NEW YORK — Reeling from unusually high product-development costs, Mossimo Inc. said Thursday its third-quarter earnings sank 48.9 percent to $2.3 million, or 15 cents a share, from $4.5 million, or 21 cents, a year ago.
The year-ago figures were adjusted to make them comparable in view of the sportswear maker’s initial public offering last February, when the Irvine, Calif.-based firm’s stock came to market at 18.
Mossimo saw its stock slide 5/8 to end at 21 7/8 on the New York Stock Exchange.
Sales in the quarter ended Sept. 30 soared 69.7 percent to $31.9 million from $18.8 million. However, gross margins were squeezed by sharply higher marketing and development costs related to the fall sportswear collections.
The higher development costs were principally related to an expanded men’s sportswear line and the launch of the women’s sportswear line, the company said. The problem was compounded by inefficiencies in the sourcing of samples through new agents and factories.
In the quarter ended Sept. 30, Mossimo spent $1.3 million in marketing, nearly three times the $455,000 it spent a year ago. Overall operating costs ran up 47 percent to $7.2 million, from $3.8 million. Gross profits slid to 32 percent of sales from 41 percent.
In a statement, Mossimo Giannulli, chief executive officer, said the firm has taken “swift and decisive steps” to contain the product development costs, adding that he was encouraged by the strong sales growth.
For the nine months, earnings increased 11 percent to $l0.1 million, or 69 cents, from $9.1 million, or 70 cents, on fewer shares. Sales advanced 52 percent to $81.9 million from $53.8 million. Gross profit fell to 39 percent of sales from 44 percent.
Mossimo opened 29 men’s and 13 women’s in-store shops during the third quarter and has received requests from Federated Department stores for more in-store shops to be installed for spring 1997, Giannulli noted.