St. John Knits Reports Another Drop in Profits

Upscale women’s clothier St. John Knits Inc. reported a drop in earnings for the third consecutive quarter Wednesday in the last financial report before shareholders decide whether to accept a buyout bid by Chief Executive Robert E. Gray and his family.

Earnings for the second quarter ended May 2 fell 15% to $8.26 million, or 49 cents a share, from $9.74 million, or 57 cents a share for the same time period last year. The Irvine-based company said the most recent results included $1.68 million in one-time expenses related to a legal settlement with Amen Wardy Sr. and Amen Wardy Jr. over a home store chain that bore their name.

Analysts’ earnings projections for the quarter had ranged from 51 cents a share to 54 cents a share.

Sales rose 12% to $78.2 million from $69.8 million.

Gray and his family, along with Vestar Capital Partners, are attempting to buy most of the company that the Grays don’t already own for $522 million, or $30 a share. Shareholders will meet June 28 to decide whether to accept the offer. The transaction could close early next month if the buyout bid is accepted, the company said.

A shareholder lawsuit challenging the deal is pending.

In connection with the buyout, the company also said Wednesday that St. John Knits International Inc.--the entity formed to make the purchase--intends to sell $160 million in bonds to buy the company and pay related expenses.

St. John shares closed Wednesday at $26.25, down 6 cents, in New York Stock Exchange trading.