IRVINE, Calif. — St. John Knits reported third-quarter earnings climbed 40 percent to $3.5 million, or 43 cents a share, easily topping Wall Street’s consensus forecast of 39 cents a share. A year earlier, St. John earned $2.5 million, or 31 cents. The stock closed up 1 1/4 to 28 3/8 Wednesday on the New York Stock Exchange. In the quarter ended July 31, sales rose 18.5 percent to $29.7 million from $25 million.

Robert Gray, chairman, said the results were in line with the company’s expectations, and that there was strong consumer demand for St. John’s products.

In a conference call with analysts, Gray said the company’s new Griffith & Gray line has been doing “exceptionally well” in all three of St. John’s major accounts: Neiman Marcus, Saks Fifth Avenue and Nordstrom. As for the growth potential of the new line: “We’re very bullish,” he said. “There’s no limit to how big it can get.”

He said the New York introduction for the St. John fragrance will begin Oct. 24 at Saks Fifth Avenue, the same week St. John ready-to-wear has the Fifth Avenue windows.

Gross margin in the quarter improved to 54.7 percent of sales from 50 percent a year ago, helped by efficient utilization of machinery and leveraging of fixed costs, said Roger G. Ruppert, chief financial officer.

Gray noted that St. John has hired Marta Prager, formerly the St. John specialist at Nordstrom, to oversee European operations. Referring to the strong reaction to the company’s products in Europe, he noted: “We feel we have the chance to grow rapidly there.” Gray observed that St. John will focus on German and Swiss markets, where the bulk of its European accounts are. Net sales for the St. John retail division rose 25 percent in the quarter to $5.8 million, with same-store sales up 16 percent. The company opened its 13th retail boutique and plans to open a 14th next month. It said it is close to an agreement on a 7,000-square-foot store in Chicago’s Oak Street area.

Looking ahead, Gray said, “We’re not interested in growing revenue too much faster than 20 percent [annually],” although he noted that, for the current year, it will probably reach 25 percent.

In the nine months, earnings grew 37 percent to $9.9 million, or $1.20, from $7.2 million, or 88 cents. Sales advanced 26 percent to $89.2 million from $70.7 million. In the retail division, sales rose 51 percent to $18.6 million, with same-store sales up 24 percent.

— Fairchild News Service

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