Mossimo Reports 1999 First-Quarter FinancialResults.

IRVINE, Calif.--(BUSINESS WIRE)--May 7, 1999--

Mossimo Inc. (NYSE:MGX) Friday reported financial results for the first quarter ended March 31, 1999.

The company reported a net loss of $1.5 million, or 10 cents per diluted share, for the quarter, compared with a net loss of $1.7 million,

For the three-month period, net sales were $8.3 million vs. $14.4 million last year, resulting from a narrower product line this year and the reduction of unprofitable accounts. The sales decline also reflects the discontinuation of the Moss line and the closure of the company's screen printing operation. Also contributing to the sales decline was the discontinuation of the optics line, a product category the company intends to license.

Men's sales for the first quarter amounted to $4.9 million, compared with $6.4 million last year. Net sales of womenswear were $3.1 million for the quarter, compared with $4.6 million for the first quarter of 1998. Net royalty income from licensed products increased 18 percent to $1.3 million from $1.1 million.

Gross profit for the quarter decreased to $2.0 million, or 24 percent of sales, from $3.7 million, or 26 percent of sales, a year ago.

Despite a significant increase in marketing and advertising expenditures in the current first quarter, operating expenses decreased substantially to $4.7 million in the first quarter of 1999 from $6.3 million a year ago. The decline reflects cost-cutting initiatives effected over the past year, including reduced staffing and the relocation of the company's corporate headquarters.

"We knew the difficulties we experienced in 1998 would carry into the first half of the year; however, substantial progress has been made in a number of areas, including better management of inventory and significant reductions in expenses," said Edwin Lewis, president and chief executive officer.

"While we continue to work through the spring and summer seasons, we are looking forward to the release of our fall collection, which will represent a marked improvement from our previous lines, with our 1999 holiday and spring 2000 collections more fully reflecting our new design direction.

"As we remerchandise our line to reflect Mossimo's vision, we will continue to invest in new marketing and advertising programs to build brand awareness and consumer demand. This strategy will help us achieve our goal of driving sales through a broader account and product base and continue to improve our bottom-line results."

Lewis added that the company continues to make strides in reducing inventory levels, which declined to $6.4 million at March 31, 1999, marking a 22 percent reduction from Dec. 31, 1998, and a 51 percent reduction from March 31, 1998.

Founded in 1987, Mossimo is a leading designer of men's and women's sportswear, with a focus on the contemporary, fashion-minded consumer. Mossimo designs are distributed to department stores and specialty chain stores nationwide.

The matters discussed in this news release with respect to operations and future results, and the benefits thereof, are forward-looking statements that involve risks and uncertainties, including changes in consumer demands and preferences; competition from other lines; and uncertainties generally associated with product introductions and apparel retailing. More information on factors that could affect the company's financial results is included in the company's 1998 annual report and Form 10-K, filed with the Securities and Exchange Commission. -0-

                     MOSSIMO INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF OPERATIONS
                (in thousands, except per share data)
                             (unaudited)

                                               For The Three Months
                                                  Ended March 31,
                                               1999             1998

Net sales                                  $   8,286        $  14,436
Cost of sales                                  6,278           10,688
Gross profit                                   2,008            3,748
Royalty income, net                            1,308            1,109
                                               3,316            4,857
Operating expenses:
  General and administrative                   1,686            2,972
  Selling                                        942            1,975
  Marketing                                    1,414              577
  Design                                         691              774
                                               4,733            6,298
Operating loss                                (1,417)          (1,441)

Other (expense) income:
  Other (expense) income                          (3)             (48)
  Interest (expense) income                     (131)            (178)
                                                (134)            (226)

Net loss                                   $  (1,551)       $  (1,667)

Net loss per common share;
 basic and diluted                         $   (0.10)       $   (0.11)

Weighted average common shares outstanding    15,021           15,009


                     CONSOLIDATED BALANCE SHEETS
                            (in thousands)

                                           March 31,         Dec. 31,
                                             1999              1998
                                          (unaudited)

Inventories                               $    6,454        $   8,325
Working capital                           $    3,447        $   4,532
Long-term debt                            $        7        $      10
Stockholders' equity                      $    7,273        $   8,639