Workplace uniform provider UniFirst (NYSE: UNF) beat Wall Street’s revenue expectations in Q4 CY2025, with sales up 2.7% year on year to $621.3 million. The company expects the full year’s revenue to be around $2.49 billion, close to analysts’ estimates. Its GAAP profit of $1.89 per share was 5.1% below analysts’ consensus estimates.

Is now the time to buy UNF? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

UniFirst’s fourth quarter was met with a negative market response, as the company’s revenue growth was offset by lower-than-expected profitability. Management attributed the mixed performance to continued investments in sales and service capabilities, higher healthcare claims, and increased legal costs. CEO Steven Sintros highlighted that the company’s core Uniform and Facility Service Solutions business saw solid organic growth driven by new account wins and improved customer retention. However, these gains were tempered by ongoing operational investments and incremental weakness in customer employment levels, which impacted growth in existing accounts.

Looking forward, UniFirst’s guidance for the year is underpinned by ongoing digital transformation and operational initiatives, particularly the rollout of its enterprise resource planning (ERP) system. Management believes these efforts will drive long-term efficiency and scalability, even as near-term margins remain pressured by investment spend. CEO Steven Sintros noted, “There’s a fair amount of investment and execution around these tech and other initiatives to get them off the ground… we are getting to a much closer line of sight to these things starting to inflect.”

Key Insights from Management’s Remarks

Management pointed to targeted investments, digital transformation, and segment-specific dynamics as key factors shaping Q4 performance and outlook.

• Salesforce and Service Investment: UniFirst increased headcount in both sales and service teams, aiming to enhance account acquisition and customer retention. These personnel investments contributed to short-term margin compression but are expected to support sustainable growth.

• Digital and Operational Transformation: The company advanced its “UniFirst Way” operational framework, focusing on process standardization, inventory management, and procurement improvements. The ongoing ERP implementation is central to this effort, with management expecting efficiency gains and cost discipline over the next several years.

• First Aid Segment Momentum: The First Aid and Safety Solutions segment posted robust revenue growth, driven by expansion in van operations and small bolt-on acquisitions. Despite these gains, profitability was impacted by investments and a softer employment environment affecting account volumes.

• Customer Mix Shift: Management emphasized progress in the mid-sized account segment, which had been underpenetrated in prior years. Recent salesforce restructuring enabled more targeted engagement, leading to improved results in this customer category.

• Cost Headwinds: Higher-than-anticipated healthcare claims and legal expenses weighed on operating margins. Management also flagged tariffs as a potential risk to the cost structure in the coming quarters.

Drivers of Future Performance

Management expects ongoing investments in technology, process improvement, and customer expansion to shape the company’s performance in the next year.

• ERP and Digital Initiatives: The completion of foundational ERP modules and subsequent supply chain enhancements are expected to unlock inventory sharing and procurement efficiencies. Management believes these changes will drive gradual margin expansion, though many benefits are not anticipated until late 2027 and beyond.

• Growth in Mid-Sized Accounts: The company aims to accelerate new account wins, particularly among mid-sized customers, by leveraging its restructured sales organization. This focus is expected to drive organic revenue growth, with enhanced service operations supporting retention and upsell opportunities.

• Margin Headwinds and Operational Leverage: UniFirst continues to face near-term margin pressure from investment spending, healthcare costs, and tariffs. Management anticipates that as major initiatives are completed, operating leverage will improve, allowing for stronger profitability in subsequent years.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will be focused on (1) the pace and results of UniFirst’s ERP and digital transformation milestones, (2) continued progress in acquiring and retaining mid-sized accounts, and (3) the company’s ability to offset cost pressures from tariffs and healthcare claims. While management has discussed plans for new facility services product launches as a future initiative, these are not expected to be near-term catalysts. Additionally, regarding the Cintas acquisition proposal, management indicated they would only provide an update once their review is complete, so further clarity may not be imminent.

UniFirst currently trades at $192.90, down from $202.96 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).

Now Could Be The Perfect Time To Invest In These Stocks

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.