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Vestis Corporation (NYSE:VSTS), a wholesale distributor of miscellaneous nondurable goods with annual revenue of $2.77 billion, announced today that Kim Scott has stepped down as President and Chief Executive Officer and resigned from the Board of Directors, effective immediately. The announcement comes as the company’s stock has declined nearly 30% over the past six months, though InvestingPro analysis suggests the stock is currently oversold. The company stated there was no disagreement on operations, policies, or practices leading to her departure. Scott’s separation benefits align with her employment agreement dated April 2, 2024. Despite recent challenges, the company maintains a healthy financial position with a current ratio of 1.8, indicating strong liquidity.
Concurrently, Vestis has named Phillip Holloman as interim Executive Chairman, President, and CEO. Holloman, who has been the Chairman of the Board since September 2023, brings extensive experience from his previous role as President and COO of Cintas Corporation (NASDAQ:CTAS), among other leadership positions. According to InvestingPro data, Holloman inherits a company with strong free cash flow generation and multiple positive analyst revisions for the upcoming period. Subscribers can access the comprehensive Pro Research Report for detailed analysis of Vestis’s financial health and growth prospects. He is also on the boards of Pulte Group (NYSE:PHM) and BlackRock (NYSE:BLK) Fixed Income, and has previously served on the board of Rockwell Automation (NYSE:ROK).
The company clarified that there are no familial ties or arrangements influencing Holloman’s appointment, and he is not involved in any transactions requiring disclosure under SEC regulations.
Holloman will receive a monthly cash compensation of $125,000 and is scheduled to receive restricted stock units (RSUs) valued at $675,000 on March 20, 2025, and subsequent grants of RSUs valued at $225,000 each month starting June 20, 2025, conditional upon his continued service. The RSUs are subject to forfeiture conditions detailed in the company’s 2023 Long-Term Incentive Plan.
During Holloman’s interim term, Doug Pertz will assume the role of Lead Director as per the company’s Corporate Governance Guidelines. With the company trading at a P/E ratio of 186.79x, investors seeking detailed valuation metrics and additional insights can explore InvestingPro, which offers 12 more exclusive ProTips and comprehensive financial analysis.
This leadership transition is based on information provided in a press release statement filed with the SEC.
In other recent news, Vestis Corp announced its first-quarter 2025 earnings, reporting a shortfall in both earnings per share (EPS) and revenue compared to analyst expectations. The company posted an EPS of $0.14, missing the projected $0.22, while revenue reached $684 million, below the anticipated $724.72 million. Despite these results, Vestis maintains its full-year guidance, expecting revenue between $2.8 billion and $2.83 billion and adjusted EBITDA ranging from $345 million to $360 million. The company anticipates a 3-4% revenue growth in the latter half of the fiscal year, along with an EBITDA increase approaching or exceeding 10%.
In other developments, JPMorgan analyst Andrew Steinerman adjusted Vestis’s stock price target from $16 to $14, maintaining a Neutral rating. He noted the management’s confidence in the company’s transformation efforts, highlighting a strong pipeline and new customer acquisitions in the healthcare and industrial sectors. Vestis CEO Kim Scott emphasized improvements in customer experience and logistics optimization, which are expected to enhance customer retention and pricing power. Furthermore, the company has seen progress under the leadership of Pete Rego, the new SVP of Sales, with increased productivity in the SME/field sales team.
Vestis has also reported executive changes, with a new Chief Legal Officer and CFO set to join the company. Despite adverse currency effects, notably from the Canadian dollar, Vestis’s management remains optimistic about future growth, focusing on national account sales and retention strategies. The company continues to target a leverage ratio of 1.5-2.5x by the end of fiscal 2026, aiming to improve financial stability.
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