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Shares of staffing services company ManpowerGroup sank Thursday toward the worst one-day post-earnings performance in five years, as slowing demand for jobs due to increasing economic uncertainty resulted in another earnings miss and a downbeat outlook.
The stock
MAN,
dropped 6.4% in afternoon trading, putting it on track to close at the lowest price since Oct. 19, 2022. The stock was also headed for the worst reaction to quarterly earnings since it tumbled 14.5% on April 20, 2018.
The company said in January that it had seen a “softening of demand” for staffing services in the fourth quarter, but added that labor markets remained strong and that order flow was still good. Although ManpowerGroup missed profit expectations that quarter, it provided a first-quarter profit outlook that was above expectations.
That demand outlook appeared to change during the past three months.
“This softening trend continued into the first quarter of this year, with demand for staffing services slowing further, most notably in the U.S.,” said Chief Executive Officer Jonas Prising in a post-earnings conference call with analysts, according to an AlphaSense transcript.
In Europe, the company experienced a “modest decrease in demand” in most of the region’s major markets, while business trends in Asia Pacific, the Middle East and Latin America were “quite robust,” Prising said.
Net income fell to $77.8 million, or $1.51 a share, from $91.6 million, or $1.68 a share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share of $1.61 came in below the average analyst estimate compiled by FactSet of $1.63.
Revenue declined 7.6% to $4.75 billion, below the FactSet consensus of $4.81 billion.
CEO Prising said that after months of a “remarkably strong” U.S. labor market, he is seeing more companies across various industries “recalibrating their workforces.” These companies are shifting their focus toward more “intentional” hiring for specialist skills, delaying hiring decisions and reducing demand for contingent workforce, he said, which is in line with what he’s seen in past economic slowdowns.
Revenue in the U.S. fell 13.4% to $770 million, below expectations of about $831 million, according to FactSet.
Based on trends seen during the first quarter and so far in April, the company said it expects second-quarter EPS of between $1.58 and $1.68, which was well below the FactSet consensus of $1.84.
The selloff in ManpowerGroup’s stock appeared to weigh on the shares of other staffing services companies, as Robert Half International Inc.’s
RHI,
fell 0.5% and Korn Ferry’s
KFY,
lost 0.5%.
Year-to-date, ManpowerGroup shares have slumped 10.6%, while the S&P 500 index
SPX,
has gained 8%.
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