Day Runner Posts $2.7-Million Loss for Second Quarter

Feeling the biggest effect yet from changes in the way retailers order products, Day Runner Inc. on Tuesday posted a quarterly loss of $2.7 million and said losses for the current three-month period will be “substantial.”

The Irvine maker of paper organizers, planners and software said it has eliminated 30 jobs, including 14 management positions, since late last month as it continues to adjust to more inventory tightening by its major U.S. customers.

“Our goal is to complete the bulk of our restructuring this fiscal year and to enter fiscal 2001 as a leaner and profitable organization,” James E. Freeman Jr., Day Runner’s chief executive, said in a press release. “We believe this goal is achievable.”

Meanwhile, he said, the seasonal nature of the company’s business, constraints on sales, and expenses related to reducing the staff level will probably result in “a substantial loss in the March quarter.”

Freeman said the company also expects to incur other one-time costs at some point during its fiscal year, which ends June 30.

Day Runner’s loss amounts to 23 cents a share for the second quarter, which ended Dec. 31. In the year-earlier quarter, it earned $2 million, or 16 cents a share. Quarterly revenue fell to $57.5 million from $64.6 million a year earlier.

The company has seen its sales falter and product returns increase as major retailers reduce their inventories to the minimum needed to supply customers. Other companies in the office products business have had similar problems, analysts said.

Day Runner, though, was hit harder because the shift in inventory practices coincided with borrowings to buy British competitor Filofax Group for $84.5 million to expand its international presence.

The company’s survival, analysts said, depends on how Day Runner weathers the changing inventory demand. The company already has said it is exploring “strategic alternatives.”

“We believe that large retailers will continue to emphasize supply chain management and inventory turns, and we have begun to make changes in our business that we believe will allow us to operate more effectively and to become profitable under these conditions,” Freeman said in his statement.

For the first six months, the company lost $2.1 million, or 18 cents a share, compared with net income of $5.7 million, or 45 cents a share, for the same period a year earlier. Revenue for the period dropped to $109.3 million from $112.3 million.