Staffing 360 Solutions Inc. (NASDAQ: STAF) reported revenue fell 20.5% in its first quarter ended March 28. The New York-based staffing provider, which also operates in the UK, cited the impact of Covid-19 as well as IR35 in the UK and the loss of a client.
Chairman and CEO Brendan Flood said that results, overall, were in line with guidance.
“As anticipated, the revenue decline was principally due to the loss of a low-margin client in the UK and the impact of IR35 payroll tax legislation in the UK,” Flood said. “Additionally, late in the quarter both countries in which we do business were negatively impacted by the swift worldwide economic turndown due to Covid-19.”
| (US$ thousands) | Q1 2020 | Q1 2019 | % change |
| Revenue | $58,692 | $73,829 | -20.5% |
| Gross profit | $10,648 | $12,118 | -12.1% |
| Gross margin | 18.1% | 16.4% | |
| Net loss/income | ($6,997) | $229 | nm |
Gross margin improved. However, the company noted a $3.0 million goodwill impairment related to its FirstPro reporting unit. Revenue declined and was hit particularly hard by Covid-19, according to a filing with the US Securities and Exchange Commission.
Revenue by segment
| (US$ thousands) | Q1 2020 | Q1 2019 | % change |
| Commercial staffing – US | $28,743 | $30,085 | -4.5% |
| Professional staffing – US | $8,660 | $9,581 | -9.6% |
| Professional staffing – UK | $21,289 | $34,163 | -37.7% |
Flood said the company has seen revenue improvement over the past four weeks. Staffing 360 is also benefitting from government stimulus programs.
“Based on our current outlook, I believe that the combined US and UK government stimulus assistance we’ve received ($19.4 million from a forgivable US PPP loan, and $1.3 million VAT deferral and government-funded furlough program from the UK) will make a significant positive improvement in our full year financial results,” he said.
Share price and market cap
Shares in Staffing 360 were down 13.0% to approximately 92 cents as of 12:11 p.m. Eastern time; the company had a market cap of $9.9 million, according to FT.com.