Volt Information Sciences Inc (NYSE:VOLT) Q4 2019 Earnings Conference Call - Final Transcript
Jan 15, 2020 • 05:00 pm ET
in 2019 to hit 20% combined margin in new retail business across our branch network and we exceeded that goal. As you may recall from prior calls, we invested throughout the year in Business Development Managers or BDM, our retail business. Collectively, the BDMs exceeded their internal gross margin target and new business sold by this team exceeded the combined retail margin across all of the branches.
In 2020, we will continue to execute our retail strategy and plan to complete the shift to everyone selling by the end of March 2020. At that time, we will have essentially quadrupled our feet on the street in a one-year period. We have a goal to double the revenue related to our retail business over the next three years. Simultaneously, our shift towards customers in the $1 to $10 million annual spend range will be a continued focus for us in 2020. As you may recall, the benefits of targeting middle market and smaller accounts include generally higher gross margins, a faster sales cycle and more diverse customer base that is less dependent on the ebbs and flows of a few large clients. Going forward, the primary emphasis of our organization will be to build a balanced portfolio of retail, middle market and large accounts.
I will note that attracting and retaining large national accounts will remain important to both success and we will pursue when the opportunities are right. Let me also state, we will not take on lower margin or less appealing business just for the sake of growing revenue. Not all of our gross margin expansion initiatives showed the expected progress. In particular, our direct hire business did not execute well for our North American Staffing segment and decreased year-over-year.
Direct hire is not an intuitive task and arguably the turnover and on-boarding of new hires impacted performance. We have taken action, realigning training, modifying the compensation program to encourage more collaboration and reward for driving direct hire business and including individual requirements aligned to branch financial performance expectations. I want to emphasize the growth in this business represents incremental growth and would not cannibalize our staffing business. Direct hire has the potential to be very accretive to our overall gross margin and our ability to successfully execute in this candidate-driven job market is critical.
Moving on to the outlook. As a reminder to those that have followed us for some time, as well as background for those that are new to our story, almost everything that could have gone right for us in the first quarter of fiscal 2019 did, including positive adjusted revenue, an unprecedented demand from many of our larger clients. This means we are up against a difficult comparison in the first quarter of 2020. Our first quarter adjusted revenue is expected to decrease 10% to 12% compared to the prior year quarter. First quarter revenue comparisons will continue to be impacted by lower demand from certain large customers due to issues specific to their