St. John CEO Charts Luxury Label's Future Growth

In many ways, not much has changed at St. John since it was founded in 1962 by Marie and Robert Gray.

Elegant but simple knit suits are still a staple of the collection. Price points are high, and the affluent career woman is among its many fans.

But the company is branching out toward the global market, particularly since Glenn McMahon became chief executive six months ago.

quot;The key word is really to evolve,quot; McMahon said after a recent St. John fashion show Jan. 22 highlighting the Fall ’08 offerings of the Irvine, Calif.–based fashion house.

The 49-year-old executive, who came on board Sept. 1, is mindful of moving slowly but thoughtfully. He wants to make business-savvy and gradual changes to avoid alienating the company’s core customer of well-heeled middle-aged women who have powerful jobs and need a sophisticated and tasteful suit to make a statement.

Alienation is what happened during the tenure of Richard Cohen, the former head of Ermenegildo Zegna North America, who came on board as chief executive in 2004 and left in April 2006. The East Coast executive focused more on a younger, contemporary customer and pushed aside the tried-and-true client.

McMahon, former president of Dolce & Gabbana USA, has East Coast roots too. But he is wary of trying to revolutionize the company like his predecessor.

He foresees boosting revenues by concentrating on the company’s eveningwear line, which now makes up 20 percent of the company’s $400 million in annual sales. With the weak U.S. dollar, he is looking toward Europe as a logical place to focus. quot;It is one of the fastest-growing categories in our retail stores,quot; he said. quot;We think there is a market out there with the strong euro.quot;

With that in mind, McMahon recently appointed George Sharp as executive vice president of design. Marie Gray and her daughter, Kelly, remain design consultants. Maria Lopez stays on as vice president of design.

The venerable knitwear company also has been quietly rolling out a revamped line of licensed accessories, a category discontinued under Cohen.

Late last year, the company began showing St. John shoes and jewelry. In February, stores will re-introduce St. John handbags and eyewear, and then St. John perfume will be on the market in time for Mother’s Day gifts. Right now, accessories make up only 1 percent of revenues. The goal is for that division to account for 14 percent to 20 percent of sales in the near future, McMahon said.

Bruce Fetter, St. John’s president and chief operating officer, said McMahon’s leadership has helped steer the company in the right direction. Sales were up in the second, third and fourth quarters of 2007, he said, but declined to say by how much. Same-store sales at the company’s 28 boutiques were up in the double-digit range. St. John is also sold at high-end department stores such as Saks Fifth Avenue, Neiman Marcus and Nordstrom.

That leaves the burning question of who will be the next St. John signature model. For years, that coveted position was held by Kelly Gray, whose blonde bob and tan legs graced hundreds of slick fashion magazine ads.

Under Cohen, supermodel Gisele Buuml;ndchen took over that role for one year, replaced by superstar Angelina Jolie. Jolie will make her last appearance in St. John ads this spring.

quot;I don’t think you’ll see us with a celebrity or a supermodel again,quot; Fetter observed. quot;Just a beautiful woman who fits very well with the brand.quot; —Deborah Belgum