TARGET LICENSE DRIVES MOSSIMO
Byline: Dan Burrows
NEW YORK — Mossimo was right on target with its fourth-quarter and yearly earnings.
Reporting a significant turnaround, the Santa Monica, Calif.-based designer posted a thirteenfold increase in net income to $3.6 million, or 23 cents a diluted share, for the three-months ended Dec. 31. That compares with $272,000, or 2 cents, in the year-ago period.
Total revenues in the fourth quarter more than doubled to $2.6 million, from $1.2 million in last year’s quarter.
The reversal of fortune stemmed from Mossimo’s multiproduct licensing agreement with Target, signed in March 2000. Mossimo currently operates as a licensor and contributor of designs and no longer manufactures, sources or directly markets its products.
“Fiscal 2001 was a remarkable year for our company on a number of different levels,” chief executive officer Mossimo Giannulli said in a statement. “First, we nearly tripled our minimum guaranteed year-one Target sales. Second, we significantly expanded our product and category reach beyond just apparel to include footwear, jewelry, watches, handbags, belts and hair care products. And most important, we accomplished all of this with minimum infrastructure and relatively little overhead expenses.”
The company also benefited from an aggressive marketing campaign featuring Mossimo in nationally televised commercials and in a series of print ads in leading publications throughout the year, Giannulli added. Mossimo president Edwin Lewis said the company will continue to leverage the company’s business model across other brands, distribution tiers and international markets, but didn’t specify.
Overall in fiscal 2001, Mossimo swung from red to black, with net income of $9 million, or 59 cents a diluted share, compared with a net loss of $12.3 million, or 81 cents, the year before. Total revenues declined 39.7 percent to $16.7 million from $27.6 million in fiscal 2000. Full-year royalty revenues gained 380 percent to $16.7 million from $3.5 million a year ago.
Both the fourth quarter and year were positively impacted by the company recording a $3.6 million deferred tax benefit on Dec. 31 following the reevaluation of its forecasted operating results and resultant taxable income during the remaining life of the Target agreement.