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Labor Market Recession Takes Toll On Uniform Provider |
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Written by Administrator
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Monday, 01 June 2009 05:29 |
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The prospect of double-digit unemployment readings has meant there’s a lot less demand for work shirts with the name ”Buddy” stitched over the left pocket. It shouldn’t come as a surprise that a much-smaller labor force nationally would mean that demand for uniforms would be diminished. But it’s apparently caught some investors napping, as shares of Cintas (CTAS) tumbled 6% Friday. The declines came after the uniform provider warned that earnings would fall short of estimates, saying that as the economy loses employees, it’s felt the impact on its customers and prospects. It’s cutting costs in the face of what it described as sudden, severe job losses domestically - the unemployment rate came in at 8.9% in April, and is expected to top 9% when the government issues its May reading next week - but the company said it remained uncertain about the timing of a recovery in labor market conditions. Earnings are seen coming in at 34 cents to 37 cents for the fiscal fourth quarter, well off the 47 cents that analysts projected, with revenues at $870 million to $885 million versus a forecast of $923 million. Source: Barron’s, May 29, 2009
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