Heidrick & Struggles International Inc. (NASDAQ: HSII), one of the world’s leading executive search firms, ought to be able to find a turnaround master to fix the badly broken company. But it continues to employ CEO L. Kevin Kelly, who has done nothing but fail in his job.
Heidrick & Struggles reported that revenue dropped 18% to $122.3 million, compared with the third quarter a year ago. What the company calls “net income” was $1.3 million in the most recent quarter, compared with a loss of $8 million last year. The results were muddied by an impairment charge of $26.3 million last year and a drop in the provisions for income taxes of $12.3 million from last year to this one.
The improvements we’ve made to our cost structure have resulted in an increase in our year-to-date operating margin despite the revenue challenges we continue to face in the macroeconomic environment. … We believe we are winning a strong share of the C-suite and Board level searches, but clients are still safeguarding their resources related to expansion and growth until the environment becomes more stable, affecting the pace of new hiring decisions. We are steadfastly serving clients with our search and leadership consulting expertise and continue to focus on evolving our business model to foster growth and enhanced profitability.
No evidence can be found that the market believes the effectiveness of this. Shares trade at $12, near a 52-week low and down from a period high of $23.95.
Kelly needs to leave, but the board has done nothing.
Douglas A. McIntyre