UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended April 28, 1996

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _____________ to ______________

Commission File Number 1-11752

ST. JOHN KNITS, INC.
(Exact Name of Registrant as Specified in its Charter)

CALIFORNIA 95-2245070
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)

17422 DERIAN AVENUE, IRVINE, CALIFORNIA 92714
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, Including Area Code: (714) 863-1171

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
---- ----

The number of outstanding shares of registrant's Common Stock, no par
value, was 16,480,998 shares as of June 4, 1996.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ST. JOHN KNITS, INC.
CONSOLIDATED BALANCE SHEETS

APRIL 28, OCTOBER 29,
1996 1995
------------ -----------

(unaudited)
ASSETS
------
Current assets:
Cash and cash equivalents............................................... $11,811,937 $ 8,711,613
Investments............................................................. 6,502,184 6,399,692
Accounts receivable, net................................................ 21,135,668 21,124,306
Inventories............................................................. 16,047,156 14,909,042
Deferred income tax benefit............................................. 3,454,291 3,454,291
Other................................................................... 444,626 247,236
----------- -----------
Total current assets................................................ 59,395,862 54,846,180
----------- -----------
Property and equipment:
Machinery and equipment............................................... 28,081,487 23,614,437
Leasehold improvements................................................ 21,174,745 19,132,496
Furniture and fixtures................................................ 4,020,475 3,756,202
Construction in progress.............................................. 2,793,729 350,950
----------- -----------
56,070,436 46,854,085
Less--Accumulated depreciation and amortization....................... 20,208,704 17,245,028
----------- -----------
35,861,732 29,609,057
----------- -----------
Other assets............................................................. 2,381,896 1,517,483
----------- -----------
$97,639,490 $85,972,720
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable...................................................... $ 3,860,756 $ 4,480,794
Accrued expenses...................................................... 10,586,719 9,162,096
Income taxes payable.................................................. 2,081,221 3,073,125
----------- -----------
Total current liabilities........................................... 16,528,696 16,716,015
----------- -----------
Deferred income tax liability......................................... 29,465 29,465
----------- -----------
Shareholders' equity:
Preferred Stock, no par value: Authorized--2,000,000 shares, issued
and outstanding--none................................................ -- --
Common Stock, no par value: Authorized--40,000,000 shares, issued
and outstanding--16,480,998 and 16,468,734 shares, respectively...... 502,799 502,799
Additional paid-in capital............................................ 15,894,778 15,687,393
Retained earnings..................................................... 64,683,752 53,037,048
----------- -----------
81,081,329 69,227,240
----------- -----------
$97,639,490 $85,972,720
=========== ===========

See accompanying notes.

ST. JOHN KNITS, INC.
CONSOLIDATED STATEMENTS OF INCOME

Thirteen Weeks Ended Twenty-Six Weeks Ended
------------------------------ -----------------------------
April 28, April 30, April 28, April 30,
1996 1995 1996 1995
-------------- --------------- ------------- -------------
(unaudited) (unaudited)

Net sales...................................... $50,028,466 $40,620,455 $95,287,195 $76,923,490
Cost of sales.................................. 22,388,015 18,800,007 43,069,603 35,884,966
------------ ----------- ----------- ------------
Gross profit................................... 27,640,451 21,820,448 52,217,592 41,038,524
Selling, general and administrative expenses... 16,150,521 13,103,856 31,508,618 25,637,248
------------ ----------- ----------- ------------
Operating income............................... 11,489,930 8,716,592 20,708,974 15,401,276
Other income................................... 235,616 103,783 845,320 289,594
------------ ----------- ----------- ------------
Income before income taxes..................... 11,725,546 8,820,375 21,554,294 15,690,870
Income taxes................................... 4,941,554 3,717,215 9,083,731 6,612,682
------------ ----------- ----------- ------------
Net income..................................... $ 6,783,992 $ 5,103,160 $12,470,563 $ 9,078,188
============ =========== =========== ============
Net income per share........................... $ 0.40 $ 0.31 $ 0.73 $ 0.55
============ =========== =========== ============
Dividends per share............................ $ 0.025 $ 0.025 $ 0.05 $ 0.05
============ =========== =========== ============
Weighted average shares outstanding............ 17,052,284 16,414,876 17,050,624 16,414,438
============ =========== =========== ============

See accompanying notes.

