Kelly Flop

Jul 22, 2008

Some highlights (mainly lowlights, actually) from Kelly Services’ CEO Carl Camden today; thanks to Seeking Alpha for help. Kelly’s earnings were lower than expected.

“The second quarter was a rough one. Analyst’s reports and media have well documented the economic challenges faced by our industry and the global economy. Overall demand for labor in the U.S., already weak, has worsened; and demand for temporary staffing is declining at an even faster rate.”

“The current unemployment situation seems to be more of a reflection of employers’ reluctance to add new employees, rather than the result of aggressive layoffs.”

“Although up, just the slight bit, the unemployment rate for college graduates remains very low at 2.3%.”

“With the exception of France, which exhibited 4% growth, the rest of Western Europe and Scandinavia was down roughly 3%. On the other hand in Eastern Europe, we continue to see strong sales performances with revenue growth over 33%, largely driven by our strong performance in Russia.”

“Although manufacturing, financial services, and various other industries have experienced job losses, there continues to be opportunities in other sectors like education, government, energy, and engineering.”

“We are pushing ahead with geographic expansion to generate additional revenue and earnings growth. For example, Kelly recently announced an agreement to purchase 13 branch offices and 15 onsite locations from Randstad Holding, a transaction that establishes Kelly’s presence in Portugal.”

“While it’s been a long downturn, it has been a shallower downturn without the sharp inflexion down that crushed lot of firms the last time. So we haven’t seen the abundance of the business closings or distressed sales in this cycle that we’ve seen in the past.”

“We are not experiencing anywhere near the operating earnings declines that we did in the last cycle … while the unemployment rate has moved up to 5.5%, that still is significantly lower unemployment rate than it was on the last downturn …”

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