Korn/Ferry High Earnings but Decreased Margins

Korn/Ferry International (KFY) made a big point of announcing historically high revenues and earnings. A 16% increase in Q4 revenues alone was announced. All segments of the business were firing on all cylinders. Here is the key issue. Operating Margin in Q4 dropped to 9.7% from 10.8% in the comparable quarter last year. Annual operating margin dropped to 11.6% from 12.6% last year.

Not a word was spoken or mentioned about worsening profit margins. While its OK to celebrate record revenues and profits this may be the Trojan Horse. If the market is strong margins should be improving not retreating.