Based in Roswell, Georgia, Vestis is a provider of uniforms and workplace supplies in the United States and Canada. The Company was created as the result of its September 30, 2023 spinoff from food services and facilities management provider Aramark. Vestis began trading on the New York Stock Exchange on October 2, 2023, the first day of the class period, under the ticker symbol “VSTS.”
Leading up to class period before the spinoff, soon-to-be executives of Vestis 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.” As the class period progressed, 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 class action alleges that, during the class period, the 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disclose that: (1) Aramark had historically underinvested in the business that became Vestis; (2) Vestis operated with outdated facilities and an underperforming sales force; (3) Vestis’s outdated facilities and underperforming sales force led to “service gaps” that had impeded the Company’s levers of growth and had resulted in customer attrition; and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.
The truth was revealed before markets opened on May 2, 2024, when 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 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.
On September 23, 2024, the Court appointed the City of Atlanta General Employees’ Pension Fund, the City of Atlanta Police Officers’ Pension Fund, the City of Atlanta Firefighters’ Pension Fund, the Employees’ Retirement System of the City of Baltimore, and Norfolk County Retirement System as Lead Plaintiffs and Saxena White P.A. as Lead Counsel.
Lead Plaintiffs filed an amended complaint on November 22, 2024. On February 25, 2025, Defendants filed a joint motion to dismiss the amended complaint. Lead Plaintiff’s omnibus opposition to Defendants’ motion was filed on May 2, 2025, and Defendants’ joint reply was filed on June 2, 2025. On August 28, 2025, the parties appeared before the Court for oral argument on the motions to dismiss.
On September 30, 2025, the Court denied the majority of Defendants’ motion to dismiss, sustaining every false statement alleged as materially false and misleading and concluding that Lead Plaintiffs sufficiently alleged Defendants’ fraudulent intent, or scienter, against all but one Defendant. In the opinion, the Court found “that Defendants made optimistic statements about the prospects of Vestis’s business while failing to include past performance information that would have been useful to reasonable investors in assessing whether those statements truly reflected Vestis’s customer-retention prowess, its service-delivery capabilities, and its underlying financial health.” For scienter, the Court held that the allegations establish that Vestis’s CEO Kimberly Scott and CFO Rick Dillon “knew how fundamental service failures were costing Vestis millions of dollars in recurring revenue every week, but hid the truth from investors until plummeting revenues forced them to come clean.”
The case is now proceeding through the discovery phase. Lead Plaintiffs filed a Motion for Class Certification on April 10, 2026.
