Mossimo Stock Drops 16% on Loss Forecast

Beset by dramatically lower sales and an inventory loss of $700,000, clothing maker Mossimo Inc. said Monday that it expects to report a third-quarter loss of $4.8 million next week.

Mossimo’s stock took a beating Monday, falling nearly 16% after the disappointing results were announced. It dropped $1.13 a share to close at $6, after hitting a 52-week low of $5.75 in heavy trading on the New York Stock Exchange. More than 362,000 shares changed hands, compared with the stock’s average daily volume of 74,500 for the last three months.

The Irvine-based company said sales for the three months ended Sept. 30 plummeted 46%, to $17.1 million from $31.9 million a year ago, partly as a result of weaker sales throughout the industry. The company said it will release final numbers Nov. 11.

In a move to bolster its management ranks, the company also said it will hire a president, a new position at the firm, who will oversee daily operations.

Industry analysts applauded the move. “They’re going to have to find somebody fast,” said Faye Landes of Smith Barney.

Landes said Mossimo, which has dabbled in a variety of clothing styles--from beach wear to button-down shirts--needs to chart a clearer fashion path.

The company, which makes designer clothes for men and women, said it will take reserves of about $2.2 million after taxes in the third quarter to reduce the value of some of its inventory and to discount the price of some clothing to retailers.