Staffing company takes measures to promote profitability.
WALNUT CREEK, CA, January 25, 2002
Westaff, Inc. (NASDAQ:WSTF), a leading provider of temporary office and light industrial staff, announced today a series of cost reduction measures, including layoffs, office closings, and a hiring freeze. The measures, which will occur over the next two weeks, aim to increase Westaff's profitability and streamline operations as the company enters its second fiscal quarter.
The layoffs will involve about 70 employees, or roughly nine percent of Westaff's regular workforce. The reductions will affect employees at all levels, including staff and management at corporate headquarters in Walnut Creek as well as employees in the field. Westaff currently has 340 field offices and about 810 regular employees.
At least eighteen historically low-performing offices will be closed. Westaff is also adopting a hiring freeze with limited exceptions for key positions.
"Given the nature of our business and these difficult economic times, I am keenly aware of how important jobs are to individuals and families, and so it is particularly difficult to have to announce these steps," said Westaff's Chief Executive Officer Dwight Pedersen. "However, Westaff needs to be profitable. We believe these decisions will be in the best interests of Westaff employees and shareholders over the long term."
Mr. Pedersen acknowledged that the cost-cutting measures are, in part, a response to the sharp economic downturn in 2001 that has affected the entire staffing industry. Nationwide, employment in the temporary staffing sector was down 16% in December to 2.86 million, according to the Bureau of Labor Statistics - its lowest level since 1998. Westaff suffered a 15.7% fourth quarter sales decline.
"I am confident, however, that we will come out of the other end of this general economic downturn a stronger company with a great future," Mr. Pedersen said.
In addition to cost-cutting measures, there will be other changes at Westaff, he said. Those changes include the pursuit of several components of a new strategic plan to boost the company's revenue growth.
Among the changes that may be implemented are:
- Increasing Westaff's focus and deployment of sales resources towards building new and stronger relationships with key accounts.
- Expanding and improving the quality of Westaff's temporary workforce by using better selection and placement criteria and by offering a comprehensive benefits package.
- Restructuring Westaff's field organization to strengthen its service capabilities.
- Continuing to work with the Company's bank group and senior note holders on a proposed new revolving credit facility and related agreements.
- Exploring the prospects for additional financing opportunities.
Mr. Pedersen said there are indications from Westaff field management that customers' workforce needs are starting to expand. Several offices have recently reported an increase in demand for temporary staffing.
"The nature of our business is cyclical," he said. "We had a tough fourth quarter last year. Like everyone else, we hope the economy improves sooner rather than later. Whenever it does, we intend to take full advantage of it. Meanwhile, we're focusing on sales, growth, and a return to profitability. The measures we are taking now are difficult, but necessary to reorganizing and strengthening Westaff."
Westaff, with headquarters in Walnut Creek, CA, services approximately 25,000 client companies from more than 350 offices throughout the U.S., Mexico, the United Kingdom, Australia, New Zealand, Norway and Denmark. Westaff achieved fiscal 2000 revenues of more than $700 million. For more information on Westaff's services, please visit our Web site at www.westaff.com.
This press release contains forward-looking statements regarding future events and future performance of the company, including, without limitation, statements about layoffs, office closures, future profitability, and the increase of customers' workforce needs, that involve risks and uncertainties that could cause actual results to differ materially. We refer you to documents that the company files from time to time with the Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K reports, which contain a description of certain factors that could cause actual results to differ from current expectations and the forward-looking statements in this press release.
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