Shares of Valassis Communications Inc. fell to a record low Monday, as the Livonia-based direct marketing firm cut 100 jobs and reduced its profit forecast after posting a third-quarter loss of $5.2 million last week.
Valassis also was removed from the Standard & Poors MidCap 400 index at the close of trading Monday, a move announced by S&P after the company's market value dropped to $90 million late last week, putting it dead last in the ranking of 400 mid-sized firms.
Valassis stock closed at $1.40 Monday, down from a high of $16.42 on May 16, following the company's move Thursday to cut its 2008 profit forecast by up to 28 percent. Valassis said it now expects adjusted profit of $1.71 per share for the year, down from an earlier profit forecast of between $2.14 and $2.39 per share.
About 2 percent of Valassis' 5,000 U.S.-based associates have been let go as part of the company's plan for 2009, said Valassis spokeswoman Cindy Hopman. Less than half of those jobs will be cut in Michigan, she added.
"Decisions that impact our employees are not taken lightly," Valassis president and CEO Alan Schultz said in a statement dated Friday. "We make every effort to minimize headcount reductions."
The company also plans to cut spending, increase production efficiencies and concentrate on the company's best opportunities for revenue and profit growth, according to Schultz's statement.
Valassis employs about 7,000 associates worldwide, including 1,100 in Michigan. It provides media and marketing services to more than 15,000 advertisers.
The company reported third-quarter revenue of $563.7 million, down from $607.2 million for the July through September period last year. Valassis posted a net loss of $5.2 million or 11 cents per share, for the third quarter, compared with net earnings of $16.4 million, or 34 cents per share, in that quarter last year.
The quarterly loss gives Valassis net earnings of $14.5 million for the first nine months of the year, compared with $37.45 million for the same period last year. Valassis anticipated low- to mid-single digit revenue growth earlier this year but is now projecting a decline of 6 percent to 7 percent revenue growth for the second half of 2008, according to Schulz. As a result, the company is aiming to save $50 million to $60 million in costs next year.
"We did not anticipate the severity of the U.S. economic decline or the extent of its immediate effect on our clients' budgets and our business," Schulz said.
Forced to find new ways to reach consumers, the company launched redplum.com in January and acquired Windsor, Conn.-based ADVO, direct-mail marketer for $1.2 billion. Redplum.com features short video clips, coupons and sale announcements by ZIP code and was expected to distribute three billion pages of ads this year.
"We are confident in our ability to successfully meet these cost-reduction goals and minimize capital spending," Robert L. Recchia, Valassis executive vice president and chief financial officer, wrote in a note to investors Thursday. "While we cannot control the uncertain state of the economy and its impact on our clients and consumer spending, our focus is on what is within our control."
Fulton Financial Corp., which offers banking products and services, replaced Valassis in the S&P index.
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