Designer Mossimo Has a New Look: In the Black

Fashion designer Mossimo Inc., continuing its rebound from a nearly disastrous move into higher-end apparel, on Thursday reported its first quarterly net profit in two years.

The Irvine company said it earned $1 million, or 7 cents a share, for the third quarter ended Sept. 30, compared with a net loss of $3.4 million, or 23 cents a share, for same time period last year. Sales spiked 85% to $20.3 million from $11 million.

It was the second consecutive upbeat quarter for Mossimo, which over the past year has slowly but steadily been regaining its footing since shifting away from its beachwear roots.

In July, Mossimo reported its first quarterly operating profit in two years and a sales boost of 22%. But the company reported a $5.5-million loss after a recording a one-time charge of $6.1 million, which accounted for an insurance policy purchased by founder Mossimo Giannulli to resolve a class-action lawsuit filed by shareholders.

Excluding the charge, “these results represent our second consecutive quarter of positive earnings after nine quarters of losses and reflect the progress we have made to date,” said Chief Executive Edwin Lewis, in a statement. “Our plan is to continue investing in our marketing and advertising programs, as well as our infrastructure and retail partners, to create a solid foundation for long-term growth.”

The company’s advertising strategy includes a series of black-and-white photographs of models wearing Mossimo clothing that appear in high-end publications such as Vanity Fair.

Founder Mossimo Giannulli has taken some dramatic steps to right the company. In early 1998, he brought aboard turnaround specialist John Brincko, who slashed costs, including laying off more than 40% of the work force and moving the company into a smaller, less expensive headquarters.

Last December, Giannulli relinquished half of his shares in the company to Lewis to snag the former Tommy Hilfiger chief executive. A number of Hilfiger executives then followed Lewis to Mossimo.

Mossimo’s shares closed Thursday at $9.94, down 6 cents, in New York Stock Exchange trading. The financial results were released after the market closed. Mossimo shares are off 1.25% since January, but are up 206% over the past 12 months.

The third-quarter profit won’t be enough to propel the company into the black for the full year, as Mossimo lost $7.03 million through the six months ended June 30. Analyst Jeffrey Van Sinderen of B. Riley & Co. expects the company to lose $7.8 million, or 52 cents a share.