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COSTA MESA, Calif. — St. John is refocusing on the brand’s DNA to serve its core customer and cope with the economic downturn.
This story first appeared in the July 24, 2009 issue of WWD. Subscribe Today.
That was the message when the luxury firm presented its 2010 resort and spring collections Wednesday during a runway show for 400 guests at the Orange County Performing Arts Center here.
In addition to its ready-to-wear line, St. John introduced the latest incarnation of its casual lifestyle collection. The company has decided to shelve SoCa, the spin-off line launched last fall, and to bring the casual collection back under the St. John label.
“We took a temperature check in this economy, and where we can’t promote a new brand, we could take advantage of our brand equity,” chief executive officer Glenn McMahon said in an interview.
The sole SoCa store at South Coast Plaza in Costa Mesa, Calif., which opened last October, reverted to being a St. John boutique in May.
“A year ago we came up with the SoCa concept and it hit the floor as the economy went into meltdown, but certain elements got a lot of attention, which meant our customer was ready for more fashion,” McMahon said.
The customer who once bought five or six pieces at a time has cut those purchases in half, he said. In response to conservative buying, there is more of a focus on classic investment pieces with a modern flair.
“The whole notion of obsolete fashion is really passé,” McMahon observed. “Customers are smarter and are no longer waiting to be told there are different pieces to wear each season.”
Like most companies, St. John is looking to lower costs and improve efficiency. The company reduced its workforce by about 10 percent, eliminated bonuses, suspended merit pay increases, froze 401(k) matching contributions and cut salaries by an unspecified amount across the board, including executives.
“If it saves jobs, we’ll do it,” McMahon said. “As painful as it is, it’s also healthy. This is the new reality and we’re creating a new business model.”
McMahon said he was “not concerned” by the decision of Moody’s Investors Service last week to lower St. John’s corporate credit rating to “B3” from “B2” and the probability of default to “Caa1” from “B3.” “We remain liquid, and we are in a good position,” he said.
Moody’s estimated the company’s revenues for the 12 months ended May 3 at $315 million.
George Sharp, executive vice president of design, who handles both the rtw and casual lifestyle collections, said, “We want to dress our customer 24/7, so we took the best of the best from SoCa — basic Ts, cardigans and jeans — and made it all part of St. John. Women can mix a tweed jacket from the ready-to-wear collection with a pair of jeans and it will have the same coloration and fit. It’s seamless.”
The casual lifestyle collection, which is referred to as Yellow Label because its tags feature the same St. John logo with a different hue, is priced 30 percent lower than rtw, with most pieces retailing for less than $500.
“It speaks to a broader audience and it’s how women dress today,” McMahon said. “For example, there’s a trenchcoat in [nylon] techno fabric that she can wear from the office to a night out. They are go-to pieces.”
The rtw collection, where a knit jacket retails for about $1,000, is based on the company’s signature Santana knits along with an increasing mix of woven fabrics, including brocade, charmeuse, georgette, linen and leather. Graphic prints, volume, ruffles, bows and asymmetric necklines were key elements, while silhouettes veered toward long and lean. The emphasis was on mixing and matching patterns and textures, as well as accessories, which are produced in partnership with Stuart Weitzman.
“I feel so comfortable with our ready-to-wear now,” McMahon said. “That’s our priority and we are making great progress there. Our biggest focus is on ingenuity and innovation, where maybe we were a little delinquent in the last five years. A better product means the difference between a customer buying full price or waiting for a markdown.”
In addition to casual lifestyle, McMahon identified two other areas of opportunity: a basics program of all-black pieces in a new fine-textured knit stitch called caviar, and more special occasion offerings such as white organza blouses and floor-length knit skirts.
Building retail real estate is not a priority.
“We’re not aggressively going after retail expansion right now,” McMahon said. “We have 29 boutiques in great markets, so service and education is our priority.”
Three stores — Houston and Bal Harbor and Naples in Florida — feature a revamped design with a residential look in a platinum hue, but the company is in no rush to renovate the other stores.
“In a tough economy, we have to pick our battles,” McMahon said. “Some things are more three-year strategy than one-year strategy. We’re focusing on quality product with exceptional value. Our prices are not going up and our customer appreciates that more than ever.”