Vestis Corp recently released its 10-Q report. The company provides uniform rental programs and workplace supplies in the United States and Canada, with offerings that include shirts, pants, outerwear, gowns, scrubs, high-visibility garments, particulate-free garments, flame-resistant garments, shoes, and accessories. It also supplies managed restroom products, first-aid and safety items, floor mats, towels, and linens to customers in manufacturing, hospitality, retail, food processing, food service, pharmaceuticals, healthcare, automotive, and cleanroom operations.
In Item 2, management said the quarter and nine-month period ended July 3, 2026 should be read alongside the company’s fiscal 2025 audited statements. Vestis operates in two reportable segments, the United States and Canada, and said its fiscal 2026 year is a 52-week period ending October 2, 2026. The company said demand is influenced by macroeconomic conditions, employment levels, workplace hygiene and safety standards, outsourcing trends, inflation in labor and energy, and foreign currency movements. It also said it began charging an energy surcharge in the second fiscal quarter of 2026 to offset higher energy costs.
Vestis amended its Credit Agreement on May 1, 2025 and agreed to restrict dividends and share repurchases until the earlier of a quarter ending after October 2, 2026, if covenant-compliant, or the point at which net leverage falls to 4.5x or below for two consecutive quarters through fiscal 2026. The company said a prolonged stock-price decline in fiscal 2025 triggered goodwill impairment testing for both reporting units, though no impairment was recorded then.
During the first quarter of fiscal 2026, Vestis approved a multi-year transformation and restructuring plan built around Commercial Excellence, Operational Excellence, and Asset and Network Optimization. The company said the plan is expected to generate at least $75 million in annual operating cost savings by the end of fiscal 2026, with total plan costs estimated at $35 million to $40 million, including about $15 million of third-party consulting and up to $25 million of severance and related costs. In the third quarter of fiscal 2026, it recorded $6.1 million of third-party consulting fees and $1.6 million of severance costs; for the first nine months, those amounts were $23.2 million and $8.0 million, respectively. Vestis also said it executed a long-term outsourcing arrangement for certain transactional support functions during the quarter.
For the three months ended July 3, 2026, revenue was $661.7 million, down $12.1 million, or 1.8%, from $673.8 million a year earlier. Uniform revenue fell $18.3 million, while workplace supplies revenue rose $6.1 million. Net volumes declined 4.5%, partly offset by strategic pricing improvements, and management said the volume decline reflected targeted reductions in unprofitable sales volume tied to the transformation plan. Cost of services provided fell $15.4 million to $476.3 million, driven by lower merchandise costs of $9.4 million, lower plant operating costs of $3.9 million, and lower delivery costs of $1.5 million. SG&A dropped $7.4 million to $114.9 million, helped by an $11.8 million decline in salaries, wages and related employee costs, a $2.0 million reduction in separation-related charges, and a $2.7 million decrease in advertising and related costs, partly offset by $6.1 million of consulting costs, a $5.4 million increase in share-based compensation, and a $1.2 million increase in severance-related costs.
Operating income rose to $37.2 million from $25.0 million. Interest expense, net, decreased to $20.1 million from $22.5 million, mainly because of lower borrowings. Net income was $11.0 million, compared with a net loss of $0.7 million in the prior-year quarter. The effective tax rate was 23.0%, versus 9.7% a year earlier.
For the nine months ended July 3, 2026, revenue was $2.0 billion, down $38.3 million, or 1.9%, from $2.02 billion. Cost of services provided declined $22.7 million to $1.45 billion, depreciation and amortization fell $5.5 million to $102.2 million, and SG&A dropped $44.0 million to $347.5 million. Total operating expenses decreased $72.2 million to $1.90 billion, lifting operating income to $80.6 million from $46.8 million. Following these announcements, the company's shares moved 2.52%, and are now trading at a price of $14.22. For the full picture, make sure to review Vestis Corp's 10-Q report.
