Vestis Corporation Reports 5.7% Revenue Decline and $27.8 Million Net Loss in Q2 Fiscal 2025

Vestis Corporation reported a significant decline in financial performance for the second quarter of fiscal 2025, with total revenue of $665.2 million, down 5.7% from $705.4 million in the same period last year. The company experienced a net loss of $27.8 million, compared to a net income of $6.0 million in the prior year, marking a decrease of 566.6%. This downturn was attributed to lost business exceeding new contracts, lower revenue from existing customers, and a notable decline in direct sales, particularly from a national account customer.

Operating expenses for the quarter increased to $673.8 million, up from $662.3 million, driven primarily by a 20.6% rise in selling, general, and administrative expenses, which included a $17.4 million increase in bad debt expense and severance charges related to executive departures. The company's operating loss was $8.6 million, a stark contrast to the operating income of $43.1 million reported in the previous year. Interest expenses also decreased significantly, falling by 36.8% to $22.3 million, reflecting lower average outstanding debt.

In terms of operational metrics, Vestis reported a decrease in customer engagement, with revenue declines across both its U.S. and Canadian segments. The U.S. segment generated $606.1 million in revenue, down 5.6%, while the Canadian segment saw a 6.5% drop to $59.2 million. The company’s total assets as of March 28, 2025, were approximately $2.9 billion, with total liabilities of $2.0 billion, resulting in total equity of $876.3 million.

Looking ahead, Vestis has amended its credit agreement to increase its net leverage covenant ratio, allowing for greater flexibility in managing its debt obligations. The company has also restricted dividends and share repurchases until it meets certain financial covenants. Despite the current challenges, Vestis aims to stabilize its operations and improve financial performance by focusing on customer retention and operational efficiency. The company remains cautious about the impact of macroeconomic conditions, including inflation and global supply chain disruptions, on its future performance.