<PAGE>
 
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                               ----------------
 
                                   FORM 10-Q
 
(MARK ONE)
 
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
   ACT OF 1934
 
  FOR THE QUARTERLY PERIOD ENDED FEBRUARY 1, 1998
 
[_]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 NO.)

   17422 DERIAN AVENUE, IRVINE, CALIFORNIA                      92614
  (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 16,730,548 SHARES AS OF MARCH 10, 1998.
 
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
                                                          Total No. of Pages: 9
                                                Exhibit Index located at page 9
<PAGE>
 
                         PART I. FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
                              ST. JOHN KNITS, INC.
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                    FEBRUARY 1,   NOVEMBER 2,
                                                        1998          1997
                                                    ------------  ------------
                                                    (UNAUDITED)
                      ASSETS
                      ------
<S>                                                 <C>           <C>
Current assets:
  Cash and cash equivalents........................ $ 26,169,027  $ 14,266,564
  Investments......................................    2,385,851     2,351,765
  Accounts receivable, net.........................   28,737,828    36,572,423
  Inventories......................................   34,559,790    30,736,980
  Deferred income tax benefit......................    5,793,961     5,793,961
  Other............................................    2,522,769     2,591,742
                                                    ------------  ------------
    Total current assets...........................  100,169,226    92,313,435
                                                    ------------  ------------
Property and equipment:
  Machinery and equipment..........................   40,289,978    35,903,659
  Leasehold improvements...........................   26,474,295    25,351,868
  Buildings........................................   13,314,961    11,572,917
  Furniture and fixtures...........................    5,562,509     5,434,754
  Land.............................................    3,547,544     3,536,606
  Construction in progress.........................    4,857,015     4,225,573
                                                    ------------  ------------
                                                      94,046,302    86,025,377
  Less--Accumulated depreciation and amortization..   30,749,641    28,222,633
                                                    ------------  ------------
                                                      63,296,661    57,802,744
                                                    ------------  ------------
Other assets.......................................    3,490,080     3,787,396
                                                    ------------  ------------
                                                    $166,955,967  $153,903,575
                                                    ============  ============
<CAPTION>
       LIABILITIES AND SHAREHOLDERS' EQUITY
       ------------------------------------
<S>                                                 <C>           <C>
Current liabilities:
  Accounts payable................................. $  9,332,188  $ 10,034,396
  Accrued expenses.................................    9,675,705    10,504,934
  Income taxes payable.............................    6,690,787     2,081,242
                                                    ------------  ------------
    Total current liabilities......................   25,698,680    22,620,572
                                                    ------------  ------------
Minority interest..................................      628,136       602,910
                                                    ------------  ------------
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--
   16,714,548 and 16,634,548 shares, respectively..      502,799       502,799
  Additional paid-in capital.......................   20,138,756    18,929,541
  Cumulative translation adjustment................      (83,811)      (19,351)
  Retained earnings................................  120,071,407   111,267,104
                                                    ------------  ------------
                                                     140,629,151   130,680,093
                                                    ------------  ------------
                                                    $166,955,967  $153,903,575
                                                    ============  ============
</TABLE>
 
                            See accompanying notes.
 
                                       2
<PAGE>
 
                              ST. JOHN KNITS, INC.
                       CONSOLIDATED STATEMENTS OF INCOME
 
<TABLE>
<CAPTION>
                                                         THIRTEEN WEEKS ENDED
                                                        -----------------------
                                                        FEBRUARY 1, FEBRUARY 2,
                                                           1998        1997
                                                        ----------- -----------
                                                              (UNAUDITED)
<S>                                                     <C>         <C>
Net sales.............................................. $68,760,977 $56,175,295
Cost of sales..........................................  28,982,889  24,419,710
                                                        ----------- -----------
Gross profit...........................................  39,778,088  31,755,585
Selling, general and administrative expenses...........  24,192,763  19,410,516
                                                        ----------- -----------
Operating income.......................................  15,585,325  12,345,069
Other income...........................................     228,136     206,412
                                                        ----------- -----------
Income before income taxes.............................  15,813,461  12,551,481
Income taxes...........................................   6,593,294   5,168,070
                                                        ----------- -----------
Net income............................................. $ 9,220,167 $ 7,383,411
                                                        =========== ===========
Net income per common share--basic..................... $      0.55 $      0.44
                                                        =========== ===========
Net income per common share--diluted................... $      0.54 $      0.43
                                                        =========== ===========
Dividends per share.................................... $     0.025 $     0.025
                                                        =========== ===========
Shares used in the calculation of net income per
 share--basic..........................................  16,645,097  16,599,476
                                                        =========== ===========
Shares used in the calculation of net income per
 share--diluted........................................  17,075,004  17,139,461
                                                        =========== ===========
</TABLE>
 
 
 
 
                            See accompanying notes.
 
