Grabar Law Office is investigating claims on behalf of shareholders of Vestis Corp. (NYSE: VSTS). The investigation concerns whether certain officers and directors breached the fiduciary duties they owed to the company.

Vestis Corporation was created as the result of its September 2023 spinoff from food service and facilities services provider Aramark, in which Vestis became an independent publicly traded company. Prior to the Spinoff, the company that was to become Vestis operated as the Aramark Uniform Services division of Aramark, providing rental uniforms and workplace supplies, including: uniform delivery; laundering for rental linens, floor mats, and towels; restroom services; and first-aid supplies. Vestis continues to provide rental uniforms, and workplace supplies in the United States and Canada.

According to an underlying federal securities fraud class action complaint, the Defendants made materially false and misleading statements and failed to disclose that: (1) Aramark had historically underinvested in the business that became Vestis (NYSE: VSTS); (2) Vestis operated with outdated facilities and an underperforming sales force; (3) Vestis’s outdated facilities and underperforming sales force led to “service gaps” that had impeded the Company’s levers of growth and had resulted in customer attrition; and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.

Shares of Vestis fell about 45% on May 2 when the company announced "results in the quarter and our outlook for the year are not in line with expectations," according to the suit.

It is alleged that Vestis (NYSE: VSTS), through certain of its officers, falsely praised the execution of their business strategy. For example, in February the company told investors that it expects to continue delivering revenue growth in the range of 4% to 4.5%, the suit states.

The defendants also told investors it was seeing "great feedback" from its customers regarding Vestis' customer experience initiatives, according to the suit. When asked about problems with customer retention, Scott cited an "uptick in business closures," the complaint states.

The truth began to emerge on May 2, the suit alleges, when Vestis announced that its quarterly revenues were $705 million, a 0.9% increase year-over-year. Defendant Scott said during the investor call that day the underperformance was due to "short-term challenges related to sale productivity and deliberate moderated pricing actions."

During that investor call, the defendants also told investors that problems with customer retention were not the result of "business closures" as they had previously stated, but rather "we know that more than 70% of the [customer] cancellations are due to causes that are within our control."

WHAT YOU CAN DO NOW: If you acquired Vestis (NYSE: VSTS), shares on or near October 2, 2023 through the Aramark spinoff, and still hold shares today, you are encouraged to contact Joshua Grabar at jgrabar@grabarlaw.com, or call 267-507-6085.  You can seek corporate reforms, the return of funds back to the company, and a court approved incentive award at no cost to you whatsoever. $VSTS #Vestis