O.C. Sportswear Firm Mossimo’s Stock Hits Low

Trendy sportswear maker Mossimo Inc.’s stock plunged to an all-time low Thursday as investors, apparently worried over the company’s soon-to-be-released third quarter results, dumped nearly 750,000 shares and drove the price down $3.375 to $23 a share.

Just four months ago, the Irvine-based company’s stock was selling at $50 a share.

Company founder Mossimo Giannulli said Thursday he didn’t know of any event that would have triggered the sell-off. Wall Street brokerage Smith Barney, however, is scheduled to release a report on Mossimo this morning, and jitters about its contents could have contributed to Thursday’s slide.

Just 2 1/2 weeks ago the company’s stock took an even bigger tumble, falling $7 in one day of frantic trading on the New York Stock Exchange after Mossimo said higher production costs would cut into its third-quarter earnings, due to be released Nov. 7. Almost 4 million shares changed hands on Sept. 23.

The company said at the time that its earnings could be as much as 46% below analysts’ projections. That would mean a profit of about $2.2 million for the quarter, but investors had been buying the stock based on analysts’ much higher expectations of a $4-million quarter.

“When I saw their prediction, I knew [the stock] was going to take a hit,” Merrill Lynch analyst Brenda J. Gall said at the time.

In an interview Thursday, though, Giannulli said that his 10-year-old company “stubbed a toe, but we are moving forward and all is fine. We are the same company we were three weeks ago” before the earnings slip was revealed, he said.

“I’m not worried about this,” Giannulli said of the stock price slide. “I know it will correct. This is the nature of the market and I knew that going in” to the initial public offering eight months ago.

Industry watchers say that investors are demanding outstanding performance from apparel companies and are quick to abandon stocks when companies don’t meet the expectations of the analyst community.

For example, Surfwear giant Quiksilver Inc.’s earnings have been falling short of analysts’ projections, and its stock price has dropped from $47.375 in May to $24.625 at the close of trading Thursday.

The stock has slumped even though Quiksilver’s $9 million in earnings through the third quarter put it more than 20% ahead of the record pace set in 1995, when company earnings hit $10 million for the full year.

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Mossimo’s Misfortunes

Mossimo Inc.’s stock, in decline for three weeks, closed at its lowest point ever on Thursday after investors sold 700,000 shares. A quick look at the company and its stock price since it closed at $25 on its opening day, Feb. 23:

Headquarters: Irvine

Chairman/CEO: Mossimo Gianulli

Business: Clothing and accessories

Went public: Feb. 23, 1996

Employees: 250

Initial public offering: 4 million shares at $18

High price: $50.125

1995 net sales: $72 million

1995 net income: $19 million

Source: Bloomberg Business News; Researched by JANICE L. JONES / Los Angeles Times