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Southern California’s publicly owned apparel firms are learning a new fashion lesson: What looks good on the runways is not necessarily appealing on Wall Street.

Of the region’s handful of publicly traded clothing companies, only one is performing in synch with the surge in the overall stock market. That exception is private label jeans maker Tarrant Apparel Group Inc., whose stock closed at $14.75 on May 29, up 64 percent from its $9 initial public offering price two years ago.

Stock prices of the others including Guess?, Mossimo Inc., Jalate Ltd. and Sirena Apparel Group Inc. have either seriously lagged the market or actually declined.

Nowhere has the task of translating high fashion into high finance been so acute as at Irvine-based Mossimo, which held its first annual shareholders’ meeting last week since going public in February 1996.

For the first quarter ended March 31, Mossimo reported a net loss of $498,000, compared to pro forma net income of almost $4 million for the like period last year.

Mossimo’s stock, which surged to as high as $50.125, closed at $8 on the New York Stock Exchange on May 29.

At last week’s meeting, the company’s founder and chairman, Mossimo Giannulli, assured shareholders and employees that the company’s production and distribution problems a key source of the financial woes have been ironed out.

Whether Wall Street is convinced remains an open question.

“Designer firms are finding it very difficult to be a public company,” said Joseph Teklits, an analyst with the New York investment firm Ladenburg, Thalmann & Co. “These companies usually are run by entrepreneurs or designers not by business people who are used to keeping a tight control over costs. It’s tough to change your focus from being fashion-driven to being shareholder-driven.”

Guess, which went public last August and also held its first shareholders’ meeting last week, has had its own share of Wall Street woes.

Largely the result of ongoing labor troubles and investor concern about the firm’s relatively high executive salaries, the stock price has been mired at about $12 a share since opening at $18 less than a year ago.

For the first quarter ended March 31, Guess reported net income of $14 million, down from $16.6 million in the like period in 1996.

“Showing profits when you’re a privately owned company is easy,” said Bernard Lax, president of the Coalition of Apparel Industries in California. “When all of a sudden you have stockholders looking at what you’re doing every day I don’t know that most (apparel firms) have the ability to perform under those circumstances.”

Such problems are not limited to high-profile branded apparel firms like Guess and Mossimo as evidenced by the recent earnings statements of some L.A. clothing companies that few people have even heard of.

For example, L.A.-based Jalate Ltd. designs moderately priced juniors’ sportswear that is sold in retail chains such as Mervyn’s, Sears and Miller’s Outpost, and has been publicly traded on the American Stock Exchange since 1993.

The company reported a first-quarter net loss of $34,000 compared with net income of $217,000 for the like period a year earlier a drop company officials attributed to an overall downturn in retail apparel sales.

Jalate’s stock was stuck at $2 a share at the May 29 closing, as of late last week.

Part of the problem, analysts say, is that the culture of the apparel industry is fundamentally at odds with the culture of Wall Street.

Because of the ever-changing trends sweeping through the world of fashion, successful apparel firms must be extremely nimble, said Lax, and able to respond to rapid shifts in market demand.

Clothing companies “don’t know what’s going to happen from season to season,” Lax said. “Investors like to see long-term plans, and in this industry, you cannot be cast in stone.”

Teklits said the most successful publicly owned apparel firms will be those that manufacture basic items that are relatively immune to the whims of the marketplace.

“If you have a classic business where you are not driven by fashion, it is easier to be profitable than it is if you are trying to stay ahead of the trends,” he said.

That seems to be the case with Tarrant Apparel, one of the few bright spots among L.A.’s publicly owned apparel firms.

The company which produces moderately priced private label clothes for specialty stores and mass market retailers recently reported net income of $2 million for the first quarter ended March 31, compared with $1.5 million for the like period a year earlier. And Tarrant’s stock has followed suit, climbing steadily to nearly $15 a share as of late last week, a level 64 percent above its IPO price.

Despite such success stories, many investors are becoming increasingly convinced that the fashion industry and finance simply don’t mix.

“There is no reason to be there,” said Eric Appell, an analyst at Dabney/Resnick/Imperial LLC, who recently dropped apparel companies from his coverage. “You don’t want to be investing in the apparel stocks right now.”

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