Introduction: Hays reports slowdown in hiring
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
December has been a cruel month for UK recruiters, and retailers.
Hays, the global recruitment consultants, has reported that its fees – earned by placing candidates into roles) – fell by 15% last month, as demand from companies looking to fill vacancies slowed.
This led to a 10% drop in earnings across the last quarter, and the slowdown means Hays expects to miss market expectations for profits in the first half of its financial year.
The company is now accelerating its cost reduction and efficiency programmes, and cut its consultant headcount by 5% in the October-December quarter.
In the UK & Ireland, Hays reports that fees fell 17% in the last quarter, including a 13% drop in income from temporary positions and a 21% drop in permanent fees.
The slowdown went further too, with Australia & New Zealand fees down 20%, Asia down 11%, and the Americas down 25%.
Dirk Hahn, Hays chief executive, says it is “too early to say” if December’s weakness shows a sustained market slowdown, or rather that some placements are simply being deferred.
But, Hahn warns, near-term market conditions are expected to remain challenging, citing increased uncertainties and reduced client and candidate confidence.
He told shareholders:
“Overall market conditions became increasingly challenging through the quarter, including a clear slowdown in most markets in December, notably in our Perm businesses as client and candidate decision-making slowed. Temp volumes remained broadly stable sequentially through the quarter, but declined YoY as we did not see our normal seasonal step-up in worker volumes.
As a result, we expect operating profit in our first half to be c.£60 million, despite our ongoing actions to reduce costs.
UK shoppers also cut back last month, leaving retailers suffering a disappointing festive period, new data this morning shows.
Total sales grew 1.7% in December, down from almost 7% growth a year earlier, the British Retail Consortium and consultancy KPMG have reported.
Their report shows there was a slight increase spending in the week leading up to Christmas as consumers scrambled to purchase last-minute gifts. But shoppers shunned clothing, jewellery and technology gifts, opting instead for beauty, health and personal care products, while toys and gaming also sold well.
And households remained cautious about making larger purchases in the post-Christmas sales.
Helen Dickinson, chief executive of the BRC, says:
“The festive period failed to make amends for a challenging year of sluggish retail sales growth.
“Weak consumer confidence continued to hold back spending.”
Also coming up today
Boeing is facing an escalating crisis after loose parts were discovered on some grounded 737 Max jets, days after an Alaska Airlines plane suffered a mid-air blowout on Friday.
Alaska Airlines indicated that its maintenance technicians had found issues when inspecting their 737 Max 9 fleet, saying:
“Initial reports from our technicians indicate some loose hardware was visible on some aircraft”.
The problems don’t end there either; United Airlines said yesterday it had found loose bolts and other “installation issues” on multiple 737 Max 9 aircraft.
Boeing’s shares fell 8% yesterday, as investors pondered the possible fallout from the accident.
The agenda
-
7am GMT: German industrial production for November
-
7.45am GMT: French trade balance for November
-
10am GMT: Eurozone unemployment report for November
-
10am GMT: Business and Trade Committee to quiz Asda co-owners TDR Capital
-
1.30pm GMT: US trade deficit figures for November
-
3pm GMT: RealClearMarkets/TIPP index of US Economic Optimism Index
Key events
Discount retailer B&M has reported a rise in UK revenues in the run-up to Christmas period.
B&M’s UK like-for-like revenues rose by 3.7% in the 13 weeks from 24 September to 23 December, rather slower than in France where they grew by 11.3%, while its Heron Foods business grew by 11.7%.
Alex Russo, chief executive, said,
“The performance across the Golden Quarter has been pleasing, with strong operational execution across the three businesses.
Our strategy remains unchanged – we are an everyday low-price discounter with a laser-focus in keeping excellence in retail standards and our costs the lowest.
This allows us to provide our products at the best price to all customers – many of whom continue to face significant cost-of-living pressures.
B&M has also announced a special dividend of 20p per share for investors. But despite this sweetener, its shares have dropped 0.6% this morning.
Emma Carr, retail partner at law firm Gowling WLG, says:
Despite a slowing in midway-year growth for this discount retailer, its last minute rebound in sales can doubtless be attributed to a rush in last-minute festive sales requirements where the retailer was able to step in and rapidly meet these needs.
Of course, capitalising on this as we move into the New Year period will be key for the retailer, as it looks to utilise its traditionally well-focused supply chain capabilities to deliver against the fortunes of other more mainstream supermarket competitors.
Hays shares slide after hiring slowdown warning
Shares in Hays are down 12% in early trading in London, after it warned that the fall in fees will hits its profits.