ST. JOHN KNITS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Twenty-Six Weeks Ended
-----------------------------------
April 28, 1996 April 30, 1995
----------------- ---------------

(unaudited)
Cash flows from operating activities:
Net income....................................................... $ 12,470,563 $ 9,078,188
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................... 3,274,492 2,512,613
Deferred income tax benefit..................................... -- (400,000)
Loss on sale of property and equipment.......................... 17,820 44,047
Partnership losses.............................................. 54,897 73,796
(Increase) decrease in accounts receivable...................... (11,362) 110,633
Increase in inventories......................................... (1,138,114) (1,693,141)
Increase in other current assets................................ (197,390) (585,218)
Increase in other assets........................................ (233,048) (16,080)
Decrease in accounts payable.................................... (620,038) (1,728,301)
Increase in accrued expenses.................................... 1,424,316 1,037,462
Increase (decrease) in income taxes payable..................... (991,904) 231,003
------------- -----------
Net cash provided by operating activities.................... 14,050,232 8,665,002
------------- -----------
Cash flows from investing activities:
Proceeds from sale of property and equipment.................... -- 32,618
Purchase of property and equipment.............................. (9,544,987) (6,758,585)
Net purchase of short term investments.......................... (102,492) (98,133)
Net capital (contributions to) distributions from partnership... (686,261) 21,500
------------- -----------
Net cash used in investing activities........................ (10,333,740) (6,802,600)
------------- -----------
Cash flows from financing activities:
Dividends paid.................................................. (823,553) (410,357)
Issuance of common stock........................................ 207,385 78,748
------------- -----------
Net cash used in financing activities........................ (616,168) (331,609)
------------- -----------
Net increase in cash and cash equivalents......................... 3,100,324 1,530,793
Beginning balance, cash and cash equivalents...................... 8,711,613 8,855,445
------------- -----------
Ending balance, cash and cash equivalents......................... $ 11,811,937 $10,386,238
============= ===========

Supplemental disclosures of cash flow information:
Cash received during the twenty-six weeks for -
Interest income............................................... $ 406,555 $ 245,231
============= ===========
Cash paid during the twenty-six weeks for -
Interest expense.............................................. -- $ 242
============= ===========
Income taxes.................................................... $ 9,983,750 $ 6,807,599
============= ===========

See accompanying notes.

ST. JOHN KNITS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of St. John
Knits, Inc. and its subsidiaries (collectively referred to herein as "the
Company") reflect all adjustments (which include only normal recurring
adjustments) considered necessary to present fairly the financial position,
results of operations and cash flows of the Company for the periods
presented. It is suggested that the accompanying unaudited consolidated
financial statements and footnotes thereto be read in conjunction with the
financial statements and footnotes included in the Company's Annual Report
on Form 10-K for the year ended October 29, 1995 as filed with the
Securities and Exchange Commission on January 26, 1996.

The results of operations for the periods presented are not necessarily
indicative of the operating results that may be expected for the year
ending November 3, 1996.

2. SUMMARY OF ACCOUNTING POLICIES

a. COMPANY OPERATIONS

The Company is a leading designer, manufacturer and marketer of women's
clothing and accessories. The Company's products are distributed primarily
through specialty retailers and the Company owned retail boutiques. All
intercompany and interdivisional transactions and accounts have been
eliminated.

b. DEFINITION OF FISCAL YEAR

The Company utilizes a 52-53 week fiscal year whereby the fiscal year
ends on the Sunday nearest to October 31. The quarters also end on the
Sunday nearest the end of the quarter, which accordingly were April 28,
1996 and April 30, 1995.

