By Dean Seal

Shares of Vestis hit their all time low after the company swung to a quarterly loss, offered weak guidance for the current quarter and suspended dividends and buybacks.

The stock sank 39% to a low of $5.30 after the opening bell and has now fallen 63% since the start of the year.

Shares have seen big declines in the year and a half since Vestis, previously known as $Aramark(ARMK-W)$ Uniform Services, was spun off from Aramark in 2023.

The trouble continued Wednesday when the uniform supplier posted a loss of $27.8 million, or 21 cents a share, for the fiscal second quarter ended March 28. That's compared with a profit of $6 million, or 5 cents a share, in the same quarter a year earlier.

Even when adjusted for one-time items, the company recorded a loss of 5 cents a share. Analysts polled by FactSet had been expecting an adjusted profit of 14 cents a share.

Revenue slid 5.7% to $665.2 million, missing analyst forecasts by almost $25 million, according to FactSet.

Vestis said it lost more business than it gained during the quarter, while revenue from existing customers declined and the loss of a national account customer knocked down its direct sales. The company's overhead costs meanwhile shot up due to adjustments on its bad debt reserve and executive exit costs.

"We are disappointed with our second quarter results, which do not reflect the true potential of our business," Phillip Holloman, the company's interim chief executive, said in a statement.

For the current quarter, Vestis expects $674 million in revenue, well below the $705 million that analysts were targeting. The company said it has shifted to quarterly guidance and isn't giving a full-year outlook or guidance on free cash flow.

On top of all that, the company said it has amended its revolving credit facility and term loan facility, and as a result has agreed to restrict all dividends and share repurchases through the end of fiscal 2027, or until its net leverage ratio falls below 4.5 for two consecutive quarters.

Vestis also said that Jim Barber has been tapped to become its next chief executive on June 2 and will take over for Holloman, who will return to his role as chairman and has been filling in since Kim Scott departed as CEO in March. Barber retired as chief operating officer of United Parcel Services at the end of 2019.

Write to Dean Seal at dean.seal@wsj.com

(END) Dow Jones Newswires

May 07, 2025 10:33 ET (14:33 GMT)

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