                                       3
<PAGE>
 
                              ST. JOHN KNITS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                       THIRTEEN WEEKS ENDED
                                                      ------------------------
                                                      FEBRUARY 1,  FEBRUARY 2,
                                                         1998         1997
                                                      -----------  -----------
                                                            (UNAUDITED)
<S>                                                   <C>          <C>
Cash flows from operating activities:
  Net income......................................... $ 9,220,167  $ 7,383,411
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation and amortization....................   2,618,978    2,035,755
    (Gain) loss on disposal of property and
     equipment.......................................       9,167      (19,155)
    Partnership losses...............................      87,175       87,630
    Minority interest in income of consolidated
     subsidiaries....................................      25,226          --
    Decrease in accounts receivable..................   7,834,595    8,276,723
    (Increase) decrease in inventories...............  (3,822,810)   1,878,302
    (Increase) decrease in other current assets......      68,973      (23,911)
    Decrease in other assets.........................     110,753      138,498
    Decrease in accounts payable.....................    (702,208)  (2,334,155)
    Decrease in accrued expenses.....................    (829,229)    (970,658)
    Increase in income taxes payable.................   4,609,545    3,931,906
                                                      -----------  -----------
      Net cash provided by operating activities......  19,230,332   20,384,346
                                                      -----------  -----------
Cash flows from investing activities:
    Proceeds from sale of property and equipment.....         250      217,006
    Purchase of property and equipment...............  (8,046,924)  (6,481,868)
    Purchase of short term investments...............     (34,086)     (57,449)
    Capital distributions from partnership...........      24,000       15,000
                                                      -----------  -----------
      Net cash used in investing activities..........  (8,056,760)  (6,307,311)
                                                      -----------  -----------
Cash flows from financing activities:
    Issuance of common stock.........................   1,209,215       34,914
    Dividends paid...................................    (415,864)    (414,978)
                                                      -----------  -----------
      Net cash provided by (used in) financing
       activities....................................     793,351     (380,064)
                                                      -----------  -----------
Effect of exchange rate changes......................     (64,460)         --
                                                      -----------  -----------
Net increase in cash and cash equivalents............  11,902,463   13,696,971
Beginning balance, cash and cash equivalents.........  14,266,564    6,186,057
                                                      -----------  -----------
Ending balance, cash and cash equivalents............ $26,169,027  $19,883,028
                                                      ===========  ===========
Supplemental disclosures of cash flow information:
    Cash received during the thirteen weeks for
     interest income................................. $   330,647  $   250,278
                                                      ===========  ===========
    Cash paid during the thirteen weeks for:
      Interest expense............................... $       --   $       --
                                                      ===========  ===========
      Income taxes................................... $ 1,431,128  $ 1,214,000
                                                      ===========  ===========
</TABLE>
 
                            See accompanying notes.
 
                                       4
<PAGE>
 
                             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 November 2, 1997 as filed with the Securities and Exchange
Commission on January 30, 1998.
 
  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 1, 1998.
 
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 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 February 1, 1998 and
February 2, 1997.
 
3. DIVIDENDS
 
  The Company declared a quarterly dividend of $0.025 per share on December
16, 1997 for all shareholders of record on January 14, 1998. The dividend was
paid on February 14, 1998. On March 2, 1998, the Company declared another
quarterly cash dividend of $0.025 per share to be paid on April 30, 1998 to
shareholders of record on March 31, 1998.
 
4. EARNINGS PER SHARE
 
  The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
128 "Earnings Per Share" during the first quarter of fiscal 1998. Under the
new requirement, primary earnings per share was replaced with basic earnings
per share. Basic earnings per share excludes the dilutive effect of common
stock equivalents, including stock options. Diluted earnings per share
includes all dilutive items. Dilution is calculated based upon the treasury
stock method, which assumes that all dilutive securities were exercised and
that the proceeds received were applied to repurchase outstanding shares at
the average market price during the period.
 
  As a result of the adoption of SFAS No. 128, primary earnings per share for
the first quarter of fiscal 1997 was restated from $0.43 to $0.44 to reflect
the change to basic earnings per share. The difference between basic and
diluted earnings per share, as shown on the consolidated statements of income,
is due to the dilutive effect of stock options outstanding at February 1, 1998
and February 2, 1997.
 
                                       5
<PAGE>
 
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:
 
<TABLE>
<CAPTION>
                                                          PERCENT OF NET SALES
                                                          THIRTEEN WEEKS ENDED
                                                            ("FIRST QUARTER")
                                                         -----------------------
                                                         FEBRUARY 1, FEBRUARY 2,
                                                            1998        1997
                                                         ----------- -----------
   <S>                                                   <C>         <C>
   Net sales............................................    100.0%      100.0%
   Cost of sales........................................     42.2        43.5
                                                            -----       -----
   Gross profit.........................................     57.8        56.5
   Selling, general and administrative expenses.........     35.2        34.6
                                                            -----       -----
   Operating income.....................................     22.6        21.9
   Other income.........................................      0.3         0.4
                                                            -----       -----
   Income before income taxes...........................     22.9        22.3
   Income taxes.........................................      9.6         9.2
                                                            -----       -----
   Net income...........................................     13.3%       13.1%
                                                            =====       =====
</TABLE>
 
