TrueBlue shares fall after weak forecast

BANGALORE (Reuters) - Shares of TrueBlue Inc (TBI.N: Quote, Profile, Research) fell as much as 11 percent Thursday, a day after the provider of temporary blue collar workers forecast second-quarter results below Wall Street expectations, citing slowing growth in the industrial staffing sector.

The company's decline in growth is not expected to last, but it would be weak for some time to come, according to Mike Carney, analyst at Coker and Palmer.

"The longer-term outlook is really tepid because TrueBlue has not seen a big drop-off in commercial construction yet, which is their biggest industry segment, and that will continue to pressure them," Carney said by phone.

TrueBlue, formerly known as Labor Ready Inc, forecast quarterly earnings of 28 cents to 30 cents per share, well below analysts' average estimate of 38 cents a share.

The company has been badly hit by minimum wage increases, which is holding down its opportunity for further demand, and will continue to occur for the next year and a half, the analyst said.

Davenport and Co analyst Clint Fendley said TrueBlue's second-quarter forecast has been quite conservative with the first two weeks of April seeing a more pronounced drop-off of same-store sales of about 8 to 10 percent.

"April's declines were not concentrated solely within the construction industry, as manufacturing and services also began to see slowing business," he wrote in a note to clients.

On Wednesday, the company had posted a lower first-quarter profit but above market expectations.

TrueBlue shares were trading down 89 cents at $12.66 in afternoon trade on the New York Stock Exchange.

(Reporting by Biswarup Gooptu in Bangalore; Editing by Gopakumar Warrier)