Revenue declined 1.8% YoY to $661.7M in Q3 2026, with gross margin compressing to 28.0% from 29.0% a year earlier, though operating margin improved to 5.6% from 3.7%.
Vestis Corporation (VSTS) annual income statement — 5-year revenue, gross profit & net income history
| Metric | TTM | Oct'25 | Sep'24 | Sep'23 | Sep'22 | Sep'21 |
|---|
| Sales/Revenue | 2.7B | 2.73B | 2.81B | 2.83B | 2.69B | 2.46B |
| Revenue Growth % | -0.39% | -2.53% | -0.69% | 5.15% | 9.38% | - |
| Cost of Goods Sold | 2.02B | 2.01B | 1.99B | 1.97B | 1.91B | 1.77B |
| COGS % of Revenue | - | 73.5% | 70.92% | 69.74% | 71.07% | 71.87% |
| Gross Profit | 674.54M | 724.76M | 815.95M | 855.07M | 777.33M | 690.94M |
| Gross Margin % | 25.02% | 26.5% | 29.08% | 30.26% | 28.93% | 28.13% |
| Gross Profit Growth % | - | -11.18% | -4.58% | 10% | 12.5% | - |
| Operating Expenses | 575.3M | 660.33M | 658M | 637.16M | 585.09M | 594.7M |
| OpEx % of Revenue | - | 24.14% | 23.45% | 22.55% | 21.77% | 24.21% |
| Selling, General & Admin | 472.34M | 517.31M | 517.22M | 500.66M | 450.73M | 461.4M |
| SG&A % of Revenue | - | 18.92% | 18.43% | 17.72% | 16.77% | 18.78% |
| Research & Development | 0 | 0 | 0 | 0 | 0 | 0 |
| R&D % of Revenue | - | - | - | - | - | - |
| Other Operating Expenses | 3M | 143.02M | 140.78M | 136.5M | 134.35M | 133.31M |
| Operating Income | 99.25M | 64.43M | 157.95M | 217.91M | 192.24M | 96.24M |
| Operating Margin % | 3.68% | 2.36% | 5.63% | 7.71% | 7.15% | 3.92% |
| Operating Income Growth % | - | -59.21% | -27.52% | 13.35% | 99.76% | - |
| EBITDA | 236.77M | 207.45M | 298.73M | 354.41M | 326.6M | 229.54M |
| EBITDA Margin % | 8.78% | 7.59% | 10.65% | 12.54% | 12.15% | 9.34% |
| EBITDA Growth % | 7.86% | -30.56% | -15.71% | 8.52% | 42.28% | - |
| D&A (Non-Cash Add-back) | 137.52M | 143.02M | 140.78M | 136.5M | 134.35M | 133.31M |
| EBIT | 85.11M | 47.96M | 158.59M | 271.84M | 194.51M | 97.36M |
| Net Interest Income | -87.72M | -92.26M | -126.56M | -10K | -2.28M | 1.12M |
| Interest Income | 0 | 0 | 0 | 0 | 0 | 1.12M |
| Interest Expense | 87.72M | 92.26M | 126.56M | 10K | 2.28M | 0 |
| Other Income/Expense | -101.86M | -108.74M | -125.92M | 51.82M | -2.28M | 1.12M |
| Pretax Income | -2.61M | -44.31M | 32.03M | 269.73M | 189.96M | 97.36M |
| Pretax Margin % | -0.1% | -1.62% | 1.14% | 9.55% | 7.07% | 3.96% |
| Income Tax | 2.69M | -4.08M | 11.06M | 56.57M | 48.28M | 23.09M |
| Effective Tax Rate % | -103.07% | 9.22% | 34.53% | 20.97% | 25.42% | 23.72% |
| Net Income | -5.3M | -40.22M | 20.97M | 213.16M | 141.68M | 74.27M |
| Net Margin % | -0.2% | -1.47% | 0.75% | 7.54% | 5.27% | 3.02% |
| Net Income Growth % | 82.32% | -291.81% | -90.16% | 50.45% | 90.76% | - |
| Net Income (Continuing) | -5.3M | -40.22M | 20.97M | 213.16M | 141.68M | 74.27M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | -0.04 | -0.31 | 0.16 | 1.63 | 1.09 | 0.57 |
| EPS Growth % | 80.73% | -293.75% | -90.18% | 49.54% | 91.23% | - |
| EPS (Basic) | - | -0.31 | 0.16 | 1.63 | 1.09 | 0.57 |
| Diluted Shares Outstanding | 134.34M | 131.75M | 131.79M | 130.73M | 129.86M | 131M |
| Basic Shares Outstanding | 132.11M | 131.75M | 131.51M | 130.73M | 129.86M | 131M |
| Dividend Payout Ratio | - | - | 94.67% | 792.33% | 94.93% | 128.71% |
Quick answers to the most common questions about buying VSTS stock.
