VSTS

Vestis runs a structurally good business — recurring, multi-year, weekly-delivery uniform rental, the same model that earns Cintas and UniFirst (its named competitors) ~20%+ operating margins. Vestis earns 2.4%. That gap is the whole story. Since the Aramark spin-off (Sept 2023), the trajectory has been straight down: net income fell from $213M (FY2023) to $21M (FY2024) to a -$40.2M loss (FY2025), operating income dropped 59.2% to $64.4M, revenue slipped 2.5% to $2.73B, and operating cash flow collapsed 86.4% to $64.2M. ROE is -4.6% and retained earnings have gone negative (-$46.9M). This is a company losing ground in a business where the leaders compound.

The MD&A and Risk Factors name the cause directly: the company is 'experiencing rental revenue declines' and concedes that periods of higher new-business wins carry 'substantial start-up and operating costs' that have 'negative impact to our profit margin and our cash flows.' So even a sales recovery would come at the expense of near-term margin — there is no quick, cost-free path back to peer profitability. Layer on inflation/labor-cost exposure it admits it 'may not be able to mitigate' through pricing, and the margin pressure looks persistent, not one-off.