Day Runner’s CEO Out; Stock Continues Slump
Day Runner Inc., the struggling maker of daily organizers and planners, said Tuesday that James E. Freeman Jr. has resigned as chief executive after less than two years on the job.
Freeman, who was tapped for the top spot in August 1998, presided over the decline of the Fullerton-based company, which has piled up large losses and is wrestling with huge debts from a major acquisition that soured.
Day Runner also has failed to respond quickly enough to major industry changes, including growing competition from electronic personal organizers, such as Palm Pilot, analysts said.
“There’s a lot of people who think [Day Runner’s] products are yesterday’s technology,” said analyst Alexander Paris Sr. of Barrington Research in Chicago. “The company’s in a precarious position.”
Retailers are expected to order 6.4 million electronic personal organizers worth $2 billion by 2003, according to International Data Corp., a market research firm.
Day Runner’s electronic personal organizers have so far failed to generate Palm Pilot-type sales. But the company says it has high expectations for its latest version, e-Runner, which is slated to be shipped to retailers starting in September.
In a recent regulatory filing, the company also noted that its stock, which trades on the Nasdaq market, is in danger of being delisted.
Day Runner recently undertook a 1-for-5 reverse split in an effort to boost the price, but the shares continued to slump. The stock, which traded as high as $68.75 last June, has lost nearly 90% of its value so far this year. It closed Tuesday at $2.22, down 3 cents a share.
The company has lost more than $24 million over the past five quarters and has warned of further “substantial loses” ahead. It has blamed its sluggish performance on lack of promotion and inventory tightening by its major customers, as well as restructuring costs.
As part of a major overhaul, Day Runner recently closed its Irvine headquarters and consolidated operations at its Fullerton plant.
Day Runner hired Crossroads LLC to provide interim management services. John F. Ausura, a principal of Crossroads, was named as Day Runner’s interim chief executive.
Freeman became chief executive at a time when Day Runner was riding high, posting record earnings and sales for fiscal 1998. Buoyed by that success, Freeman helped orchestrate the acquisition of British rival Filofax Group for $84.5 million, 50% more than Filofax’s stock value. But the deal saddled Day Runner with a mountain of debt, resulting in big interest payments.
Day Runner is now closing Filofax’s two British manufacturing plants and shifting production to subcontractors.
The company’s bottom line absorbed another blow when major customers, such as Wal-Mart and OfficeMart Inc., began tightening their inventories, cutting orders.
Freeman will continue to serve on the company’s board. Neither Freeman nor other Day Runner executives could be reached for comment.
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Day Runner Fades
Day Runner has been piling up hefty losses in recent quarters while the company’s stock has been pummeled.
Sales, in millions
1999
3Q $36.22
4Q 47.70
2000
1Q 51.85
2Q 57.48
3Q 29.98
*
Net Income, in millions
1999
3Q -$4.45
4Q -5.25
2000
1Q .60
2Q -2.69
3Q -12.38
*
Stock Trend, year to date
12/31/99 close: $19.53
5/15/00: $2.22
Source: Bloomberg
