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Kelly revenue falls 25%

November 06 2009
Staffing Industry Analysts North American Daily News

Third-quarter revenue fell 24.9% at Kelly Services Inc. (NASD: KELYA) to $1.05 billion on a year-over-year basis. A decrease in hours worked of 21.6% and a decline in average hourly bill rates of 5.1% helped pull down third-quarter revenue, the company said in its 10-Q filing with the U.S. Securities and Exchange Commission. Also fee-based revenue fell 48.2% on a year-over-year basis to $20.5 million.

Kelly's U.S. third-quarter revenue fell 21.7% to $623.1 million from $795.8 million in the third quarter of 2008. Canadian third-quarter revenue declined 22.1% on a year-over-year basis to $48.4 million.
Gross margin narrowed to 15.8% in the third quarter from 17.6% in the third quarter of the year-ago quarter. The decrease in fee-based revenue impacted gross margin, the company said in its 10-Q. Also, gross margin was affected by shifts to a higher proportion of light industrial business from clerical and to large corporate customers from retail, it said.

Kelly posted a third-quarter net loss of $14.8 million compared to a net loss of $12.2 million in the same period last year. The company reported legal charges of $4.3 million in the most-recent quarter and legal charges of $22.5 million in the third quarter of 2008.

The company also said it is continuing with its restructuring in the U.K. and has closed 11 branches as of Sept. 27 out of 16 branches slated for closure. It had sold 31 U.K. branches to Hexagon Staffing Solutions Ltd. on March 13. Kelly said in its 10-Q that it expects $1 million to $2 million in U.K. restructuring charges in the fourth quarter.

Kelly Services Inc. (NASD: KELYA)
For the third quarter ended Sept. 27, 2009, compared with the same period in 2008.
Revenue: $1.05 billion, -24.9%
Net loss: $14.8 million vs. net loss of $12.2 million


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