3. DIVIDENDS

The Company declared a quarterly dividend of $0.025 per share (as
adjusted for the stock split discussed below) on March 5, 1996 for all
shareholders of record on April 4, 1996. The dividend was paid on May 3,
1996. On May 31, 1996, the Company declared another quarterly cash
dividend of $0.025 per share to be paid on August 2, 1996 to shareholders
of record on July 3, 1996.

4. STOCK SPLIT

On March 12, 1996, the Company declared a 2-for-1 stock split for all
shareholders of record on April 8, 1996. Certificates evidencing the
additional shares were issued on May 6, 1996. All share and per share data
have been adjusted to reflect the stock split.

5. EARNINGS PER SHARE

Beginning in the second quarter of fiscal year 1996, the weighted average
shares have been increased to reflect stock options that are issued and
outstanding.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The following table is derived from the Company's Consolidated
Statements of Income and sets forth, for the periods indicated, the results
of operations as a percentage of net sales:

Percent of Net Sales Percent of Net Sales
Thirteen Weeks Ended Twenty-Six Weeks Ended
("Second Quarter") ("Six Months")
---------------------------- -----------------------------
April 28, April 30, April 28, April 30,
1996 1995 1996 1995
----------- ----------- ----------- -------------

Net sales...................................... 100.0% 100.0% 100.0% 100.0%
Cost of sales.................................. 44.8 46.3 45.2 46.7
------- ------- ------- ------
Gross profit................................... 55.2 53.7 54.8 53.3
Selling, general and administrative expenses... 32.3 32.3 33.1 33.3
------- ------- ------- ------
Operating income............................... 22.9 21.4 21.7 20.0
Other income................................... 0.5 0.3 0.9 0.4
------- ------- ------- ------
Income before income taxes..................... 23.4 21.7 22.6 20.4
Income taxes................................... 9.8 9.2 9.5 8.6
------- ------- ------- ------
Net income..................................... 13.6% 12.5% 13.1% 11.8%
======= ======= ======= ======

SECOND QUARTER FISCAL 1996 COMPARED TO SECOND QUARTER FISCAL 1995

Net sales for the second quarter of fiscal 1996 increased by $9,408,000,
or 23.2% over the second quarter of fiscal 1995. This increase was
principally attributable to (i) an increase in sales to existing domestic
retail customers of approximately $5,928,000, (ii) an increase in sales by
Company owned retail stores of approximately $2,426,000, due in part to the
addition of three retail boutiques and two retail outlet stores since the
beginning of the second quarter of fiscal 1995 and (iii) an increase in
sales to international retail customers of $1,054,000. Net sales increased
primarily as a result of increased unit sales of various products lines.

Gross profit for the second quarter of fiscal 1996 increased by
$5,820,000, or 26.7% as compared with the second quarter of fiscal 1995,
and increased as a percentage of net sales to 55.2% from 53.7%. This
increase in the gross profit margin was due to an increase in the number of
garments being produced and sold without a corresponding increase in the
production costs, due in part to the fixed nature of some costs.

Selling, general and administrative expenses for the second quarter of
fiscal 1996 increased by $3,047,000, or 23.3% over the second quarter of
fiscal 1995, and remained constant as a percentage of net sales at 32.3%.
Although the percentage remained constant, an increase in the selling,
general and administrative expenses as a percentage of net sales for the
Retail Division was offset by a reduction in the costs incurred in
connection with the promotion and distribution of the fragrance line as
compared with the same period last year, and costs incurred during the
second quarter of fiscal 1995 related to the completion of the new
manufacturing facility.

Operating income for the second quarter of fiscal 1996 increased by
$2,773,000, or 31.8% over the second quarter of fiscal 1995. Operating
income as percentage of net sales increased to 23.0% from 21.5% during the
same period. This increase in the operating income as a percentage of net
sales was due to the increase in the gross profit margin.

