Mossimo Inc., the Santa Monica company whose apparel and accessories designs are sold at discount retailer Target, reported a 50% decline in second-quarter net income Tuesday, in part because last year's bottom line got a one-time boost from royalties.
Net income for the period ended June 30 decreased to $1.8 million, or 12 cents a share, from $3.7 million, or 23 cents, in the same period last year.
Revenue fell 7% to $6.9 million, compared with $7.4 million a year earlier when $1.5 million in nonrecurring revenue that had been deferred pending the results of a royalty audit was included.
About 90% of Mossimo's sales come from its deal with Target Corp., which has exclusive rights to market the company's designs in the U.S.
The nonrecurring revenue gain also increased second-quarter 2002 profit by $600,000, or 4 cents.
For the current year's second quarter, Mossimo's profit was reduced by 8 cents a share after an income tax expense was booked.
Chief Financial Officer Manny Marrero said that when the tax provision and one-time revenue gain are taken into account, the company's per-share net income increased slightly and beat analysts' estimates by 1 cent.
On that basis, the company reported pretax earnings of 20 cents a share, compared with 19 cents a year earlier. Analysts surveyed by Thomson First Call had forecast earnings of 19 cents.
In March 2000, Mossimo entered into a trademark license and design services deal in which Target agreed to carry the company's goods in its 1,200 stores.
In March of this year, the company began offering its products in Canada at 300 Zellers stores, a chain owned by Hudson's Bay Co., Canada's largest department store retailer.
"Our results underscore the ongoing strength of the Mossimo brand in our core apparel and accessory categories along with positive reaction to new product extensions," said Mossimo Giannulli, the company's chairman and chief executive.
Mossimo's stock gained 5 cents to $5.10 on Nasdaq. The stock has lost 7% this year.