I can’t think of anything more difficult than being a staffing company amidst the worst labor market in over a quarter century. Today one of the best in the business, executive search specialist Korn/Ferry International (KFY), actually managed to survive last quarter’s employment market meltdown.
The Los Angeles-based company reported a quarterly loss of $14.3 million, or 33 cents per share, down sharply from a profit of $15.9 million, or 36 cents per share, in the same period last year. Excluding restructuring costs of $18.2 million, Korn/Ferry said it lost $2.3 million, or 5 cents per share.
Although the company’s revenue dropped 43% to $123.3 million from $217.5 million in the same quarter in 2008, the results were better than consensus Wall Street expectations for revenue of $102.6 million and a loss of 6 cents per share. The earnings beat sent investors rushing into KFY shares, pushing them nearly 9% higher in Wednesday trade.
The company said that demand for its services began to stabilize in the quarter, but it also warned that the economy and labor markets remain uncertain. Korn/Ferry executives also said they expect a decline in new business in the most recent quarter, due to the seasonal nature of summer employment.
Indeed, it must be very tough to be a job search firm when employers are slashing payrolls at a breakneck pace. Moreover, demand for high-paying executive positions—Korn/Ferry’s bread and butter—also has declined worldwide during the latter half of fiscal 2009, according to the company.
Now, in the interest of full disclosure, I have a good family friend who for years was a very high level executive at Korn/Ferry. But it is because of this relationship that I can say with confidence that if any company is smart enough to weather the current job-loss tsunami, it’s Korn/Ferry. Their management is top shelf, and as you might expect of an executive search firm, Korn/Ferry’s executives are amongst the best and brightest in the business.
I like KFY shares on the heels of today’s earnings beat, and I think the company is a good way to play what will likely be the eventual—albeit very slow—recovery in the job market.
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