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In Target Deal, Mossimo Founder Surrenders Rights

TIMES STAFF WRITER

Mossimo Giannulli stands to benefit richly from his licensing deal with Target Stores. But a regulatory filing Thursday also shows how much the fashion designer will give up to reap a financial reward.

Giannulli will earn at least $8.5 million in the first year of the deal, which Mossimo Inc. signed this week in a bid to keep the financially troubled company afloat. As part of the deal that surprised long-time Giannulli associates, the 36-year-old Southern Californian signed over rights to his name, signature, voice and personality, in effect becoming the retailer’s paid pitchman.

Giannulli, who had hoped to groom Mossimo as a bona fide alternative to such fashionable names as Tommy Hilfiger, Donna Karan and Ralph Lauren, is betting that the new relationship with the huge Minneapolis-based retailer will help turn Mossimo into a household word among among label-conscious Americans.

But the label will be more middle-of-the- road than Rodeo Drive. Mossimo’s designs will adorn everything from baby clothes and women’s lingerie to suitcases and rugs. Target is betting that it can sell more than $300 million in Mossimo merchandise, according to estimates in a filing with the Securities and Exchange Commission.

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The filing provides an intimate look at how a powerful retail chain plans to take an elite brand and turn it into a mass-marketing vehicle. The venture is not unlike Martha Stewart’s deal to provide designer goods at low prices for Kmart shoppers, and designer Michael Graves’ marketing arrangement with Target.

The filing shows what Giannulli will have to do to earn his keep, but only time will tell whether Target can mainstream what’s arguably one of Southern California’s fashion pillars. There will be immediate and noticeable changes, according to the filing.

Mossimo, which has been advertising in such high-fashion beacons as Vanity Fair and GQ, and boasts when its daring swimwear appears in Sports Illustrated’s annual swimsuit issue, now will be mass-marketed on television and billboards, through direct mail and on shopping bags promoting the Target, Dayton’s, Mervyn’s and Marshall Field’s retail chains.

The Target alliance also signals an apparent downward shift in a pricing strategy that has included $300 eyeglass frames and $500 men’s suits. Mossimo now will labor on designs for a Target line.

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Much of what Giannulli will do to earn his paycheck is pro forma--attending a dozen planning meetings annually, including six in Minneapolis. Giannulli also agreed to head a Los Angeles-based design staff that will provide Target with proprietary designs.

But Target clearly intends to leverage Giannulli’s name, personality and image as it strives to woo consumers who are demanding that good value and good design not be mutually exclusive.

Target has a long list of demands it expects to be fulfilled.

The SEC filing cautions that, “at no time . . . will [Mossimo] or Giannulli disparage their association with [Target Stores].” Another section requires Giannulli to maintain a design standard “at least as high as the top line of similar products now being sold.”

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A morals clause advises that the deal will destruct “if Giannulli is convicted of or admits to the commission of any felony, convicted of any offense involving substance abuse, or publicly admits that he is addicted to any controlled substance.”

The filing also provides an insight into Target’s plan to leverage Giannulli’s carefully cultivated image as an arbiter of fashion. Giannulli has signed over rights to his “name, signature, photograph, voice [and] other sound effects, likeness, personality, endorsement, biography and statements of Giannulli” for use in Target’s advertising and marketing.

Giannulli, the SEC filing states, has agreed to “attend and participate in all rehearsals, filming, taping, recordings and photography sessions reasonably required.”

Mossimo, which once counted Macy’s West and other high-end department stores among its most important outlets, also agreed to withhold its designs from such competitors as Wal-Mart, Kmart, Costco and Pic ‘N’ Save.

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