FIRST QUARTER FISCAL 1998 COMPARED TO FIRST QUARTER FISCAL 1997
 
  Net sales for the first quarter of fiscal 1998 increased by $12,586,000, or
22.4% over the first quarter of fiscal 1997. This increase was principally
attributable to (i) an increase in sales to existing domestic retail customers
of approximately $7,307,000, (ii) an increase in sales by Company owned retail
stores of approximately $2,828,000, due in part to the expansion of the New
York boutique, which was completed during October 1996, the expansion of the
Dallas boutique, which was completed during June 1997, and the addition of one
retail boutique and two retail outlet stores since the beginning of the first
quarter of fiscal 1997 and (iii) an increase in international sales of
$2,451,000, which includes the sales of St. John Company, Ltd., a majority
owned subsidiary which commenced operations during the fourth quarter of
fiscal 1997. Net sales increased primarily as a result of increased unit sales
of various product lines.
 
  Gross profit for the first quarter of fiscal 1998 increased by $8,023,000,
or 25.3% as compared with the first quarter of fiscal 1997, and increased as a
percentage of net sales to 57.8% from 56.5%. This increase in the gross profit
margin was primarily due to an increase in the number of garments being
produced and sold, primarily by our knitwear division, 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 quarter of fiscal
1998 increased by $4,782,000, or 24.6% over the first quarter of fiscal 1997,
and increased as a percentage of net sales to 35.2% from 34.6%. This increase
was due to costs incurred related to the start-up of the Company's new home
furnishing subsidiary, Amen Wardy Home Stores, LLC.
 
  Operating income for the first quarter of fiscal 1998 increased by
$3,240,000, or 26.2% over the first quarter of fiscal 1997. Operating income
as percentage of net sales increased to 22.6% from 21.9% 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 which was partially offset by
the increase in selling, general and administrative expenses as a percentage
of net sales.
 
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 quarter of
 
                                       6
<PAGE>
 
fiscal 1998, cash provided by operating activities was $19,230,000. Cash
provided by operating activities was primarily generated by net income, a
decrease in accounts receivable and an increase in income taxes payable, while
cash used in operating activities was primarily used to fund the increase in
inventories. Cash used in investing activities was $8,057,000 during the first
quarter of fiscal 1998. The principal use of cash in investing activities was
for the purchase of 34 computerized knitting machines and the purchase of
property and the construction of improvements for the Company's jewelry and
garment hardware manufacturing facility in Mexico.
 
  The Company anticipates purchasing property and equipment of approximately
$12,000,000 during the remainder of fiscal 1998. The estimated $12,000,000
will be used principally for (i) upgrades to the Company's computer systems,
(ii) the construction of improvements for the Company's manufacturing facility
in Mexico, (iii) the purchase of computerized knitting machines, (iv) the
construction of leasehold improvements for a new boutique location in Las
Vegas and (v) the construction of leasehold improvements for a new retail
boutique.
 
  As of February 1, 1998, the Company had approximately $74,471,000 in working
capital and $28,555,000 in cash and marketable securities. The Company's
principal source of liquidity is internally generated funds. The Company also
has a $25,000,000 bank line of credit ("Line of Credit") which expires on
March 1, 2000. The Line of Credit is unsecured and borrowings thereunder bear
interest at the Company's choice of the bank's reference rate (8.25% at
February 1, 1998) or an offshore rate plus 1.5%. As of February 1, 1998, 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 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.
 
  The Company declared a quarterly cash dividend of $0.025 per share on
December 16, 1997 which was paid on February 14, 1998 to shareholders of
record on January 14, 1998. On March 2, 1998, the Company declared another
quarterly cash dividend of $0.025 per outstanding share to be paid on April
30, 1998 to shareholders of record on March 31, 1998. 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.
 
YEAR 2000
 
  The Company is continuing to assess the impact of the Year 2000 issues on
its computer systems. The Company is planning to replace some of its existing
systems during the current fiscal year, primarily to improve productivity, but
such replacement systems will also address the Year 2000 issues. The estimated
cost of the new systems are included in the capital budget for fiscal 1998.
Management currently believes that the impact of the Year 2000 issues will not
have a material effect on its financial statements.
 
                          PART II. OTHER INFORMATION
 
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.
 
      None.
 
                                       7
<PAGE>
 
                                   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.
 
March 10, 1998                            ST. JOHN KNITS, INC.
 
                                                   /s/ Robert E. Gray
                                          By: _________________________________
                                                       Robert E. Gray
                                              Chairman of the Board and Chief
                                                     Executive Officer
 
                                                  /s/ Roger G. Ruppert
                                          By: _________________________________
                                                      Roger G. Ruppert
                                              Senior Vice President--Finance,
                                                  Chief Financial Officer
                                               (Principal Financial Officer)
 
                                       8
<PAGE>
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
 EXHIBIT                                                           SEQUENTIALLY
 NUMBER                   DESCRIPTION OF EXHIBIT                   NUMBERED PAGE
 -------                  ----------------------                   -------------
 <C>                      <S>                                      <C>
  27.1   Financial Data Schedule
</TABLE>
 
                                       9