By  on November 15, 2005

NEW YORK — Mossimo Inc. reported a lot more than a third-quarter profit on Monday.

Mossimo Giannulli, chairman and co-chief executive officer, abandoned his plan to take over the Santa Monica, Calif.-based apparel company he founded after a special committee of the board refused to support the bid.

Talks involving the company, Giannulli and Iconix Brand Group fell apart last week amid speculation that the designer was seeking more than $7 a share for a takeover by Iconix.

Giannulli, whose ownership stake in Mossimo Inc. is about 65 percent, issued a statement to announce he was pulling his own proposal at $5 a share. "I am disappointed that the special committee has withdrawn its recommendation of my offer, which it had endorsed in September," Giannulli said in the statement.

Even if the panel had given its approval, shareholders at institutional firms and hedge funds such as RockView Management and Segall Bryant and Hamill weren't planning on tendering their shares, said people close to the situation.

The company also said that it would hold its annual meeting — delayed since July — on Dec. 15 and that its licensing agreement with Hudson's Bay Co. expired and won't be renewed.

The developments came as the company for the third-quarter ended Sept. 30 posted income of $637,000, or 4 cents, compared with a loss of $125,000, or 1 cent, in the same year-ago period. Total revenues jumped 37.23 percent to $6.8 million from $4.9 million, which included licensing royalties and design fees that were nearly flat at $4.2 million and an almost 350 percent gain in product sales to $2.5 million from $747,000 last year.

For the nine months, income more than doubled to $4.7 million, or 30 cents, from $2.1 million, or 13 cents, last year. Total revenues were up 40.9 percent to $24.5 million from $17.4 million.

"Our third-quarter performance was primarily driven by continued improvements in our Target business, coupled with better regular-price sales at Modern Amusement," Edwin Lewis, president and co-ceo, said in a statement. "While there is still much work to be done in both businesses, we are encouraged by the progress we are making."It was the improvement and sales trends at Modern Amusement that had many investors electing to hold on to their shares. Several told WWD that even Iconix's $7-a-share bid was low because they felt that the company is worth at least $7.50 or even $8 a share.

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