ST. JOHN SALES JUMP 19.1 PERCENT
Byline: Arnold J. Karr
NEW YORK — Reductions in debt, higher gross margins and double-digit sales increases combined to propel St. John Knits International to big boosts in profits for the fourth quarter and year ended Oct. 29.
The Irvine, Calif.-based producer and marketer of women’s apparel and accessories generated net income of $9.1 million, or $1.22 a diluted share, in the fourth quarter, 103.9 percent higher than the $4.5 million, or 53 cents, registered in the prior-year period. Sales jumped upward 19.1 percent to $91.3 million from $76.6 million.
For the full year, St. John’s net income rose 62.1 percent to $23.8 million, or $3 a diluted share, from $14.7 million, or 98 cents. Sales were up 14.4 percent to $336.5 million from $294.2 million in fiscal 1999.
The increase in annual sales was attributed to a 10.5 percent increase in the company’s knit product lines, which accounted for 80 percent of wholesale revenues, and a 137.3 percent increase in the company’s sport product lines, which generated 9.2 percent of wholesale volume.
Despite the 1999 closure of four home stores, retail division sales rose 25.2 percent to $112.1 million, one-third of overall sales. Comparable-store sales at the company’s full-price boutiques rose 7.6 percent during the quarter and 20.3 percent during the year.
St. John last summer completed the repurchase of 93 percent of its outstanding shares in a privatization led by the buyout group Vestar Capital Partners and the family of Bob Gray, St. John founder, chairman and chief executive. With about 7 percent of its stock still held by the public, St. John continues to report its financial results.
As reported, H.W. Mullins, former chairman and ceo of Neiman Marcus Stores, will join St. John as ceo on Feb. 1. Gray will continue as chairman.
Bottom-line improvements were aided by reductions in debt and improvements in gross margin during the year. Gross margin advanced to 58.1 percent in fiscal 2000 versus 55.8 percent in the prior year. Selling, general and administrative expenses declined to 36.7 percent of sales in 2000 from 39.1 percent in 1999, primarily because of the elimination of the home stores. Prior-year figures included $1.7 million in nonrecurring costs to close the home stores and settle litigation relating to them. However, last year’s results included $1.5 million in litigation expenses connected to the company’s privatization.
The company made two unscheduled principal payments of $10 million each during fiscal 2000, helping to reduce the debt $22.5 million to $267.4 million. Interest expense tripled to $31.8 million last year against $10.2 million in fiscal 1999. A third unscheduled principal payment of $10 million was made just after the close of fiscal 2000.