The force deserted the children's book publisher Dorling Kindersley yesterday as the group revealed that it will plunge £25m into the red after massively over-ordering Star Wars books before Christmas.

The company's chief executive, James Middlehurst, has already quit and the chairman and 30% shareholder, Peter Kindersley, will return to the driving seat until a replacement can be found.

The dramatic announcement to the stock exchange admitted that directors had "seriously misjudged" the demand for Star Wars books and related merchandise.

The company's sales had risen strongly when the film Star Wars: The Phantom Menace was released last year, but the boardroom failed to realise that it would not be able to rekindle demand when the box office blockbuster had faded from cinema screens.

Fewer than 3m of the 13m Star Wars books Dorling Kindersley printed were sold, and the disastrous trading performance has forced the company on to the mercy of its bankers.

The mistake hit the company hard - plunging by more than 35% to wipe £42.3m off the personal fortune of Mr Kindersley and more than £140m off the group's value.

The fiasco is the latest in a series of setbacks since Dorling Kindersley joined the stock market in 1992. Once regarded as a shooting star of the media industry, DK has rarely managed to go for more than a year before an upset has threatened to derail its profits performance.

The company turned down a takeover offer from Bill Gates's Microsoft in 1995. He abruptly sold the 18% shareholding he had built in the publisher.

More recently, senior executives have come and gone with alarming regularity.

Mr Kindersley, whose wife Juliet is a Dorling Kindersley author, rejected suggestions that he should relinquish the reins of control at the group. "In the longer term, some [boardroom] issues will have to be considered, but at this particular moment I have to get back into the driving seat."

He added that the com pany's underlying business was good, and hoped that the video release of Phantom Menace in the spring and the re-release of the original Star Wars trilogy in the autumn would help use up some of the warehouses full of unwanted stock.

But the company's problems do not end there. It is running out of working cash because it has £44m worth of books in stock but unsold. By no means all of them are Star Wars titles.

It has also been suffering in a dispute with its main distribution agent, which meant DK did not manage to supply one book during September to WH Smith, its largest customer.