January 14, 2002 12:00 PM

It was the American dream come true. Six years ago Mossimo Giannulli’s swimwear line was selling like gelato on a hot summer day. Forbes named him one of the country’s 400 richest people and put his picture on the cover. SPORTS Illustrated included his designs in its annual swimsuit issue. And the New York Stock Exchange listed his company, Mossimo Inc., making him, at 32, the youngest CEO in Big Board history. “I’d seen my name on a lot of products and never cared,” says Giannulli, whose grandparents came from Italy. “But when I saw my name being traded, I started crying.”

Then came the fall. In 1997 Giannulli went from being the toast of Wall Street to just plain toast. Yes, he could design clothing. But he had trouble making on-time deliveries, and production costs were ballooning. Sales declined. Shares of his company’s stock dropped from $50 to S3. Suddenly, Mossimo Inc. was on the edge of bankruptcy. “I was scared,” says Giannulli. “But I also thought, ‘I’m strong enough to get out of this one.’ ”

He was right. Last year, as three angry creditors were filing a liquidation petition against the company, Giannulli moved the Mossimo label to a single outlet: Target. Instead of charging $550 for a suit or $70 for a pair of jeans, he priced almost every item in his collection—contemporary clothing, children’s wear, shoes, hosiery, hats, eyewear and handbags—below $30. The result: His line is one of Target’s best-selling, especially among teens, and he is in the process of paying back his creditors. “He totally connected with our customers,” says Trish Adams, a senior vice president at Target.

At first the fashion industry gave the move a thumbs down. “Everyone snickered,” says Gia Castrogio-vanni, a senior vice president at Mossimo Inc. “They said, ‘How could you do it? You sold out.’ “Irma Zandl, president of the Zandl Group, a New York City fashion-research company, was among those questioning the deal. “My first reaction was that he was moving down the food chain,” she says. Since then, Zandl has changed her mind: “Mossimo is having a comeback.”

Giannulli was never one to leave things as they are. The oldest son of Gene, 69, a retired architect, and Nancy, 67, a homemaker, he grew up in Encino, Calif., painting his bikes, redesigning his skateboards and cutting his Little League socks to suit his personal style. “I used to change my bedroom around and paint my walls constantly,” he says. “I was 10 years old, but I was very visual and needed constant change. It made my mom nuts.”

In the first grade he changed his name—from Massimo—at the behest of his teacher who insisted Mossimo was easier to pronounce. After graduating from high school, he studied business and architecture at the University of Southern California for three years but didn’t spend a lot of time doing homework. Instead, he hung out at the beach, where he first got the idea for his company after noticing “a void in the market for cool beachwear.”

In 1987 he dropped out of college, borrowed $100,000 with his father’s help and started selling three-panel neon volleyball shorts and T-shirts out of his garage with his girlfriend Chris Clausen, then a college student. Within a year, sales hit $1 million, and he and Clausen were married. Their son Gianni, now 9, was born five years later, but by then their marriage was in trouble. “It was a difficult divorce,” he says. “I was really young and naive. I was immature, and I believed in all the hype about myself. I didn’t have my priorities straight.”

He turned to a life of parties, bars, hanging out with celebrities and pursuing women. Then in 1995, Giannulli met actress Lori Loughlin, 37, one of the stars of the TV sitcom Full House, at a restaurant in L.A. After dating for two years, he surprised her with 500 roses and two months later proposed. They eloped on Thanksgiving Day 1997, getting up at dawn to be married on a hillside in Newport Beach. “We showed up in ski hats and sweatpants,” says Loughlin. “It was cold, and the sun was coming up. It was beautiful.”

The couple, who are building a new home in Bel Air, share a three-bedroom bungalow in Laguna Beach with their daughters Isabella Rose, 3, and Olivia Jade, 2. Friends say Giannulli has found a balance in his life, and he agrees. “I’ve got a great wife and great kids,” he says. “I spend my days doing what I love. What’s not to like?”

Veronica Byrd

Ulrica Wihlborg in Los Angeles

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