Dan River stock hits the rapids
Furniture Today Staff -- Furniture Today, February 2, 2004
Taking a three-day roller-coaster ride, shares of Dan River Inc. see-sawed in sharp swings last week, rushing up by almost 40 percent on Tuesday, Jan. 27, before giving up some of its gains the next day, and then returning near its original price at $0.80 on Thursday, Jan. 29.
Almost 1.5 million shares changed hands in unusually heavy trading Tuesday, almost 10 times the routine daily trading volume, as shares of the diversified textiles producer jumped up by $0.35 a share to $1.27, a 38 percent run-up.
The following day, Wednesday, Jan. 28, Dan River shares gave up some of their gains, sliding back by $0.07 a share to $1.20, a drop of 5.5 percent.
More than 1.6 million shares traded hands on the second day of feverish activity on the New York Stock Exchange.
Trading was so atypical that the Big Board asked the company to issue a statement "indicating whether there are any corporate developments which may explain the unusual activity in the company's stock."
Raising some eyebrows and triggering speculation, Dan River spokesperson Denise Laussade responded to the request by saying, "The company's policy is to not comment on unusual market activity."
Dan River stock has been trading lately at, or slightly beneath, the $1.00 a share mark, driven down in recent months by persistent losses and two straight quarterly sales declines in excess of 20 percent.
Following a third straight day of heavy trading, Thursday, Dan River shares were back where they started earlier during the week. After it was announced that they were being de-listed by the NYSE, the company lost a third of its value, or $0.40 a share, to a closing price of $0.80.
During the third quarter, the company recorded a loss of $103.5 million, compared with a year-before profit of $4.7 million. Dan River's losses over the past nine months total $120.2 million, compared with $17.5 million last year.
Sales during the third quarter tumbled by 29.6 percent, to $103.7 million from $147.4 million last year, a shortfall of more than $43 million. For the nine months year to date, sales have declined by 20.1 percent, to $367.4 million from $459.8 million.
Given the sales declines, losses and contracting cash flow, Dan River has had to turn to its lenders three times in recent months for a relaxation of various debt covenants.
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