RemedyTemp Predicts One-Time $2-Million Charge
RemedyTemp Inc., a national temporary-staffing firm, said Wednesday it expects to take a charge of about $2 million for the last quarter because of unpaid invoices by the struggling online company EToys Inc.
The one-time charge would represent nearly a third of RemedyTemp’s expected pre-tax profit for its fiscal first quarter ended Dec. 31. And it reflects how the fallout of the dot-com industry has trickled down to suppliers and service providers like RemedyTemp, which is based in Aliso Viejo.
Alan M. Purdy, RemedyTemp’s chief financial officer, said EToys’ obligation stems from staffing provided at the online retailer’s customer service and distribution centers for the month of December.
Purdy said EToys had remained current with its payments until last week, when RemedyTemp was told it would join a list of roughly 1,000 other creditors waiting to be paid.
After weak holiday sales, EToys announced earlier this month that it was laying off 70% of its workers and closing two warehouse operations. The Santa Monica company also had previously said it would run out of money in March.
“We fall just under the highest five or six creditors in terms of debt owed,” Purdy said. “It’s not a great place to be, but we’re hopeful we can secure payment, and we believe the one-time charge is a prudent measure.”
Excluding the first-quarter charge, which amounts to 14 cents a share, RemedyTemp still expects to report results in line with November’s expectations of 45 to 47 cents a share. Full results for the quarter will be reported Jan. 30. Purdy said that despite RemedyTemp’s pursuit of payment, “we have no information at this point on which to base collectibility.”
In last year’s first quarter ended Jan. 2, 2000, the company earned $3.91 million on revenue of $150.1 million.
RemedyTemp’s shares were unchanged Wednesday at $9. The news of the charge was announced after the markets closed.
On Wednesday, shares of EToys rose 9 cents to 69 cents in very heavy trading, apparently on speculation that the toy seller may be in talks to be acquired.
Purdy said he was hopeful that EToys may soon be bought, which could result in a faster resolution of the unpaid bills.
Officials at EToys could not be reached for comment late Wednesday.
RemedyTemp, which operates as Remedy Intelligent Staffing, has 285 offices in 39 states and provides temporary staff for clients in business services, manufacturing and distribution.
