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Mossimo Posts Quarter Profit; 1st in 2 Years

Earnings: Recent reorganization appears to help Irvine clothing designer regain its financial footing.

July 30, 1999|LESLIE EARNEST | TIMES STAFF WRITER

Mossimo Inc. reported its first quarterly operating profit in two years Thursday, as sales from ongoing operations rose 22%.

Factoring in a one-time charge of $6.1 million, the Irvine-based clothing designer remained in the red.

But Mossimo's improving numbers indicate that its internal reorganization is paying off, according to Chief Executive Edwin Lewis.

"We are very focused on the relaunch of the Mossimo brand and believe the results for the quarter reflect increasing support and confidence from the retail community," he said in a statement.

The company trimmed its loss to $5.5 million, or 36 cents a share, in the second-quarter ended June 30, from a $6.1-million deficit, or 41 cents a share, in the comparable period last year.

Excluding the $6.1-million charge, Mossimo earned $625,000, or 4 cents a share.

Sales of men's and women's clothing rose to $10.4 million, compared with $8.5 million during the same quarter last year.

Overall, sales dipped to $11.4 million, from $11.5 million in 1998's second quarter. Last year's numbers, however, included $1.5 million in sales from the Moss line and screen-printing business, both of which have been discontinued.

The charge was related to additional insurance purchased by founder Mossimo Giannulli to supplement the company's existing policies, which were used to resolve a class-action shareholders lawsuit. The company said earlier this month it had agreed to pay $13 million to settle the lawsuit.

Mossimo has been working to rebound from problems that arose after it shifted too quickly to fashion-oriented apparel from its beachwear roots.

To regain its financial footing, Mossimo initially hired turnaround specialist John Brincko, who slashed costs and moved the company to smaller, less expensive headquarters. Then, Giannulli brought in Lewis, former chief executive at Tommy Hilfiger.

The new quarterly financial results were viewed with cautious optimism by Jeffrey Van Sinderen, an analyst with B. Riley & Co. in Los Angeles.

"The four cents shows progress, but it is still early in the turnaround," he said.

Mossimo's shares closed Thursday at $9.13, down 25 cents, in New York Stock Exchange trading. The quarterly results were posted after the market closed.

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