Vestis Corp Reports Mixed Q1 2026 Results, Reaffirms Full-Year Outlook Amid Transformation Push
Vestis Corp (NYSE:VSTS), a leading provider of uniform rental and workplace supplies, reported financial results for its fiscal first quarter ended January 2, 2026. The company delivered a beat on adjusted earnings per share but fell short of revenue expectations, as it continues to execute a strategic business transformation plan aimed at improving operational efficiency and profitability.
Earnings and Revenue Versus Estimates
The company’s performance presented a split picture relative to Wall Street forecasts. On the bottom line, Vestis reported adjusted net income of $13.1 million, or $0.10 per diluted share. This figure comfortably exceeded the analyst consensus estimate of $0.0644 per share.
However, top-line revenue came in below expectations. First-quarter sales totaled $663.4 million, a 3.0% decrease compared to the prior year period. This result missed the analyst revenue estimate of approximately $677.6 million.
The divergence between earnings and revenue performance highlights the early impact of the company’s cost-focused transformation initiatives, which helped bolster profitability despite softer sales.
Market Reaction and Price Action
The market’s initial reaction to the earnings report appears positive, focusing on the earnings beat and reaffirmed guidance. In pre-market trading following the release, Vestis shares were indicated up approximately 7.8%. This follows a period of modest gains, with the stock up roughly 13.7% over the past month.
The positive price action suggests investors are encouraged by the company’s progress on its restructuring plan and its ability to deliver improved earnings ahead of schedule, even as it works through revenue headwinds.
First Quarter 2026 Financial and Operational Summary
The earnings release detailed a quarter of transition, marked by a GAAP net loss but improving operational trends.
- Revenue & Profitability: Revenue declined to $663.4 million. The company reported a GAAP net loss of $6.4 million, or $(0.05) per share, compared to net income of $0.8 million in Q1 2025. However, the key profitability metric of Adjusted EBITDA was $70.4 million, representing a margin of 10.6% on revenue.
- Sequential Improvement: Management emphasized sequential progress, noting that both net loss and Adjusted EBITDA improved compared to the fourth quarter of fiscal 2025. Adjusted EBITDA margin expanded from 9.1% in Q4 to 10.6% in Q1.
- Strategic Transformation: The quarter’s results were heavily framed around the launch of Vestis’s strategic business transformation plan, which targets at least $75 million in annual operating cost savings by the end of fiscal 2026. Early initiatives under the plan’s three pillars showed progress:
- Operational Excellence: Plant productivity improved 7%, on-time deliveries rose 3%, and customer complaints fell 12% year-over-year.
- Commercial Excellence: The company is implementing new tools aimed at improving pricing, product mix, and customer penetration.
- Asset & Network Optimization: Market studies are underway, and non-core properties are being marketed for sale, with proceeds intended for debt reduction.
- Cash Flow & Liquidity: The company generated $37.7 million in cash from operating activities and $28.3 million in Free Cash Flow. It ended the quarter with total available liquidity of $316.7 million.
Updated Outlook and Analyst Expectations
Crucially, Vestis reaffirmed its full fiscal 2026 outlook, signaling management’s confidence in its transformation roadmap. The company continues to expect:
- Revenue to be between flat and down 2% year-over-year.
- Adjusted EBITDA in the range of $285 million to $315 million.
- Free Cash Flow between $50 million and $60 million.
Management also projected that Adjusted EBITDA would improve approximately 5% on a sequential basis for each of the remaining quarters of the fiscal year, driven by cost reduction efforts.
This outlook can be compared to current analyst estimates for the full year. The company’s revenue guidance (flat to down 2%) implies a range centered around approximately $2.72 billion, which is broadly in line with the analyst sales estimate of $2.718 billion. The reaffirmation likely provided reassurance to the market following the Q1 revenue miss.
For the upcoming second quarter, analysts are currently estimating revenue of approximately $663.9 million and earnings per share of $0.0622.
Conclusion
Vestis Corp’s first-quarter results underscore a company in the midst of a deliberate turnaround. While revenue pressures persist, evidenced by the top-line miss, the significant earnings beat and strong pre-market stock performance indicate investors are rewarding the visible early gains from its cost transformation program. The reaffirmation of the full-year outlook serves to bolster credibility around the plan’s trajectory. The key question for Vestis moving forward will be whether its commercial excellence initiatives can eventually stem the revenue decline and complement the operational improvements, setting the stage for balanced, profitable growth.
For a detailed look at Vestis’s historical earnings, future estimates, and analyst projections, visit the Vestis earnings and estimates page on Chartmill.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, investment recommendation, or an offer to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
