Here’s Why Vestis Corporation’s (VSTS) Revenue Dropped in Q2

Riverwater Partners, an investment management company, released its “Small Cap Strategy” Q2 2025 investor letter. A copy of the letter can be downloaded here. The Small Cap Core Strategy underperformed the Russell 2000 in Q2 2025, primarily due to the portfolio’s more defensive holdings and the market’s preference for low-quality companies. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its second-quarter 2025 investor letter, Riverwater Small Cap Strategy highlighted stocks such as Vestis Corporation (NYSE:VSTS). Vestis Corporation (NYSE:VSTS) is a uniform rental and workplace supplies provider. The one-month return of Vestis Corporation (NYSE:VSTS) was -2.29%, and its shares lost 71.04% of their value over the last 52 weeks. On September 08, 2025, Vestis Corporation (NYSE:VSTS) stock closed at $4.26 per share, with a market capitalization of $561.638 million.

Riverwater Small Cap Strategy stated the following regarding Vestis Corporation (NYSE:VSTS) in its second quarter 2025 investor letter:

“Vestis Corporation (NYSE:VSTS) significantly underperformed in Q2 2025, weighed down by a sharp decline in revenue and a surprising swing to a net loss. Revenue dropped more than analysts anticipated—driven by lower rental volumes and direct sales from existing customers. The company incurred a loss in net income, missing expectations for a modest profit and taking a hit from a one-time bad-debt charge. In response, Vestis eliminated its dividend and amended its credit agreement to shore up liquidity, but these moves highlighted both financial stress and diminished investor confidence in the near-term outlook. We still hold a small position in the stock but could look to sell in the future if the situation does not improve.”

Vestis Corporation (NYSE:VSTS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held Vestis Corporation (NYSE:VSTS) at the end of the second quarter, which was 48 in the previous quarter. Vestis Corporation’s (NYSE:VSTS) fiscal third quarter revenue decreased 3.5% year-over- year to $674 million. While we acknowledge the risk and potential Vestis Corporation (NYSE:VSTS) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Vestis Corporation (NYSE:VSTS) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Vestis Corporation (NYSE:VSTS) and shared the list of best single digit stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.