Dude! Mossimo Stock Totally Awesome in IPO
Mossimo Inc. joined the parade of apparel-related public stock offerings to light up Wall Street, rocketing nearly 39% above its initial offering price Friday on the New York Stock Exchange.
Hot from the moment the market opened, Mossimo’s stock closed at $25. More than 3.6 million shares changed hands, making the company the second most-active issue on the exchange.
Founder and Chairman Mossimo Giannulli was on the trading floor when the market opened.
“It was so amazing to see all these savvy institutional people responding to our story so strongly,” Giannulli said. “Next to the birth of my child, it was the most incredible experience of my life.”
The company’s shares were priced at $18 on Thursday, above the anticipated $14-to-$16 range. Strong demand prompted the company to increase its offering by 1 million shares, to a total of 4 million. Mossimo Inc. and its founder each sold 2 million shares.
Market observers linked Mossimo Inc.’s strong, first-day performance to Wall Street’s continued willingness to embrace new, retail-oriented stock issues--even as many retailers struggle to turn a profit.
“It’s a good company and the deal was attractively priced,” said Ryan Jacob, research director for New York-based IPO Value Monitor. “But the timing was especially good. It was the perfect time for a stock like this to go public.”
Mossimo joins several other apparel companies that recently met with success on Wall Street.
In October, Gucci Group generated $539 million and Intimate Brands Inc., operator of the Victoria’s Secret chain, raised $680 million in public offerings. In August, Oakley Inc. founder and Chairman Jim Jannard saw the value of his holdings soar to $530 million following the upscale sunglass company’s initial offering.
The Mossimo stock offering marked the latest chapter in the business life of Giannulli, a Newport Beach resident who started his namesake company by selling volleyball shorts and T-shirts.
Based on Friday’s closing price, 11 million shares still held by Giannulli have soared in value to $275 million. He retains 73% of the company’s stock.
While Mossimo’s roots are in Southern California’s beach culture, in recent years the company has been moving away from sports apparel toward leisure wear, a niche that already includes powerhouses such as Tommy Hilfiger Inc. and Nautica Enterprises.
“If you look at Tommy Hilfiger, that’s the model for Mossimo Giannulli,” said Linda R. Killian, an industry analyst with Renaissance Capital Corp., which tracks initial public stock offerings. “Tommy Hilfiger and Mossimo both outsource production, they’re establishing strong brand names and they’re both setting up a series of boutiques inside department stores.”
Mossimo reported $15.1 million in net income for the nine-month period ended Sept. 30, up from $7.4 million a year earlier. Revenue for the period rocketed to $53.8 million from $30.7 million.
Mossimo has a bright future, Jacob said, as long as the brand remains hot with young, fashion-conscious consumers.
“There’s no reason why it can’t grow in the 30%-to-35% range,” Jacob said. “The only danger is if the economy goes a little south and brand names aren’t as popular.”
