Day Runner Inc. stock plunged 28% Tuesday to a new low in reaction to the company's announcement that growth of its sales of personal organizers will be slower than Wall Street had anticipated.
In trading on the NASDAQ market, Day Runner closed at $8.125 a share, down $3.125. At one point during the day, the stock reached $7.50 a share, its lowest price since the company went public in March at $15 a share.
On Monday, after the market closed, the company said its fourth-quarter sales will increase 16% to 22% over last year's level, well short of analysts' forecasts of a growth range of 33% to 38%.
"It was heavily owned by institutional investors, and they're dumping it out the window," said R. Jerry Falkner, an analyst at Southeast Research Partners, a brokerage and research company in Boca Raton, Fla.
"Obviously, this is disappointing for the short term. But I don't think it has anything to do with the long-term potential of the company."
Analysts attributed the poorer-than-expected sales to distribution problems. Office supply "super-stores" that sell Day Runner's calendars, address books and project-planning books are pushing independent stores, which also sell Day Runner products, out of business. Those sales aren't always quickly picked up by competitors, said Judy Tucker, a Day Runner spokeswoman.
The Wal-Mart retail chain, which orders through a distributor, found that it had not sold as many organizers as expected during the fourth quarter. And Bizmart, an office super-store retailer, also did not order as many supplies as expected.
Tuesday's plunge was the second hit for Day Runner's stock in the last month. Shares fell $2.50 each to $12.25 on Dec. 8 after a securities analyst with Montgomery Securities in San Francisco revised her earnings estimates downward.
For the third quarter, Day Runner reported a profit of $1.7 million, or 29 cents a share, on revenue of $20.5 million. That compared to earnings of $1.2 million, or 25 cents a share, on revenue of $15.5 million for the same period a year earlier.