Cintas makes uniforms and other work clothing for big employers and has been trying, through the downturn, to shrink itself down to a smaller size. It’s rough going for Cintas, though, as its revenues generally track unemployment, which has been rising and will continue to rise, and, during the downturn, the Teamsters and other unions have been trying to organize Cintas workers, which might be an easier sell now as the company has been laying people off.
The uniform rental segment accounts for about 74% of Cintas’ sales, and it’s been dropping slightly, down about 4% from last year to $675 million according to Elliot L. Schlang of Soleil Securities.
Soleil has a hold rating on Cintas, though it expects the company to benefit slightly from reductions in headcount and lower fuel costs. The direct sale of uniforms fell 23% in the company’s fiscal third quarter that ended in February, as the lodging and gaming sectors, where uniforms are prevalent, laid off workers. Upcoming earnings reports from hotel chains like Marriott International could be relevant here. Its major public competitor, G&K Services, has also seen revenue decline during the recession.
The mean profit outlook for the quarter is 37 cents a share, down from 47 cents the quarter before. Analysts expect modestly higher quarterly profits heading into 2010. The company’s fiscal year ended in May. Soleil securities expects earnings of $1.80 a share while consensus expects $1.82, but that’s still down from $2.15 a share the prior year.
Source: Forbes.com, July 14, 2009