Victoria Scholar, head of investment at interactive investor, says:
“Hays has issued a profit warning – it expects first half pre-exceptional operating profit of about £60 million, missing analysts’ expectations, sending shares sharply lower. In its second quarter trading statement it also said quarterly fees fell by 10%, hurt by weakness in December. But the recruiter said it is too early to tell whether this reflects a more sustained market slowdown.
Shares in Hays plunged as much as 19% at one stage this morning and are still down by over 12%. Hiring of permanent staff tends to ebb and flow with the economic cycle. The sluggish global growth backdrop combined with tighter monetary policy has dampened business appetite to pile on additional fixed staffing costs. And while temporary workers typically pick up the slack, Hays said it didn’t see the ‘normal seasonal step-up in worker volumes’ dealing a double blow to the recruitment firm.
Today’s slide reverses much of the rebound in the stock seen since the lows in October. Over a 12-month period shares are down by over a fifth.”
Here’s a full breakdown of Hays’ trading in the last quarter of 2023, showing the “clear slowdown” in global markets:
-
Germany: flat fees, or up 2% on a WDA basis. Temp & Contracting flat (up 2% WDA), with volumes down 1%, impacted by lower new sales YoY through the quarter. Perm fees flat YoY
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UK & Ireland: fees down 17%, with Temp down 13% and Perm slowing through the quarter, down 21%
-
Australia & New Zealand: fees down 20%, with Temp down 16% and Perm slowing through the quarter, down 27%
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Rest of World: fees down 11%. EMEA ex-Germany fees declined by 5%, with Asia down 11%. The Americas continued to be tough, down 25%
Introduction: Hays reports slowdown in hiring
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
December has been a cruel month for UK recruiters, and retailers.
Hays, the global recruitment consultants, has reported that its fees – earned by placing candidates into roles) – fell by 15% last month, as demand from companies looking to fill vacancies slowed.
This led to a 10% drop in earnings across the last quarter, and the slowdown means Hays expects to miss market expectations for profits in the first half of its financial year.
The company is now accelerating its cost reduction and efficiency programmes, and cut its consultant headcount by 5% in the October-December quarter.
In the UK & Ireland, Hays reports that fees fell 17% in the last quarter, including a 13% drop in income from temporary positions and a 21% drop in permanent fees.
The slowdown went further too, with Australia & New Zealand fees down 20%, Asia down 11%, and the Americas down 25%.
Dirk Hahn, Hays chief executive, says it is “too early to say” if December’s weakness shows a sustained market slowdown, or rather that some placements are simply being deferred.
But, Hahn warns, near-term market conditions are expected to remain challenging, citing increased uncertainties and reduced client and candidate confidence.
He told shareholders:
“Overall market conditions became increasingly challenging through the quarter, including a clear slowdown in most markets in December, notably in our Perm businesses as client and candidate decision-making slowed. Temp volumes remained broadly stable sequentially through the quarter, but declined YoY as we did not see our normal seasonal step-up in worker volumes.
As a result, we expect operating profit in our first half to be c.£60 million, despite our ongoing actions to reduce costs.
UK shoppers also cut back last month, leaving retailers suffering a disappointing festive period, new data this morning shows.
Total sales grew 1.7% in December, down from almost 7% growth a year earlier, the British Retail Consortium and consultancy KPMG have reported.
Their report shows there was a slight increase spending in the week leading up to Christmas as consumers scrambled to purchase last-minute gifts. But shoppers shunned clothing, jewellery and technology gifts, opting instead for beauty, health and personal care products, while toys and gaming also sold well.
And households remained cautious about making larger purchases in the post-Christmas sales.
Helen Dickinson, chief executive of the BRC, says:
“The festive period failed to make amends for a challenging year of sluggish retail sales growth.
“Weak consumer confidence continued to hold back spending.”
Also coming up today
Boeing is facing an escalating crisis after loose parts were discovered on some grounded 737 Max jets, days after an Alaska Airlines plane suffered a mid-air blowout on Friday.
Alaska Airlines indicated that its maintenance technicians had found issues when inspecting their 737 Max 9 fleet, saying:
“Initial reports from our technicians indicate some loose hardware was visible on some aircraft”.
The problems don’t end there either; United Airlines said yesterday it had found loose bolts and other “installation issues” on multiple 737 Max 9 aircraft.
Boeing’s shares fell 8% yesterday, as investors pondered the possible fallout from the accident.
The agenda
-
7am GMT: German industrial production for November
-
7.45am GMT: French trade balance for November
-
10am GMT: Eurozone unemployment report for November
-
10am GMT: Business and Trade Committee to quiz Asda co-owners TDR Capital
-
1.30pm GMT: US trade deficit figures for November
-
3pm GMT: RealClearMarkets/TIPP index of US Economic Optimism Index
