Mossimo Reports Lower Net, Steps to Control Costs

As expected, Mossimo Inc. reported Thursday that earnings for the third quarter were noticeably lower than a year ago because of production costs for the apparel company’s new sportswear lines for men and women.

Mossimo founder and Chairman Mossimo Giannulli said the company had taken “swift and decisive steps to address the containment of product development costs.”

He said he is “extremely encouraged by the company’s substantial top line growth, which is being fueled by the success of our new women’s collection and the broadening demand for our men’s sportswear and related products.”

Net income fell to $2.3 million, or 15 cents a share, from $4.5 million, or 21 cents a share, a year ago. Quarterly sales rose about 70% to $31.9 million from $18.8 million. While gross profit for the quarter rose 31% to $10.1 million from $7.7 million a year earlier, gross profit as a percentage of total sales fell to 32% from 41% a year earlier.

Net income for the first three quarters totaled $10.1 million, or 69 cents per share, up from $9.1 million, or 70 cents per share, a year ago. Sales rose 52% to $81.9 million from $53.8 million.

Mossimo, which completed its initial public stock offering in February, saw its stock rise to an all-time high of $50.125 in June before tumbling on word of weaker-than-anticipated third-quarter earnings.

The company announced its earnings after the market closed. Mossimo’s stock fell 62.5 cents Thursday, closing at $21.875 in New York Stock Exchange trading.