Mossimo Inc. continued its slide in the first quarter, reporting Friday that it lost $1.5 million while sales dropped 42% in the three-month period.
The sales decline was attributed in part to a narrower product line and the reduction of unprofitable accounts.
The Irvine-based clothing designer has undergone a siege of belt-tightening as it struggled to rebound from difficulties that arose after shifting from its beachwear roots to more fashion-oriented apparel.
Last December, 35-year-old founder Mossimo Giannulli relinquished half his shares in the company to snag former Tommy Hilfiger Inc. boss Edwin Lewis as chief executive.
"We knew the difficulties we experienced in 1998 would carry into the first half of the year," Lewis said in a statement. "However, substantial progress has been made in a number of areas, including better management of inventory and significant reductions in expenses."
Lewis, 48, could not be reached for further comment Friday.
The Irvine company's first-quarter loss of $1.5 million, or 10 cents a share, was slightly less than its loss of $1.7 million, or 11 cents a share, for the same period last year. Sales totaled $8.3 million, down from $14.4 million during the first quarter in 1998.
The results did not jar Wall Street. Mossimo's stock closed unchanged at $10.19 a share in New York Stock Exchange trading.
Despite the company's ongoing struggles, Giannulli and Lewis have flourished financially, at least on paper.
On Friday, the value of Giannulli's current 34.5% stake was almost $53 million. Lewis is the beneficial owner of a 36.2% stake worth more than $55 million. At the time the company announced Lewis' hiring, their shares were worth about $15.6 million each.
The men have equal voting rights, regardless of who owns the larger stake.
Both executives have agreed not to receive a salary this year, according to the company's annual proxy, which was filed last month with the Securities and Exchange Commission.
Giannulli's base salary was $315,000 in 1998, a 37% decline from $500,000 the previous year.
When he took the job, Lewis was granted the option to purchase up to 5,186,111 shares of stock at $3 a share. A spokeswoman for the company said he has not exercised the option.