Frugal retail clients prompt Accenture warning on weak consulting business
Reuters
Published Dec 16, 2022 06:51AM ET
Updated Dec 16, 2022 01:15PM ET
By Yuvraj Malik
-Accenture Plc warned that a pullback in spending from clients who were postponing business improvement projects, especially in retail, was hurting its consulting business and forecast quarterly sales that could miss market estimates.
Shares in the company fell as much as 6% on Friday.
After a pandemic-led boom, spending on IT and transformation projects is slowing as companies prioritize projects that deliver stronger return-on-investments in an uncertain economy.
Customers "are more and more focused on cost resilience and many of them are having to make really hard choices," Chief Executive Julie Sweet told a post-earnings conference call.
Sweet said Accenture (NYSE:ACN)'s strategy and consulting business would decline slightly in the second quarter. She added clients were still spending on technology, cloud services and on projects that helped cut costs, but advertising and marketing initiatives were shrinking, and retailers had cut back majorly.
Accenture forecast revenue between $15.20 billion and $15.75 billion for its second quarter ending Feb. 28. Analysts expected $15.61 billion, according to Refinitiv.
Last month, rival Cognizant Technology Solutions (NASDAQ:CTSH) Corp slashed its revenue and profit guidance for this year, citing higher costs and pullback in contracts.
There will be softer demand for new consulting projects in fiscal 2023, said Julie Sharma, equity analyst at Morningstar.
"We think generally, caution will persist – leading to delays in decision making, and that spending will be the softest in smaller deals over larger deals, where hitting the pause button has more repercussions," Sharma added.
The weak outlook commentary overshadowed Accenture's higher-than-expected revenue and earnings in the first quarter ended Nov. 30, when sales grew 5% to $15.7 billion, surpassing an average analysts' estimate of $15.58 billion.
Adjusted earnings of $3.08 per share beat an average estimate of $2.91.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.