Filofax shares slump stuns stock market

Profits warning: Makers of classic yuppie accessory in decline weeks after upbeat returns

Filofax, the maker of the personal organisers that were once a symbol of the yuppie boom, shocked the stock market yesterday when it issued a calamitous profits warning only weeks after reporting a sharp increase in profits along with an upbeat statement for the current year.

Filofax shares slumped 39 per cent to 165p when the company said its first half profits would not reach the pounds 2.9m achieved in the same period last year.

The company blamed the warning on a series of problems including an expected cut in orders from W H Smith, its largest customer. W H Smith, which is undergoing a big restructuring under a new chief executive, is moving to a swifter ordering system that will enable it to reduce its level of stocks.

Other problems are in the US where growth has failed to match expectations even though the company has invested in expensive display systems in stores. Filofax is also experiencing lower demand from some overseas agents such as those in Japan.

Filofax now expects to make profits of pounds 2m in the first half, compared to last year's pounds 2.9m. The shortfall is unlikely to be made up in the second half. Analysts have slashed their full year forecasts from pounds 8.2m to pounds 5.7m.

The tone of the statement and its timing caused consternation in the City and even dismayed its own broker, Hoare Govett. Andy Bowers of Hoare Govett said: "It does seem quite incredible that this could happen. It seems a coincidence of misfortunes over the last couple of weeks."

The timing of the statement is certain to anger shareholders due to attend the company's annual meeting on Thursday.

Robin Field, Filofax chief executive, said he accepted the group's credibility might take a knock as a result of the warning but added: "Things haven't gone wrong. We are just anticipating that they might. We have leant over backwards to speak to people as early and as openly as possible and I would hope we might get some credit for that." On the timing of the announcement, he said it was difficult to evaluate events early in the year, typically a slow period for the group.

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