SAN DIEGO, June 12, 2024 (GLOBE NEWSWIRE) -- A class action lawsuit has been filed on behalf of purchasers or acquirers of Vestis Corporation (NYSE: VSTS) (“Vestis” or the “Company”) common stock between October 2, 2023 and May 1, 2024, inclusive (the “Class Period”), charging the Company and certain current senior executive officers with violations of the federal securities laws.
Vestis investors have until July 16, 2024 to seek appointment as lead plaintiff of the class action lawsuit.
If you purchased Vestis common stock between October 2, 2023 and May 1, 2024, and suffered substantial losses, and you wish to obtain additional information or serve as lead plaintiff in this lawsuit, you may submit your information and contact us here: https://dicellolevitt.com/securities/vestis-corporation/.
You can also contact DiCello Levitt partner Brian O’Mara by calling (888) 287-9005 or at investors@dicellolevitt.com. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
No Case Has Been Filed and No Class Has Been Certified. Until a case is filed and a class is certified, you are not represented by counsel unless you retain one. You may select counsel of your choice.
Case Allegations
Vestis provides uniforms and workplace supplies throughout the United States and Canada. The Company was created when it was spun off from food services and facilities management provider Aramark on September 30, 2023, and began trading on the New York Stock Exchange on October 2, 2023, the first day of the Class Period, under the ticker symbol “VSTS.”
According to the Vestis lawsuit, before the spinoff, soon-to-be Vestis executives claimed that “investments are in place” to deliver “5% to 7% topline growth” on compound annual growth rate (CAGR). They also assured investors that the Company’s sales force had “reached their stride” and were “now hitting productivity levels that we desire from them.” Throughout the Class Period, Defendants highlighted the “really, really great feedback” that Vestis had received from its customer service initiatives and maintained that the Company’s growth would continue to accelerate based on, among other things, Vestis “providing service excellence to our customers.”
The lawsuit alleges that, during the Class Period, Defendants made materially false and misleading statements and failed to disclose that: (1) Aramark had historically underinvested in the business that became Vestis; (2) Vestis operated with outdated facilities and an underperforming sales force; (3) Vestis’s outdated facilities and underperforming sales force led to “service gaps” that had impeded the Company’s levers of growth and had resulted in customer attrition; and (4) as a result of the above, Defendants’ statements about Vestis’s business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.
As alleged in the Vestis lawsuit, before markets opened on May 2, 2024, Vestis issued a press release announcing financial results for the second quarter of fiscal year 2024, ended March 29, 2024. Specifically, the Company disclosed that it had generated revenue of $705 million, a 0.9% increase over the same quarter in the prior year, and also had downwardly revised its revenue outlook for fiscal year 2024 to a range of negative 1% to 0%. During the corresponding earnings call with analysts that day, Chief Executive Officer (“CEO”) Kimberly Scott revealed the “challenges” facing the Company related “to sales productivity and deliberate moderated pricing actions,” the latter of which CEO Scott explained were necessary to “improve[] retention” and because “service gaps” had “driven price sensitivity.” During the same call, analysts pointed out that Vestis had pivoted from a recent announcement of a price increase to a price decrease and questioned Defendants about the reversal in pricing capabilities.
On this news, the price of Vestis stock plummeted 45%, from a closing price of $18.47 per share on May 1, 2024, to a closing price of $10.16 per share on May 2, 2024.
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