Vestis Corporation Reports 4.8% Revenue Decline and 93.2% Drop in Net Income

Vestis Corporation reported a decline in financial performance for the three months ended December 27, 2024, with total revenue of $683.8 million, down 4.8% from $717.9 million in the same period last year. The decrease was attributed to lost business amounting to $60 million, lower net pricing of $9 million, and a reduction of approximately $16 million in revenue from direct sales. Despite these challenges, the company noted a slight improvement in customer retention, which increased from 92.6% to 92.9%.

Operating income fell significantly by 36.1% to $30.4 million, compared to $47.6 million in the prior year. This decline was influenced by a combination of reduced revenue and increased operating expenses, which totaled $653.4 million, down from $670.3 million. Notably, selling, general, and administrative expenses decreased by 8.6% to $121.2 million, reflecting the company's ongoing optimization efforts. However, the company faced a net income of $0.8 million, a sharp decline of 93.2% from $12.3 million in the previous year, primarily due to increased interest expenses and other losses.

In terms of strategic developments, Vestis completed the sale of its equity stake in Aramark Uniform Services Japan Corporation for $36.8 million, resulting in a loss of $2.2 million recorded in other expenses. The company also engaged in a tuck-in acquisition during the quarter, which involved cash outflows of $4.6 million. Vestis continues to focus on its core business of providing uniforms and workplace supplies across the United States and Canada, managing operations through its two reportable segments.

Operationally, Vestis reported a decrease in total assets to $2.9 billion from $2.93 billion, with cash and cash equivalents dropping to $18.6 million. The company’s long-term borrowings decreased to $1.13 billion, down from $1.15 billion, reflecting ongoing efforts to manage debt levels. The company also reported a significant reduction in net cash provided by operating activities, which fell to $3.8 million from $51.5 million in the prior year, largely due to increased cash outflows from operating assets and liabilities.

Looking ahead, Vestis remains cautious about the economic environment, which has been impacted by global events and inflationary pressures. The company is focused on maintaining its customer base and optimizing operational efficiencies while navigating the challenges posed by market conditions. The outlook for the upcoming quarters will depend on the company's ability to adapt to these changes and sustain its revenue streams.