Cohen decided to bypass St. John’s twice-yearly mega-runway presentation and cocktail party at the University of California-Irvine auditorium near St. John’s headquarters for top retail clients, which had also served as a booster event for hundreds of staff and a perk for loyal customers. Instead, last October the company decided to participate in Los Angeles Fashion Week and held a runway show at Smashbox Studios. However, the company chose to sit out the most recent round of shows last month, which sources attributed to the fact that its collection, under design consultant Gardner, just wasn’t up to snuff for the runway.
Although St. John remains one of the best-selling brands at Neiman Marcus and Saks Fifth Avenue, with a cult following for its crease-free knit suits and gowns, profits have slid in recent years. While sales rose 7 percent to $395.6 million in fiscal 2004 from the previous year, profits dropped to $13.4 million, according to the company’s earnings report. That is 10 percent lower than in 2003 and 44 percent lower than in 2000.
Sources believe Cohen moved too quickly in making cultural changes that he thought were necessary. After making changes to the front end of the business, he next tackled the product, which became a more delicate situation since St. John has a devoted loyal following of core customers who are resistant to change. Part of Cohen’s strategy, said sources, was to entice a new level of younger customers to the brand, a scheme that has so far fallen short.
Sam Malouf, owner of Malouf’s in Burlingame, Calif., said, “I am surprised. I’ve known him for a long time — since Zegna. He is a very amicable, friendly guy — very outgoing, with a nice personality and made you feel warm. He always liked to keep on a happy face and a positive outlook. We’ve seen that suit sales are down and a large part of our business with St. John’s is suits.”Jeanae Michel, a St. John sales representative at Nordstrom in Brea, Calif., said, “A lot of our older customers are a little concerned with the Angelina Jolie ads because of her image. I think they’re concerned the line is going to be trendy for them. There hasn’t been a falloff in sales at all.”
Some specialty retailers interviewed recently about the St. John business said the changes to the look of the collection have turned off the core customer and failed to attract younger ones.
“Retailers I know who carry St. John are really concerned about whether they can make a generational change at the same time that they are making a management change,” said one retailer who has watched his once-robust St. John business decline steadily for the past five years.
“As those older customers dropped off or their husbands retired or they weren’t as active civilly or socially, we haven’t been able to replace the generation that was devoted to St. John….I think they are really not sure what to do,” he theorized. “There doesn’t seem to be a cohesive game plan in place.”
He felt Jolie was a poor choice as the face of the brand because she doesn’t resonate with its customers. But another retailer felt the new campaign was innocuous and hadn’t stirred any controversy after “the initial gasp” that St. John had selected the actress.
One St. John retailer with multiple stores said her business with the brand had slipped since last fall because attempts to give the line a fresh look didn’t appeal to her customers.
“Everybody wants to get younger and update their collections, but unfortunately this wasn’t a collection that the customers wanted to see updated,” she said. “It’s causing a huge uproar. They took wonderful mix-and-match sportswear and made it suitings that are strictly limited to a top, bottom and skirt….And they’ve increased the markup, which has bumped them into a real designer price point that is not acceptable to the traditional customer…It makes me sad because they had such a great product that was so easy for people to buy.”Another longtime St. John retailer began buying less than her customary minimum last fall through this coming fall because the collection didn’t warrant the investment. While the label’s sell-through has been good through this spring, she’s worried about the fall collection.
“It was a nightmare,” she said. “The colors, the retro, who wants retro St. John? It was scary — the most difficult line to buy.”
St. John Through The Years
1962: Marie Hermann, a model who used St. John as her professional name, knit her first dress. Her fiancé, sportswear salesman Robert Gray, takes her designs to Bullock's Wilshire department store and a Los Angeles boutique, where he gets orders for 84 dresses. St. John Knits is founded and based in the garage of the couple's home.
1971: The company breaks $1 million in wholesale sales.
1989: The Grays sell to Escada for $45 million.
1991: Kelly Gray, daughter of Marie and Bob Gray and the company's official model, is appointed creative director.
March 1993: Escada sells its stake and St. John goes public.
April 1996: Bob Gray promotes Kelly to president, replacing Robert C. Davis.
July 1999: Vestar Capital Partners and the Grays buy St. John for $522 million and take the company private.
November 2002: Bob Gray retires as chief executive, naming Bruce Fetter and Kelly Gray as co-presidents.
August 2004: Richard Cohen joins St. John from Zegna as ceo and hires New York-based Lipman Agency to revamp its image.
November 2004: St. John lays off 76 employees.
January 2005: Cohen appoints Robert Green executive vice president of sales and marketing; Max Weinstein, executive vice president of operations, and Elfride Campbell, executive vice president of human resources. Cohen appoints Tim Gardner as design consultant.
March 2005: Chief operating officer Fetter resigns.July 2005: Marie Gray and Kelly Gray resign. The Gray family remains a minority stockholder.
August 2005: Print campaign with Gisele Bündchen, shot by Mario Testino, appears.
September 2005: Angelina Jolie announced as the new face of the ad campaign. October 2005: St. John presents its first Los Angeles Fashion Week runway show.
January 2006: Jolie ads, also shot by Testino, appear in February magazines.
March 2006: Speculation of design deals with Narciso Rodriguez, Derek Lam, Behnaz Sarafpour and Vera Wang.
April 2006: Cohen resigns.
— With contributions from Marcy Medina and Emili Vesilind, Los Angeles, and Holly Haber, Dallas
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