Valassis slashes 2008 profit outlook after 3Q loss

The reduced forecast came as the company reported a third-quarter loss that widely missed Wall Street expectations, and the stock plunged to an all-time low.

Valassis, which produces newspaper inserts and direct mail advertising, said it now expects adjusted profit of $1.71 per share for the year, down from its prior forecast for profit of between $2.14 and $2.39 per share. That figure does not include stock option expensing or other items.

Analysts polled by Thomson Reuters, on average, expect profit of $1.13 per share, with estimates ranging between $1.02 and $1.24 per share. The figure includes stock options, but analyst estimates typically do not include one-time items.

The company said it now expects second-half 2008 revenue to be down approximately 6 to 7 percent, whereas it previously forecast low- to mid-single digit revenue growth for the period.

"The slowdown in the global economy has resulted in a combination of factors that have negatively affected our business including a significant decline in both retail sales and client marketing budgets," the company said in a statement.

Valassis also said the uncertainty surrounding the extent and duration of the economic downturn makes it difficult to predict conditions for 2009, but it expects revenue to fall in the mid-single digits during the first half of the year, and flat to slightly down revenue in the second half of 2009.

The company said it hopes to cut costs by $50 million to $60 million in 2009. "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," said Chief Financial Officer Robert L. Recchia.

Valassis shares dropped $2.33, or 55 percent, to $1.84 in afternoon trading after sinking earlier as low as $1.78, its lowest price since it debuted on the New York Stock Exchange in 1992.