Heidrick & Struggles Posts Flat Revenues; Transformation of Core Business Seen as Failure

February 29, 2012 – Heidrick & Struggles International/(NASDAQ:HSII) has posted net revenue of $127.2 million for the fourth quarter ended December 31, 2011, the same as a year ago. Year over year, net revenue increased 4.3 percent in the Americas, but declined 5.8 percent in Europe (a decline of approximately six percent on a constant currency basis), and 3.6 percent in Asia Pacific (a decline of approximately four percent on a constant currency basis). Revenue growth in the consumer, life sciences, education & social enterprise and industrial practices was mostly offset by a decline in the firm’s financial services practice – once a primary revenue driver at the firm. Heidrick posted a loss of $4.1 million and a loss per share of $0.23, compared with net income of $5.2 million, or 29 cents a share, a year ago. For the full year, Heidrick recorded revenues of $527.8 million, an increase of seven percent with Americas up 12.1 percent, Europe increasing 4.3 percent, and Asia Pacific down 1.4 percent. "We are pleased with our 2011 performance,” said CEO L. Kevin Kelly. “Our net revenue was up seven percent in a volatile economic environment and in line with our original 2011 guidance.” Looking ahead, Mr. Kelly added: “We do not expect robust growth in 2012.” Three years ago Mr. Kelly outlined a strategy to shrink his firm’s core executive recruiting business to 50 percent (at the time Heidrick garnered 95 percent of its revenue from this service offering). In its place leadership advisory consulting would ramp up, and by now constitute 40 percent of Heidrick’s overall business platform. Tellingly, net revenue from this leadership consulting service represented just 8.6 percent of the firm’s total net revenue in 2011.

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