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Q2 Sales, Profit Recovery Seen; Hiring on Hold

Q2 Sales, Profit Recovery Seen; Hiring on Hold

By RAJIV VYAS

Orange County businesses expect sales and profit gains in the second quarter but don’t plan to do much hiring or restocking of warehouse shelves, according to a California State University, Fullerton, study done with the Orange County Business Journal.

Nearly two-thirds of respondents,69 out of 109 business owners and executives,said they expect a rise in sales for the current quarter. Eight people said their sales likely could increase “significantly” in the quarter, while 26 said revenue would remain stable.

Only six businesses said that they could see a sales decline in this quarter.

“In Orange County, it appears that the recession did not hit as severely and now there is cautious optimism,” said Anil Puri, director of the Orange County Business Expectation Survey and dean of the school’s College of Business and Economics

The survey, the second by Cal State Fullerton, was done from April 16 to 26. It asked respondents about expectations for the second quarter and how they did in the first quarter.

Thirteen respondents said sales rose significantly in the first quarter. Another 53 said sales increased somewhat in the recently ended quarter.

Many respondents said they felt operating profits could rise faster than sales in the second quarter. Almost 10%, or 11 businesses, said they expect operating profits to rise significantly, while 52%, or 57 respondents, said operating profits could increase somewhat in this quarter.

That compares to 16 respondents who said profits were up significantly in the first quarter, while 42 said profits rose somewhat.

“Margins are improving, and that’s a very healthy sign,” Puri said. “That is what businesses are looking for,better operating profits. It appears that we may be seeing that,at least in Orange County,a majority of businesses feel their profits will be higher.”

The university plans to poll OC businesses every quarter in a bid to gauge where the local economy is going. The first survey was done in January.

Executives from more than 12 industries took part in the latest survey. Nearly a quarter of the respondents, 23.9%, were in financial services, followed by real estate at 15.6%. Others included business services, 13%, manufacturing, 10.1%, software, 6.4%, and healthcare, 4.6%.

While sales and profit expectations are optimistic, most businesses said they don’t plan to start hiring anytime soon.

Only 20.2% of respondents, or 22 people, said their companies expect to hire more people in the second quarter. Eight businesses said that their staffing could go down slightly, while two said there could be a significant staff reduction. The rest predict staffing will hold steady.

The same is true with inventory levels. Almost 67%, or 70 businesses, said they don’t expect to add much to their warehouses.

The survey asked six questions about sales, profitability, staffing, labor cost, inventory levels and external factors. In future quarters, the survey is expected to track changes in expectations among businesses.

Respondents also were asked what they consider the most significant factor that could influence their company in this quarter. Seventy people said the economy is their primary worry, while 17 cited government regulations as their main concern.

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