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NEW YORK — Reductions in its business with Target and investments in its infrastructure translated into lower fourth-quarter and full-year profits at Mossimo Inc.

The Santa Monica, Calif.-based design and licensing company reported that, in the three months ended Dec. 31, net income slid 9.2 percent to $629,000, or 4 cents a diluted share, from $693,000, also 4 cents, in the prior-year period.

Net revenues were up 5.5 percent to $3.2 million from $3 million. The addition of $624,000 in Modern Amusement sales and an increase in royalties and fees attributable to customers other than Target — to $695,000 from $605,000 — more than compensated for a reduction in Target-related royalties and fees, to $1.8 million from $2.4 million.

Edwin Lewis, president and co-chief executive officer of the firm, said on a company conference call, “At Target, our business was down year-over-year primarily to ongoing issues with our plus-size and kids’ categories. At Zellers, we were impacted by continued weakness in the Canadian retail environment. We continued to work with both retailers to improve our performance.”

He said business in Mexico, with Intermodal, “is off to a solid start.”

Lewis added that Modern Amusement has performed better in what he termed “image-building specialty stores. As a result, we have lost some department store doors, but we have gained some within the specialty channel….We continue to believe that Modern represents an interesting opportunity but, again, it is small and will take time to build.”

For the full year, net income dropped 40.8 percent to $2.7 million, or 17 cents, as revenues moved up 3.2 percent, to $20.5 million, overcoming a 5.9 percent drop in royalties and fees.

This story first appeared in the April 4, 2005 issue of WWD.  Subscribe Today.