Trying Public on for Size : Corona del Mar High Grad Will Offer Mossimo Shares for Sale on Stock Exchange

By GREG JOHNSON

Dec. 21, 1995 12 AM PT

TIMES STAFF WRITER

IRVINE —

Mossimo Inc., the fashionable men’s apparel company that traces its lineage to founder Mossimo Giannulli selling T-shirts and volleyball shorts during the 1980s, plans to make an initial public stock offering that would raise $25 million.

The $14-per-share asking price would push the value of stock held by Giannulli after the offering to $168 million, according to documents filed Wednesday with the Securities and Exchange Commission. Based on the stock offering price, Mossimo’s 15 million shares would have a value of $210 million.

Giannulli, a 32-year-old Corona del Mar High School graduate, founded his namesake company in 1987 using a $100,000 loan from his father. It since has produced some of the trendiest lines of men’s clothing to come out of Southern California.

Wall Street remains hungry for companies that produce fashionable merchandise for department and specialty store shelves, said Alan Milstein, editor of the New York-based Fashion Network Report.

“While the long-term track record for new retail stocks has been anything but outstanding, the market is still red-hot for initial public offerings,” Milstein said

Mossimo’s planned public stock offering comes on the heels of a high-profile IPO in August by sunglass manufacturer Oakley Inc., which boosted the value of stock held by Oakley founder and Chairman Jim Jannard to more than $530 million.

In October, Gucci Group generated $539 million, and Intimate Brands Inc., operator of the Victoria’s Secret chain, raised $680 million.

Financial data released for the first time in Wednesday’s filing portray a company that has enjoyed dramatic growth in recent years.

Mossimo’s net income rose to $15.1 million for the nine-month period ended Sept. 30, up from $7.4 million a year earlier. Revenue for the nine-month period rocketed to $53.8 million, up from $30.7 million.

“This is the right time for Mossimo to do an IPO,” said Shaheen Sadeghi, a former surf-wear industry executive and developer of the Lab, a Costa Mesa shopping center that caters to young, fashion-conscious shoppers. “It’s obviously one of the strong labels right now, and this would give them the financial strength to take it to the next level.”

Giannulli, who was born in the San Fernando Valley, moved with his family to Corona del Mar at age 16. In 1982, he graduated from Corona del Mar High, which also produced fashion leaders Shawn Stussy, who owns a local clothing company, and Kelly Gray, vice president of St. John Knits Inc. of Irvine.

Giannulli wasn’t available for comment on Wednesday, but in past interviews he linked his success to “paying attention to what was lacking” in the fashion industry. In the 1980s, that meant watching what surf apparel manufacturers were dishing out to young Southern Californians.

He designed his initial product--neon-colored volleyball shorts with a distinctive “M” emblazoned on them--while he was a student at USC. Mossimo sold $1 million in product during its first year, largely on the strength of those distinctive togs.

By 1993, Giannulli had been named Orange County Entrepreneur of the year by Inc. magazine, Merrill Lynch and Ernst & Young.

Mossimo has continued to move away from the surf and snowboarding apparel where it began in 1987.

Unlike successful companies such as Costa Mesa-based Quiksilver Inc., which has thrived by sticking close to its surfing heritage, Mossimo has gravitated toward a segment dominated by the likes of Tommy Hilfiger and Polo/Ralph Lauren.

“He’s approaching what I call the ‘slam-dunk’ level of designers,” Sadeghi said. “Those are lines where the retailers don’t have to do any thinking--they just stock them.”

Giannulli has carefully cultivated a high-fashion image for his company through a series of eye-catching, black-and-white advertisements in magazines such as GQ, Details, Detour and Elle. Mossimo also has been moving out of beach-lifestyle shops and into upscale department stores such as Dillard, Macy’s and Nordstrom.

Over the years, Mossimo has moved gradually away from less-costly T-shirts and shorts toward a wide array of more-expensive apparel and merchandise.

Mossimo Supply, a company-operated store in South Coast Plaza in Costa Mesa, offers everything from $20 T-shirts to $200 eyeglasses, $400 leather jackets and a well-received line of women’s swimwear that has won coveted exposure in Sports Illustrated’s annual swimwear issue. Mossimo also has developed a strong line of Mossimo branded products, including Zippo lighters, boots and shoes.

Proceeds of the stock offering would be used to expand the company’s national presence by adding more than 50 department store boutiques and funding the new line of upscale casual clothing for women. Mossimo will also use proceeds to pay down debt and, according to the SEC filing, possibly build a new headquarters and distribution facility.

Merrill Lynch & Co. and Smith Barney Inc. will underwrite the offering. The company would have 15 million shares outstanding after the offering and would be listed on the New York Stock Exchange, according to the SEC filing.

Mossimo plans to sell 2 million shares at $14 each, according to the filing. In addition, Giannulli would sell 1 million shares.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Profile: Mossimo Giannulli

Age: 32

Company: Mossimo Inc.

Title: Founder and chairman

Background: Graduated from Corona del Mar High School in 1982. Launched his first collection in 1987 out of a Balboa garage.

Mossimo Inc. at a Glance

Headquarters: Irvine

Founded: 1987

Business: Youth-oriented fashions

Focus: Shoes, eyewear, T-shirts, swimwear, casual wear and accessories