FIRST SIX MONTHS FISCAL 1996 COMPARED TO FIRST SIX MONTHS FISCAL 1995

Net sales for the first six months of fiscal 1996 increased by
$18,364,000, or 23.9% over the first six months of fiscal 1995. This
increase was principally attributable to (i) an increase in sales to
existing domestic retail customers of approximately $9,546,000, (ii) an
increase in sales by Company owned retail stores of approximately
$6,334,000, due in part to the addition of three retail boutiques and two
retail outlet stores since the beginning of fiscal 1995 and (iii) an
increase in sales to international retail customers of $2,484,000. Net
sales increased primarily as a result of increased unit sales of various
products lines.

Gross profit for the first six months of fiscal 1996 increased by
$11,179,000, or 27.2% as compared with the first six months of fiscal 1995,
and increased as a percentage of net sales to 54.8% from 53.3%. This
increase in the gross profit margin was due to an increase in the number of
garments being produced and sold without a corresponding increase in the
production costs, due in part to the fixed nature of some costs.

Selling, general and administrative expenses for the first six months of
fiscal 1996 increased by $5,871,000, or 22.9% over the first six months of
fiscal 1995, and decreased as a percentage of net sales to 33.1% from
33.3%. This decrease was primarily attributable to a reduction in the
costs incurred in

connection with the promotion and distribution of the fragrance line as
compared with the same period last year.

Operating income for the first six months of fiscal 1996 increased by
$5,308,000, or 34.5% over the first six months of fiscal 1995. Operating
income as percentage of net sales increased to 21.7% from 20.0% during the
same period. This increase in the operating income as a percentage of net
sales was due to the increase in the gross profit margin and the decrease
in selling, general and administrative expenses as a percentage of net
sales.

Other income for the first six months of fiscal 1996 increased by
$556,000 as compared with the first six months of fiscal 1995, and
increased as a percentage of net sales to 0.9% from 0.4%. This increase was
primarily due to the receipt of a workers' compensation insurance dividend
of $316,000 which related to the policy period ended December 31, 1994. In
addition, the Company reported higher interest income due to the increase
in its invested cash balances.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary cash requirements are to fund the Company's working
capital needs, primarily inventory and accounts receivable, and for the
purchase of property and equipment. During the first six months of fiscal
1996, cash provided by operating activities was $14,050,000. Cash provided
by operating activities was primarily generated by net income, depreciation
and amortization, and an increase in accrued expenses, while cash used in
operating activities was primarily used to fund the increase in inventories
and the decrease in taxes payable. Cash used in investing activities was
$10,334,000 during the first six months of fiscal 1996. The principal use
of cash in investing activities was for the purchase of 28 computerized
knitting machines, the purchase of 3.8 acres of land which included a
35,000 sq. ft. building to be used for production and storage and the
construction of leasehold improvements for a new retail boutique.
Subsequent to the end of the second quarter, the Company purchased a 37,000
sq. ft. building situated on 1.8 acres, to be used for design and
manufacturing, for a total cost of $1,500,000.

The Company anticipates purchasing property and equipment of
approximately $9,500,000 during the remainder of fiscal 1996. The estimated
$9,500,000 will be used principally for the construction of a new design
center on the recently purchased 1.8 acres; the expansion of an existing
retail boutique located in New York City; the purchase of land and
construction of a building to replace a manufacturing facility currently
being leased in San Fernando, California; the purchase of computerized
knitting machines; and the construction of a 20,000 sq. ft. manufacturing
facility on the recently purchased 3.8 acres.

