St. John Knits Profit Rises 2%, Sales Soar 20% in 3rd Quarter
St. John Knits, struggling to fix problems in its high-end apparel and home-store lines, said Thursday that third-quarter profit rose 2% as sales surged more than 20%.
The results were in line with the Irvine company’s warning last month that profits and sales would be below analysts’ expectations, news that triggered a 30% plunge in St. John’s shares.
On Thursday, St. John lost an additional 2.4%, to $17.63, a 52-week low as the overall stock market moved dramatically lower.
In a conference call with analysts, St. John Chairman Robert Gray said company officials will be closely monitoring the disappointing performance of their Amen Wardy home stores, which have experienced higher costs and lower sales than planned.
The company might close Amen Wardy stores, either individually or as a group, if the chain isn’t able to reverse its fortunes, company officials said.
But officials also said they believe the upscale home furnishings concept is viable and they expect the stores--in Las Vegas, Boston, Dallas and Palm Beach, Fla.,--to become profitable by the first quarter of 1999. The company plans to open a fifth store, in Scottsdale, Ariz., this month.
St. John took its first step toward reversing the chain’s fortunes last month by firing Amen Wardy Jr., chief executive of the chain. David Frankel, an executive vice president at St. John, was named to succeed Wardy.
After the conference call, analyst Jennifer Black of Black and Co. in Portland, Ore., said she was pleased that St. John is putting the home stores “under a microscope.” She also was pleased that the company replaced Wardy, who she said “wasn’t performing.”
In the three months ended Aug. 2, the company earned $7.3 million, or 43 cents a share, compared with a $7.2-million profit, or 42 cents a share, in the year-earlier period.
Sales rose to $67.7 million from $54.8 million a year ago. Sales at St. John’s 16 boutiques rose 22% from a year earlier.
For the nine months, St. John’s earnings rose 12% to $26.3 million, or $1.53 a share, from $23.4 million, or $1.37 a share.
