Wednesday, Korn/Ferry International (KFY), a talent management solutions provider, posted a loss for its first quarter ended July 31, 2009, reflecting on "difficult operating environment" as well as decline in fee revenues and one-time restructuring charges.
The Los Angeles-based company posted a quarterly net loss of $14.3 million or $0.33 per share compared with a profit of $15.9 million or $0.36 per share in the prior year. However, on an adjusted basis, the loss was $0.05 per share. On average, seven analysts polled by Thomson Reuters expected a loss of $0.06 per share. Analysts' estimates typically exclude special items.
Korn/Ferry's quarterly total revenues declined to $123.3 million, yet above Street View of $102.62 million, from $217.5 million last year.
On a segmental basis, both Executive Recruitment Fee and Futurestep revenues plunged 41.9% and 50.3% to $101.3 million and $15.5 million from $174.5 million and $31.1 million, respectively. This was driven by a 29.6% reduction in the overall number of engagements billed and a 15.6% fall in the average fee per engagement billed. On a constant currency basis, total Fee revenues decreased 38.9%.
During the recent first quarter, the company recorded an operating loss of $25 million compared to operating profit of $23.8 million in the comparable period, driven by $18.2 million in restructuring charge incurred on its Whitehead Mann acquisition, excluding which its operating loss was $6.8 million.
For the recent first quarter the company resorted to cost control initiatives which led to a drop of 36.4% and 17.4% year-over-year, in compensation and benefits, as well as general and administrative expenses, to $51.7 million and $28.1 million from $142.1 million and $34 million, respectively. However, both were benefited by favorable exchange rate translation to the tune of $6.3 million and $2.2 million, respectively.
Looking ahead to the second quarter Korn/Ferry anticipates "a decline in new business due to summer seasonality" and expects fee revenue to be approximately between $110 million and $120 million. Wall Street expects total revenues of $104.66 million.
KFY is currently trading up 9.76% at $14.62, on the NYSE.
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