LOS ANGELES — The future of St. John Inc. now rests firmly on the shoulders of chief executive officer Richard Cohen.
As Cohen’s first anniversary on the job approaches next month, the British-born executive knows there is much to be done.
The resignations on Monday of St. John’s co-founder and designer, Marie Gray, and her daughter, Kelly Gray, the creative director and longtime advertising face of the luxury brand, mark both an operational and symbolic turning point for the Irvine, Calif.-based company.
Cohen has been ushering in significant measures, from switching key executives to revamping the long-formulaic advertising campaign, in an effort to reverse shrinking profits while positioning St. John as an American luxury house.
“I’ve got my work cut out for me,” he said in an interview late Monday.
Although sales rose 7 percent to $395.6 million in fiscal 2004 from the previous year, profits dropped to $13.4 million, according to the company’s earnings report. That is 10 percent less than 2003 and 44 percent lower than in 2000.
Sales dipped 4 percent to $99.8 million for the first fiscal quarter ending Jan. 30, and profits fell 19 percent to nearly $5 million. St. John shares rose 50 cents Tuesday to $30 in over-the-counter trading.
The falling profits appear to be largely because of remodeling and expansion costs for St. John’s 31 signature retail doors worldwide. The program to open and remodel stores has been propelled partly by the slowing growth at department stores. A new retail look is set to bow in coming months, one that appears tied to the image of the new advertising campaign reflecting a defined California glamour.
While Gisele Bündchen is the first to personify this new image in the campaign bowing in September titles, there is increasing speculation — and outright talk from sources in-house — that the company has its eye on and wallet wide open for an A-list Hollywood celebrity to lead the brand into its next phase.
Angelina Jolie has been floated as the top candidate, with an offer said to be on the table. So, too, has Charlize Theron, who signed on last year as the face of Dior’s J’Adore.
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Cohen declined to comment.
David Lipman, whose company created the new advertising campaign, said last week that the process to pick the next model had only begun.
Getting St. John on the red carpet has been a goal of the brand, particularly Kelly Gray, well before Cohen entered the picture. There was even a nod to ghetto-fabulous when St. John sent out models in HotPants and plenty of gold during its show two years ago. But the stylists evidently did not come knocking.
Ever open to new resources, however, stylists working with celebrities indicate they’re not adverse to giving the brand a look — once the collection reflects it.
“If it’s getting younger, then we definitely would look at it,” said Estee Stanley, who, along with partner Cristina Ehrlich, styles Mary-Kate and Ashley Olsen, Mandy Moore and Jessica Biel. “St. John is beautifully made. But it’s a Ladies Who Lunch kind of line. Most of my clients are in their 20s. They lunch in sexy tops. And the brand has an association of being, well, more mature.”
Which brings the subject to Cohen’s immediate task.
Who will step into Marie Gray’s pumps?
“I don’t know,” he said, noting that the design team, numbering about 100, is solidly in place. “What we’re doing is evaluating where we stand, then we’ll evaluate from there.” But it will be soon, he said.
Considering the core customer, a devoted base if there ever was one, will be key, said Eric M. Beder, an analyst at Brean Murray & Co. in New York. “The exit of those two women, Marie and Kelly, puts the loyalty of their customers in flux without a doubt.”
Long known as a resource for its resilient, wrinkle-free knits — making it a favorite of women in business and politics —Beder echoes other industry watchers that St. John will have to do some soul searching if it expects to compete in the fashion arena and attract a younger and wider consumer base.
“Denim and other products have moved forward, where knits really haven’t been as much in the fashion forefront,” Beder said. In some respects, even their core market — that woman ceo — has even been finding other things to wear to work. Can they keep that core and expand it? It will be difficult, but not impossible.”
He and others point to comeback stories of other luxe brands.
Gucci was lame “before Tom Ford,” said Cameron Silver of the vintage resource Decades, who also consults for Azzaro after helping resuscitate the brand among young Hollywood. “Chanel was not a cool brand to wear until Lagerfeld revamped it.”