For fiscal year 2025, Vestis Corporation (VSTS) reported total revenue of $2.73B. This represents a 11.3% increase compared to $2.46B in 2021.
Vestis Corporation (VSTS) reported a net loss of $40.2M for the fiscal year ending 2025.
Vestis Corporation (VSTS) reported an operating income of $64.4M, resulting in an operating profit margin of 2.4%. This margin reflects the operational efficiency of the business before interest and taxes.
Vestis Corporation (VSTS) generated $724.8M in gross profit for the year, representing a gross profit margin of 26.5%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Persistent revenue decline and thin margins
Metrics are mathematically derived from official filings.
Revenue Contraction Persists
Vestis's revenue declined 2.5% year-over-year to $661.7M in Q3 2026, marking the eighth consecutive quarter of negative growth, according to recent SEC filings.
The persistent revenue decline suggests ongoing demand weakness or market share loss, particularly in the uniform rental segment. The slight sequential improvement from Q2 2026 (from -0.9% to -1.8% YoY) is not enough to signal a turnaround. The company's reliance on employment levels in industrial and hospitality sectors may be a headwind, as these sectors face cyclical pressures.
Gross Margin Compression Continues
Gross margin fell to 28.0% in Q3 2026 from 29.0% a year earlier, reflecting input cost pressures and limited pricing power, as reported in the income statement.
The 100 basis point year-over-year decline in gross margin indicates that cost inflation, particularly in labor and energy, is outpacing the company's ability to raise prices. This is consistent with the company's lower scale compared to peers like Cintas, which boasts a 50.5% gross margin. Without significant route density improvements or a shift to higher-margin services, gross margin may remain under pressure.
Operating Leverage Still Elusive
Operating margin improved to 5.6% in Q3 2026 from 3.7% a year ago, but remains well below the 6.1% peak in Q2 2024, based on reported figures.
The improvement in operating margin is partly due to SG&A discipline, with SG&A down to $114.9M from $122.3M a year ago. However, the absolute operating income of $37.2M is still below the $43.1M achieved in Q2 2024, indicating that the company has not yet regained its pre-spin efficiency. The lack of revenue growth limits the potential for operating leverage, as fixed costs are spread over a shrinking base.
EPS Beat Masks Underlying Weakness
Q3 2026 EPS of $0.18 beat consensus by $0.08, but net income of $11.0M is still below the $37.5M operating income, suggesting non-operating charges, as per financial statements.
The large gap between operating income and net income indicates significant interest expense or other non-operating costs, likely related to the company's debt structure post-spin. The EPS beat may be driven by one-time items or tax benefits, as revenue missed expectations and guidance was lowered. Investors should monitor the sustainability of these earnings, as the quality appears low given the negative revenue growth.
SG&A Efficiency Gains Offset by Revenue Decline
SG&A as a percentage of revenue fell to 17.4% in Q3 2026 from 18.2% a year ago, but absolute SG&A remains high relative to the shrinking revenue base, as reported.
The reduction in SG&A suggests management is focused on cost control, but the absolute level of $114.9M is still substantial. The company's cost structure is heavily fixed, with labor and delivery costs dominating. Without revenue growth, further cost cuts may be necessary to protect margins, but this could risk service quality and customer retention.
Spin-Off Marks Key Inflection
The spin-off from Aramark in late 2023 marked a critical inflection, with operating margins declining from 6.1% in Q2 2024 to a low of -1.3% in Q2 2025, based on reported data.
The transition to a standalone company introduced significant corporate overhead and interest costs, compressing margins. The subsequent recovery to 5.6% operating margin in Q3 2026 suggests some stabilization, but the company has not yet returned to its pre-spin profitability levels. The lasting impact is a structurally higher cost base that requires scale to amortize, which is challenging given the current revenue contraction.
What Could Invalidate the Base Case
The Q3 2026 EPS beat may be unsustainable, as management lowered full-year guidance and revenue continues to decline, suggesting the beat could be driven by one-off items or aggressive cost cuts.
Short-sellers might argue that the company's thin operating margin of 5.6% leaves no room for error, and any further input cost inflation or economic softening could push it back to losses. The persistent revenue decline of -2.5% YoY indicates a lack of pricing power and potential market share loss to competitors like Cintas, which has a 50.5% gross margin. If the company cannot stabilize revenue, the current cost discipline may not be enough to sustain profitability, and the stock could re-rate lower.