BOCA RATON, Fla., May 17, 2024 (GLOBE NEWSWIRE) -- Saxena White P.A. has filed a securities fraud class action lawsuit (the “Class Action”) in the United States District Court for the Northern District of Georgia against Vestis Corporation (“Vestis” or the “Company”) (NYSE: VSTS) and certain of its executive officers (collectively, “Defendants”). The Class Action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and U.S. Securities and Exchange Commission (“SEC”) Rule 10b-5 promulgated thereunder on behalf of all persons and entities that purchased Vestis common stock between October 2, 2023 and May 1, 2024, inclusive (the “Class Period”), and were damaged thereby. The Class Action filed by Saxena White P.A. is captioned: Plumbers, Pipefitters and Apprentices Local No. 112 Pension Fund v. Vestis Corporation et al., No. 1:24-cv-02175-SDG (N.D. Ga.).
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disclose that: (1) Aramark had historically underinvested in the business that became Vestis; (2) Vestis operated with outdated facilities and an underperforming sales force; (3) Vestis’s outdated facilities and underperforming sales force led to “service gaps” that had impeded the Company’s levers of growth and had resulted in customer attrition; and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 (“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.
If you purchased Vestis common stock during the Class Period and were damaged thereby, you are a member of the “Class” and may be able to seek appointment as lead plaintiff. If you wish to apply to be lead plaintiff, a motion on your behalf must be filed with the U.S. District Court for the Northern District of Georgia no later than July 16, 2024. The lead plaintiff is a court-appointed representative for absent members of the Class. You do not need to seek appointment as lead plaintiff to share in any Class recovery in the Class Action. If you are a Class member and there is a recovery for the Class, you can share in that recovery as an absent Class member.
You may contact Marco A. Dueñas (mduenas@saxenawhite.com), an attorney at Saxena White P.A., to discuss your rights regarding the appointment of lead plaintiff or your interest in the Class Action. You also may retain counsel of your choice to represent you in the Class Action. You may obtain a copy of the Complaint and inquire about actively joining the Class Action at www.saxenawhite.com.
Saxena White P.A., with offices in Florida, New York, California, and Delaware, is a leading national law firm focused on prosecuting securities class actions and other complex litigation on behalf of injured investors. Currently serving as lead counsel in numerous securities class actions nationwide, Saxena White has recovered billions of dollars on behalf of injured investors.
CONTACT INFORMATION
Marco A. Dueñas, Esq.
mduenas@saxenawhite.com
Saxena White P.A.
10 Bank Street, Suite 882
White Plains, New York 10606
Tel.: (914) 437-8551
Fax: (888) 631-3611
www.saxenawhite.com
