American firm Unifi's net sales at $138.8 mn in Q1 FY24

The company is grappling with ongoing sales volume declines due to inventory de-stocking and cautious ordering patterns from apparel brands and retailers. These challenges have been exacerbated by selling price pressures, particularly evident in the company's Brazil segment, where gross profit plummeted by $4.6 million owing to competition from foreign imports, Unifi said in a media release.

In stark contrast to its overall performance, the Asia Segment of Unifi saw a gross margin improvement by 290 basis points, thanks to a rich mix of its Repreve recycled fibre products.

The gross loss for the quarter stood at $0.6 million, a substantial decline from the $6.6 million gross profit reported in Q1 FY23. The Americas Segment's gross loss increased by $2.5 million. As a result of the downturn, Unifi posted an operating loss of $12 million and a net loss of $13.3 million, with earnings per share (EPS) at a negative $0.73. Adjusted EBITDA also went into the red at minus $4.8 million compared to a positive $2.3 million in the prior year.

Looking ahead, Unifi's outlook for the second quarter of fiscal 2024 indicates expectations for net sales, Adjusted EBITDA, and capital expenditures to align closely with the figures from the first quarter, signalling a steady course in the face of fiscal challenges.

“Our performance in the first quarter of fiscal 2024 reflects a continuation of the weak demand and depressed ordering patterns impacting the apparel industry and its supply chains. Given the current challenges facing the industry, our customers have continued to take a cautious approach to placing new orders as they work through existing inventory levels and monitor consumer activity. Such inventory appears to be approaching pre-pandemic levels, giving us confidence that we may soon experience improved order flow. Despite the difficult environment, our disciplined cost control measures enabled us to generate solid cash flows during the quarter and reduce net debt," said Eddie Ingle, chief executive officer of Unifi.

Fibre2Fashion News Desk (DP)