Vestis 2025 Q4 Earnings Wider Losses Despite Revenue Growth

Vestis (VSTS) reported mixed results for Q4 2025, with revenue rising 4.1% to $712.01 million but net losses widening significantly. The stock dropped sharply after hours as earnings and revenue fell short of analyst expectations, despite a strategic transformation plan aimed at driving cost savings and operational efficiency.

Revenue

The total revenue of Vestis increased by 4.1% to $712.01 million in 2025 Q4, up from $684.28 million in 2024 Q4. This growth was partly driven by an additional week of operations, which added $51.6 million to the quarter’s revenue. However, excluding this extra week, revenue declined 3.5% year-over-year, reflecting a $18.1 million drop in rental revenue due to lost business and a $5 million decline in direct sales.

Earnings/Net Income

Vestis’s losses deepened to $0.10 per share in 2025 Q4 from a loss of $0.02 per share in 2024 Q4 (400.0% wider loss). Meanwhile, the company's net loss widened to $-12.55 million in 2025 Q4, representing a 446.1% increase from the $-2.30 million loss recorded in 2024 Q4. The EPS and net loss results significantly missed analyst expectations, underscoring operational challenges despite the company’s long-term profitability history.

Post-Earnings Price Action Review

Following the earnings release, Vestis shares fell sharply in after-hours trading, dropping 9.08% as investors reacted to the disappointing results. The stock had shown strong momentum prior to the report, surging 28.49% month-to-date and 10.53% in the latest trading week. However, the wider-than-expected losses and revenue shortfall, coupled with cautious 2026 guidance, triggered a sell-off. Analysts noted that the market’s reaction highlighted concerns over the company’s ability to execute its transformation plan effectively.

CEO Commentary

Jim Barber, President and CEO, emphasized Vestis’ strategic priorities for fiscal 2026, stating the company is “in a good position to advance” its transformation plan. He outlined three pillars: Commercial Excellence (enhancing customer retention and profitability), Operational Excellence (standardizing operations and reducing costs), and Asset & Network Optimization (improving logistics and asset utilization). The plan aims to generate $75 million in annual operating cost savings by 2026 and drive revenue growth. Barber expressed optimism, noting the initiatives will “progressively realize” improvements in fiscal 2026, with a focus on profitability and cash flow to strengthen long-term performance.

Guidance

Vestis expects fiscal 2026 revenue to be flat to down 2% versus normalized 2025 levels, with Adjusted EBITDA between $285 million and $315 million and Free Cash Flow of $50–60 million. The transformation plan targets $75 million in annual operating cost savings by 2026, with restructuring costs estimated at $25–30 million. The company anticipates completing the multi-year plan by 2027, emphasizing improved operating leverage and customer-focused execution to unlock value for stakeholders.

Additional News

In the three weeks following the Q4 earnings release, Vestis announced a comprehensive restructuring plan focused on Commercial, Operational, and Asset Excellence, aiming to reduce costs and enhance efficiency. The company also confirmed $15.4 million in investments for facility improvements in Q4 2025, signaling commitment to long-term operational upgrades. Additionally, Vestis highlighted its $298 million in available liquidity, including $30 million in cash, to support strategic initiatives. These moves underscore management’s focus on stabilizing the business and positioning it for sustainable growth amid competitive pressures in the uniform and workplace services sector.