As of April 28, 1996, the Company had approximately $42,867,000 in
working capital and $18,314,000 in cash and marketable securities. The
Company's principal source of liquidity is internally generated funds. The
Company also has a $15,000,000 bank line of credit ("Line of Credit") which
expires on March 1, 1998. The Line of Credit is unsecured and borrowings
thereunder bear interest at the Company's choice of the bank's reference
rate or an offshore rate plus 1.5%. As of April 28, 1996, no amounts were
outstanding under the Line of Credit. The Company invests its excess funds
primarily in a money market fund, investment grade commercial paper,
adjustable rate tax deferred municipal obligations collateralized by
letters of credit issued by financial institutions and tax exempt municipal
bonds.

The Company believes it will be able to finance its working capital and
capital expenditure requirements on both a short-term and long-term basis
with internally generated funds. However, the Company has entered into an
agreement with its principal lender dated as of April 26, 1996 to finance
up to $8 million related to the acquisition of certain property and the
construction of improvements thereon. The agreement provides for borrowing
of up to $8 million on a revolving basis through September 1, 1997. At
that time, any unpaid balance will be converted to a 10 year fully
amortized term loan expiring on September 1, 2007. The Loan is unsecured
and borrowings thereunder bear interest at the Company's choice of the
bank's reference rate or an offshore rate plus 1.5% during the revolving
period and at the bank's reference rate plus 0.25% or an offshore rate plus
1.625% during the term loan.

The Company declared a quarterly cash dividend of $0.025 per share (as
adjusted to reflect the stock split) on March 5, 1996 which was paid on May
3, 1996 to shareholders of record on April 4, 1996. On May 31, 1996, the
Company declared another quarterly cash dividend of $0.025 per outstanding
share to be paid on August 2, 1996 to shareholders of record on July 3,
1996. Future dividends by the Company remain subject to limitations under
applicable law and other factors the Board of Directors deems relevant,
including results of operations, financial condition and capital
requirements.

PART II. OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.

(a) On March 14, 1996, an annual meeting of shareholders was held.

(b) The shareholders approved the election of all of the nominees for
the Board of Directors. The nominees elected were Robert E.
Gray, Marie St. John Gray, Robert C. Davis, Kelly A. Gray, Roger
G. Ruppert, Richard A. Gadbois, III and David A. Krinsky.

(c) The only matter voted upon at the annual meeting was the election
of directors. Robert E. Gray, Marie St. John Gray, Robert C.
Davis, Kelly A. Gray and Roger G. Ruppert each received 7,492,078
votes with 73,840 votes withheld for each. Richard A. Gadbois,
III received 7,491,978 votes with 73,940 votes withheld. David
A. Krinsky received 7,491,878 votes with 74,040 votes withheld.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits required by Item 601 of Regulation S-K.

See "Exhibit Index."

(b) Reports on Form 8-K.

On April 25, 1996, the Company filed a Form 8-K with the
Securities and Exchange Commission reporting that, on April 22,
1996, Kelly Gray was named President of the Company; she replaced
Robert C. Davis who resigned as President and Chief Operating
Officer and director effective April 19, 1996.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.

June 4, 1996 ST. JOHN KNITS, INC.

/s/ Robert E. Gray
---------------------------------
Robert E. Gray, Chairman of the
Board and Chief Executive Officer

/s/ Roger G. Ruppert
---------------------------------
Roger G. Ruppert, Senior Vice
President - Finance, Chief
Financial Officer (Principal
Financial Officer)

EXHIBIT INDEX

EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF EXHIBIT NUMBERED PAGE
------ ---------------------- -------------

10.1 Aircraft Lease dated March 7, 1996 by and between the
Company and Ocean Air Charters, Inc. as Trustee of the SJA
1&2, Ltd. Trust (Lease for Company airplane)
10.2 Agreement for Purchase and Sale of Real Property and Joint
Escrow Instruction dated as of March 12, 1996 by and between
the Company and Baxter Healthcare Corporation
(Design/Manufacturing)
10.3 Amendment No. 1 to Business Loan Agreement dated as of
April 26, 1996 by and between the Company and Bank of
America National Trust and Savings Association