Mossimo Expects 4th-Quarter Loss

Capping a disastrous year, Mossimo Inc. said Wednesday that it expects to lose $13.5 million to $14.3 million in its fourth quarter because of plummeting sales and ballooning expenses.

The Irvine apparel designer posted net income of $548,000 a year ago. Sales are expected to tumble to about $14.4 million, which would be a 50% drop from the 1996 fourth quarter.

Bert Fenanga, who joined the company in November as interim chief operating officer, said the projected losses amount to a financial housecleaning.

“This should be the end of the very bad bleeding,” he said Wednesday. “We want to start the year off clean.”

Mossimo stock fell 25%, or $1.25 a share, to $4 on the New York Stock Exchange. The stock had surged 33% Tuesday in heavy trading.

Fenanga said Mossimo may not return to profitability until the second half of this year, when its fall lines go to market.

Fenanga said the company has taken a series of steps to return to profitability. They include:

* Eliminating 140 jobs, or 42% of the work force, over the last year. Mossimo now employs 190 people.

* Cutting the pay of top executives by 20%, mid-level managers by 10% and lower-level workers by 5%. The only group spared was hourly employees. The move will save at least $900,000 this year.

Fenanga said Mossimo is eyeing further cost-saving moves, such as closing its money-losing store in Pasadena. The company also operates a boutique at South Coast Plaza in Costa Mesa and a clearance outlet at Ontario Mills.

Faye Landes of Salomon Smith Barney said the ingredients are in place for successful turnaround.

“The brand definitely has some life left,” she said.

Mossimo is scheduled to report final fourth-quarter and year-end results in early March.