Hays Shares (LON: HAS) Hit New Lows As Fees Down 10%

Hays plc shares (LON:HAS) continued their downward trajectory, shedding a further 3.75% in morning trading to hit a fresh low of 49.04p. This decline underscores the significant headwinds facing the global recruitment firm, stemming from a slowing global recruitment market and evolving industry dynamics.

The recent dip reflects growing concerns about Hays' ability to navigate the increasingly competitive landscape. Net fees experienced a substantial contraction, down 10% on a like-for-like basis during the fourth quarter. This downturn affected all geographical segments, with Germany, a key market for Hays, experiencing a particularly acute impact. While a general softening of the jobs market contributes to these results, the firm also contends with the increasing trend of businesses directly sourcing talent, bypassing traditional recruitment agencies.

The company's financial performance has been under pressure for some time. A profit warning issued in June 2025 foreshadowed a 57% decline in annual operating profit, projecting approximately £45 million, a figure significantly below market expectations of £56.4 million. This shortfall was largely attributed to difficult conditions in the German market and a broader deceleration in global hiring activity. The financial impact was further highlighted by a 9% year-over-year decrease in like-for-like net fees for the quarter ending March 31, 2025, with permanent placement fees falling by 14% and temporary and contracting fees down 5%.

Contributing to the negative sentiment, analyst downgrades have further eroded investor confidence. In July 2025, Morgan Stanley downgraded Hays from ‘Equalweight' to ‘Underweight', simultaneously reducing the price target from 64p to 55p. This decision was driven by weakening job flow data observed in critical markets like Germany and the UK, which collectively generate approximately 50% of Hays' net fees. The investment bank expressed apprehension that this weakness could extend into the first and second quarters of 2026, adding to the uncertainty surrounding the company's near-term prospects.

Hays' struggles are also reflected in its operational adjustments. The company reported an 8% year-over-year decrease in net fees for the quarter ended September 30, 2025. Permanent placement net fees experienced a steeper decline of 13%, while temporary and contracting net fees fell by 5%. As a response to the challenging market conditions, Hays implemented cost-cutting measures, reducing consultant headcount by 4% sequentially and 15% year-over-year.

The current economic climate exacerbates these challenges. Hays has warned of ongoing market headwinds extending into 2026, citing economic and political instability in key regions such as Germany and the UK. This pervasive uncertainty has diminished both client and candidate confidence, leading to delayed hiring decisions and contributing to the overall decline in net fees.

Analyst Summary: Bull and Bear Cases

The profit warnings, analyst downgrades, adverse market conditions, and macroeconomic uncertainties has significantly dampened investor sentiment towards Hays plc. These factors have collectively fueled the recent decline in the company's share price, reflecting concerns about its immediate financial performance and the broader health of the recruitment sector. The market will likely continue to monitor Hays' performance closely as it navigates these complex challenges, with any signs of stabilisation or improvement potentially influencing future sentiment.