Day Runner Signals Quarter Weakened by Inventory Cuts

Day Runner Inc. warned Monday that lower-than-expected sales could cause earnings to drop 22% to 33% in the current quarter.

The Irvine maker of personal organizers and planners blamed the disappointing sales on large retailers’ decisions not to replenish stock as Day Runner products sold out.

“Inventory tightening is fairly common in the retail world now,” spokeswoman Jenifer Kirtland said Monday. “It was just something we weren’t expecting of this magnitude during our busy season.”

Because Day Runner’s products are calendar-related, December is an important sales month for the company, she said.

The company expects to report sales of $62 million to $65 million, up from $49.4 million for the same quarter last year, but lower than analysts’ projections of $72 million to $73 million, she said.

The anticipated earnings drop for the second fiscal quarter ending Dec. 31 excludes a one-time charge of about 9 cents a share, or about $1.06 million, related to Day Runner’s acquisition in October of Filofax Group plc, a British maker of organizers.

Day Runner said consumer demand for its products remains strong and that the Filofax subsidiary is “performing well.” The company also predicted that the tightened inventory’s negative effect on sales will be short-lived.

Still, the company said it will move to bolster profitability by cutting costs “as significantly and quickly as prudent.” Kirtland declined to give specifics about how that will be accomplished.

The company is predicting per-share earnings of 30 cents to 35 cents a share, or $3.56 million to $4.15 million, compared with 45 cents a share for the same period last year.

Day Runner made the announcement after the markets closed. Its stock was unchanged in Nasdaq trading, at $18.