Office supplier maker Avery Dennison in Pasadena reported slightly higher earnings for the third quarter, a result that disappointed investors and sent the company’s stock down 3 percent Wednesday.

Net income increased marginally to $64 million (60 cents per share) compared to $63 million (59 cents per share) in the third quarter last year. On average, analysts surveyed by Thomson Reuters expected earnings of 61 cents per share.

The company said sales were strong during the quarter for pressure-sensitive labels and its retail labeling and consulting services, but inflation offset the sales gains.

“Margins came under pressure as rising raw material costs outpaced price increases,” Chief Executive Dean Scarborough said in a statement. “Despite the increased inflation, we remain on track to meet our full-year targets for earnings and free cash flow.”

Shares of Avery Dennison closed Wednesday at $37.99, down $1.17 or 3 percent in trading on the New York Stock Exchange.

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