Vestis's CEO talked up 'service excellence' while service gaps bled customers

Vestis, the North American uniform and workplace-supplies business, spun off from Aramark on 30 September 2023. Executives promised 5% to 7% annual revenue growth, a sales force that had 'reached their stride,' and 'service excellence.' CEO Kimberly Scott repeated the story after the company began trading as NYSE: VSTS.

The story collapsed on 2 May 2024. Vestis cut its full-year revenue outlook to negative 1% to 0%, and Scott admitted on the earnings call that 'service gaps' had made customers price-sensitive. The company reversed a recent price increase into a decrease to keep customers. The stock fell 45% that day, from $18.47 to $10.16.

A securities class action later alleged that Scott and CFO Rick Dillon knew Aramark had underinvested in the business, that facilities were outdated, the sales force was underperforming, and service gaps were causing customer attrition before the May disclosure. By fiscal Q2 2025 Vestis reported an operating loss, a $15 million bad-debt reserve, $10 million of executive-exit costs, and the loss of a national account.

On 18 March 2025 the Board removed Scott as President, CEO and director. The 8-K cited no disagreement, but the prior year had shown the opposite. Phillip Holloman, a retired Cintas president, became interim CEO, and Vestis later launched a multi-year transformation plan. The court allowed the class action to proceed, finding Scott and Dillon knew service failures were costing millions in recurring revenue weekly.