UniFirst Corp (NYSE:UNF) Reports Mixed Q1 Results with Revenue Beat and Earnings Miss

UniFirst Corporation (NYSE:UNF), a leading provider of workplace uniforms and facility services, reported financial results for its fiscal first quarter ended November 29, 2025. The company posted modest revenue growth that narrowly edged past analyst expectations, but earnings fell short of consensus estimates, leading to a sharp negative reaction in pre-market trading.

Earnings Snapshot Versus Estimates

The company’s performance presented a mixed picture when measured against Wall Street’s forecasts. Revenue growth was driven by organic gains in its core business, but profitability was pressured by significant planned investments.

• Revenue: $621.3 million, a 2.7% year-over-year increase.
  • This figure slightly exceeded the analyst consensus estimate of approximately $621.4 million.
• Earnings Per Share (EPS): $1.89 (GAAP) / $1.98 (Non-GAAP).
  • The Non-GAAP EPS of $1.98 came in below the analyst estimate of $2.08.

Market Reaction and Performance

The market’s immediate response to the earnings release was decisively negative, focusing on the profit miss and compressed margins. In pre-market trading, UNF stock was down approximately 7.0%. This sharp decline contrasts with the stock’s relatively stable performance over the past month, where it had gained about 12.1%. The reaction suggests investors were disappointed by the magnitude of the earnings shortfall and the associated drop in profitability, outweighing the slight revenue beat.

Key Takeaways from the Quarterly Report

The earnings press release highlighted a quarter of strategic investment, which management indicated was a deliberate drag on near-term results to fund future growth.

• Profitability Pressures: Operating margin contracted to 7.3% from 9.2% in the prior-year period. Similarly, the Adjusted EBITDA margin declined to 13.3% from 15.5%. Management attributed this primarily to "planned investments in growth and digital transformation initiatives," including a major enterprise resource planning (ERP) project referred to as the "Key Initiative."
• Segment Performance Varied:
  • The core Uniform & Facility Service Solutions segment saw revenue grow 2.4% organically, with improved customer retention and new account acquisitions. However, its operating margin fell to 7.4% from 8.8%.
  • The First Aid & Safety Solutions segment revenue jumped 15.3%, but the unit remained unprofitable as the company continues to invest in its van-based business model.
  • The Other segment (nuclear services) revenue declined as expected due to project timing, leading to a significant drop in Adjusted EBITDA due to its high fixed-cost structure.
• Strong Balance Sheet and Capital Return: UniFirst maintains a debt-free balance sheet with $129.5 million in cash and short-term investments. The company continued its commitment to returning capital to shareholders, repurchasing $31.7 million of its stock and increasing its dividend for the eighth consecutive year.

Forward Outlook and Analyst Comparisons

UniFirst reaffirmed its full-year fiscal 2026 guidance, which was initially provided in October 2025. The company expects:

• Revenue: Between $2.475 billion and $2.495 billion.
• EPS (GAAP Diluted): Between $6.58 and $6.98.

This revenue guidance, with a midpoint of $2.485 billion, is slightly below the current analyst consensus sales estimate of $2.51 billion for the fiscal year. The company’s EPS guidance range brackets the broader market’s expectations but indicates the ongoing costs of its Key Initiative, estimated at $7 million for the fiscal year, will continue to be a factor.

For the upcoming second quarter, analysts are currently estimating revenue of approximately $620.8 million and EPS of $2.08.

Conclusion

UniFirst's first-quarter results underscore a period of transition where the company is sacrificing some current profitability to fund investments aimed at improving long-term operational efficiency and growth. While the top-line performance met expectations, the earnings miss and lowered margin profile have unsettled investors, as evidenced by the pre-market sell-off. The company’s reaffirmed full-year guidance suggests management anticipated this near-term pressure and remains confident in its strategic plan. The coming quarters will be critical in demonstrating whether these investments begin to yield the intended returns and improved profitability.

For a detailed look at UniFirst’s historical earnings and future analyst estimates, visit the earnings and estimates page on Chartmill.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, nor does it recommend buying or selling any securities. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.