Struggling Mossimo to Sell Clothes at Target

Clothing designer Mossimo Giannulli, who wooed well-heeled patrons with stylish beach and urban wear, said Tuesday that he will begin selling his clothes in discount Target Stores next year.

The move, part of the Irvine apparel company’s effort to shore up its flagging operations, stunned a number of industry experts, who saw it as a marked departure from the high-profile owner’s original strategy.

“He envisioned himself as the next Ralph Lauren; he talked about the ‘Moss lifestyle,’ ” said Steven Martin, who has followed the company since it went public four years ago. “I don’t think Mossimo ever envisioned himself making public appearances at Target stores.”

His company, Mossimo Inc., also said that Chief Executive Edwin Lewis has resigned and that it will fire “a significant number” of its approximately 100 employees.

The company said that its losses more than doubled for the fourth quarter and that it is trying to arrange “critical financing” until the licensing deal with Target begins to generate revenue next year. If Mossimo can’t arrange financing, its accountants question whether it will be able to continue as a going concern, the company said.

The bombshell comes on the heels of what had seemed to be a turnaround for Irvine company, which had struggled in recent years after attempting to move too quickly to fashion-oriented apparel from its more casual beachwear roots. In October, the company reported its first quarterly profit in two years.

Giannulli has been in the front seat of a wild roller-coaster ride since he took his company public in 1996 and the stock shot to $50 a share from $18 in just a few months. Within a couple of years, the stock had plunged to the single digits, as industry experts chided the designer for making a major misstep by switching gears too quickly.

The stock closed Tuesday at $6.50 a share, down 6 cents, on the New York Stock Exchange. The restructuring was announced after the close of regular trading.

Under the deal with Target, Mossimo said Giannulli will contribute “design services” and license his company’s trademark to the retailer, which will sell its men’s and women’s apparel in all 923 Target stores nationwide.