Mossimo Chief Gives Up Control at Apparel Firm

In a bold move to turn his long-struggling apparel company around, fashion designer Mossimo Giannulli said Tuesday he gave up half his 70% stake in Mossimo Inc. to snag an industry veteran for the company’s top post.

Giannulli relinquished half of his 10.4 million shares--worth $15.6 million--to former Tommy Hilfiger Corp. chief executive Edwin Lewis, who will take the same job at Mossimo.

The move means that Giannulli is giving up controlling interest of the 11-year-old firm he founded in his Balboa Island apartment as a maker of beachwear.

Mossimo soared to dizzying heights on Wall Street in 1996 as a budding fashion star, but came crashing back to earth last year when the company stumbled trying to make the leap to fashion’s big leagues too quickly.

Analysts said the 48-year-old Lewis could be the answer that Giannulli has long sought to cure the company’s ills. Mossimo has lost nearly $30 million over the last seven quarters. Its share price plunged from $50 in mid-1996 to $1 in September.

Lewis “has a great reputation. He’s the real deal,” said Smith Barney analyst Faye Landes. “He was very instrumental in setting up Tommy Hilfiger in its current extremely successful incarnation.”

Lewis will head Mossimo’s daily operations while the 35-year-old Giannulli will remain the top designer. Giannulli said Tuesday he has no qualms about giving equal control (each now owns about 35% of the company) to Lewis, who he began wooing six months ago.

“I’m pleased as I can possibly be to give him half of what I started because we’re going to realize this thing together in a very big way,” Giannulli said.

Lewis, who plans to move to Southern California from Maryland, declined to detail his plans for Mossimo.

“Today is the first day,” he said. “I can just tell you my job is to run the business end of this and Moss is the design and marketing end. We’ll divide our efforts here.”

Investors clearly liked the idea. Mossimo shares soared 92%, or $2.75 a share, to $5.75 in New York Stock Exchange trading. The announcement paid off immediately for both men, whose stakes in Mossimo nearly doubled in value, to $29.9 million apiece.

Giannulli will relinquish another 1 million shares to Lewis under conditions of an employment contract with Lewis.

Giannulli said he and Lewis will have equal voting power, regardless of who owns the larger number of shares. Both will sit on the company’s five-member board.