Shares of UniFirst tumbled intraday Wednesday after the uniform rental company provided a cautious outlook for its fiscal 2025 earnings. The guidance indicates a year-over-year deceleration in earnings, highlighting the challenging pricing environment that the company is currently navigating. As businesses grapple with changing economic conditions, retention rates have been notably affected. UniFirst is estimating its earnings per share (EPS) for the fiscal year in the range of $6.79 to $7.19.
This marks a notable slowdown from the $7.77 EPS reported for the year ending August 31, 2023, which had shown an impressive growth of approximately 40% compared to the previous year. In terms of revenue, the company guided for a total in the range of $2.43 billion to $2.45 billion for fiscal 2025.
This is consistent with the $2.43 billion reported for fiscal 2024, which itself represented an 8.7% increase year over year. Market analysts surveyed by Capital IQ express expectations for earnings and revenue around $7.94 EPS and $2.46 billion, respectively, for the upcoming fiscal year. Notably, shares of UniFirst experienced a decline of 5% by Wednesday afternoon, signaling investor concern over the forthcoming challenges. Steven Sintros, Chief Executive of UniFirst, addressed analysts during a conference call, shedding light on the recent market trends.
Sintros explained, \"As the market emerged from a period of significantly elevated inflation levels, the more challenging pricing environment and its corresponding impact on our retention rates has affected our sequential revenue trends, consequently influencing our growth rates for fiscal 2025.\" He further elaborated that while the company anticipates organic growth within its core laundry sector, ranging from 1.3% to 2.3% in 2025, these figures do not meet the growth aspirations the company ultimately seeks.
The reported growth for this unit in 2024 was recorded at an impressive 9.1%. Focusing on the fourth quarter results, UniFirst reported a substantial revenue increase of about 12%, reaching $639.9 million. Earnings per share also saw a notable advancement, rising to $2.39 compared to $1.47 from the previous year.
Analysts from Capital IQ had projected revenue of $634.7 million for the three-month period ending in August and an EPS of $1.97. As we continue to monitor the evolving economic landscape, investors should remain vigilant regarding UniFirst's performance and strategic adjustments in light of these challenges.
The company's stock price registration at 180.91, with a change of -9.03 representing a percent decline of -4.75, signals critical sentiment that may influence investment decisions moving forward..