St. John Founder Quits Post as Chief Designer

Forty-three years after she sat down at a knitting machine and stitched together the beginnings of a nearly $400-million-a-year business, Marie Gray has relinquished her post as chief designer at St. John Knits International Inc.

The Irvine company said Monday that Kelly Gray, Marie Gray’s daughter and the company’s creative director and longtime model, had also left.

The latest transition comes six weeks after St. John announced that it was replacing Kelly Gray with leggy Brazilian supermodel Gisele Bundchen in its fall advertising campaign, a move intended to help attract young customers.

Marie Gray will remain on St. John’s board as founding designer and Kelly Gray will serve as a consultant, the company said.

Vestar Capital Partners, which bought the majority of St. John three years ago, holds an 83% stake. The Gray family, including patriarch and co-founder Robert Gray, remains as minority shareholders.

In a statement issued by the company, Marie Gray thanked St. John’s customers and employees and Kelly Gray said she was “extremely proud” of what her family had accomplished in the fashion industry. Both declined to comment further.

The company has not named replacements for the Grays but is consulting with Tim Gardner, former creative director for Calvin Klein, for “fashion direction,” Chief Executive Richard Cohen said.

“I want to become the No. 1 American luxury brand,” he said. “To do that we need to continue to satisfy our core [customers], who have been incredibly loyal to us, and we also need to reach out to that customer who hasn’t been shopping with us.”

That’s something the tony clothier has been trying to do for years. But St. John has been struggling, according to its most recent earnings reports. Sales rose 7% to $395.6 million in fiscal 2004 from a year earlier. But profit dropped to $13.4 million, 10% less than the previous year and 44% lower than in 2000.

For the fiscal first quarter ended Jan. 30, sales dipped 4% to $99.9 million and profit fell 18% to almost $5 million.

Bill D’Arienzo, chief executive of fashion brand consulting firm WDA Marketing Solutions, said he believed that Cohen had the skills to “layer in the next generation of consumers,” citing his “vision and operational talent all wrapped into one.”

St. John shares are listed in the so-called pink sheet market, an electronic trading venue for thinly traded stocks. The shares have not traded since Thursday, when they rose 50 cents to $29.50.