Heri Lonto

Heri Lonto inquired about Vestis Corporation's new strategic pricing implementation, aiming to avoid past negative effects, and sought commentary on changes in product mix, related investments, client receptiveness, and early Q1 sales performance.

Answer

President and CEO Jim Barber differentiated the new pricing strategy by aligning cost-to-serve with pricing decisions, underpinned by improved service quality and new profitability tools, to avoid past churn. He noted a shift back to a uniform-focused product mix, moving away from lower-margin workplace supplies and linens, with sales force compensation aligned to this. EVP and CFO Kelly Janzen added that Vestis lost about 8% of its uniform business over the last year, with an increase in hospitality and food & beverage related products. She confirmed that the first two months of the current quarter are on plan.

Heri Lonto from Jefferies inquired about Vestis's strategic pricing initiatives, specifically how the current plan differs from previous management's efforts to avoid negative historical effects. He also asked about the progress of product mix changes, investments made, client receptiveness, and early commentary on sales in the first few weeks of the current quarter.

Answer

Jim Barber, President and CEO, explained that the key difference in pricing is aligning cost to serve with pricing decisions to create value, moving away from the previous "all revenue is good revenue" thesis that led to churn. He emphasized that improved service quality underpins appropriate pricing in a competitive market. Regarding product mix, Mr. Barber noted that Vestis had previously over-indexed on low-margin workplace supplies, linens, and bar towels, moving away from its core uniform business. The 2026 plan refocuses on a balanced product mix, with sales force compensation aligned to this strategy. Kelly Janzen, EVP and CFO, added that the company lost about 8% of its uniform business over the last year, and the goal is to be more mindful of end markets, use profitability tools for upfront pricing, and reduce uniform business loss. Both executives confirmed that the first two months of the current quarter are on plan.