7:59 cut – Q4 Trading

Earlier that week I discussed that Shoe Zone, Next and MPac appear to have been unaffected by political uncertainty in calendar Q4…


The same cannot be said for Robert Walters, updating today:

UK net fee income down 23%.

o During the quarter client and candidate confidence deteriorated, across both recruitment and recruitment process outsourcing, due to the political uncertainty related to Brexit and the General Election.

There will also be some impact from taxation changes expected to affect contract employment from April (IR35). Follow an election pledge the government have started a review of the rules which could reduce their scope, but which in the meantime can only create greater uncertainty. Robert Walters did not disclose their permanent / contract split in their last annual or half-yearly reports, but globally they are at about 30% contract.

Recruitment companies generally are generally rated cheaply by the market because they overwhelmingly rely on staff (recruitment agents) for their sales rather than being able to leverage intellectual property (and other intangible assets) or their capital. Often the goodwill of client relationships moves around with highly mobile individual recruiters rather than being owned by the company. However the sector is unusually cheap at the moment and the lack of capital intensiveness is also an advantage.

It will be interesting to see if there is any impact on the share prices of UK-focused recruiters this morning.


Mitchells & Butlers (MAB) also report their Christmas trading today. To me the figures look strong overall, but as they point out, food was particularly strong and so of less benefit from wet-led groups like Revolution Bars (RBG).

Note: M&B are probably the only company on the stockmarket I can legally recommend buying, but not of course as a investment. For £10-£20 (the price of one share plus dealing costs), you get twelve 20% off vouchers every year to use in their various chains when buying food, but make sure you broker will pass the perk on.

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