Recovering From Skid, Mossimo Stock Jumps 58%
Mossimo Inc., whose shares have been hammered all year, saw its stock surge 58% Tuesday, making the beleaguered Irvine clothing designer the fourth-biggest percentage gainer in U.S. markets.
Neither the company nor analysts could offer an explanation for the sharp run-up.
Mossimo closed Tuesday at $4.25, up $1.56, quadrupling its Sept. 21 price of $1. More than 356,000 shares changed hands, more than 10 times the average daily volume of the last three months.
“We are pleased to see there finally is some activity,” company spokesman Rob Whetstone said. “We’re finally moving in the right direction.”
The only news the company released Tuesday was that it has moved its corporate offices to a smaller location to cut costs.
With Mossimo’s stock on the skids in recent months, analysts have speculated that the company could be a takeover target, albeit a difficult one. Founder and Chairman Mossimo Giannulli owns about 70% of the company’s shares and has spurned buyout offers.
Whetstone would not say Tuesday whether Mossimo has been approached by a prospective buyer, but he said “the company will evaluate any opportunity that makes sense.”
At last week’s price of $1, Mossimo’s value had sunk to $15 million, raising the question of whether the company would maintain its listing on the New York Stock Exchange. Whetstone said it is not unusual for companies to drop below the NYSE’s minimum value requirement and there was never talk of delisting Mossimo. Tuesday’s closing price boosted the company’s value to almost $64 million.
Once a fashion-industry and investor darling, the high-flying Mossimo fell on hard times last year as it tried to make the transition from casual apparel to upscale fashion.
Some industry experts believe that Mossimo shares have reached bottom and that the company is poised for a comeback.
Bob McKnight, chief executive of Costa Mesa-based Quiksilver Inc., recently saw Mossimo’s fall line at Macy’s in San Francisco and was impressed.
“It’s the best looking Mossimo product I’ve seen in a long time,” he said. “It just looked like a nice, tight act. The quality seemed much improved. I think it blew away Tommy Hilfiger’s look in that store.”
Tony Cherbak, an apparel expert and partner at the Deloitte & Touche accounting firm, said he thinks talk about the possibility of the stock being delisted gave investors the jitters and caused the price to sink to “unrealistic levels.” When the company continued trading on the NYSE, the lower-priced shares began looking attractive, he said.
“I think people started thinking, ‘Hey, at a dollar, this may be a bargain,” said Cherbak, who also is Mossimo’s former chief financial officer. “I kind of doubt personally that it’s going to go much higher.”
Mossimo has undergone other changes this year. In January, turnaround veteran John Brincko replaced Giannulli as chief executive. Giannulli took the title “visionary” and maintained his position as the company’s chairman.
