US firm Unifi registers gross profit of $6 million in Q4 FY23

Americas segment’s gross profit decreased $8.5 million, primarily as a result of lower sales volumes driving weaker productivity and cost absorption. Brazil segment’s gross profit decreased $2 million due to selling price pressures from foreign imports, most of which are sourced from China where lower utilisation has led to lower pricing. The Asia segment maintained strong gross margin, but it was impacted by weaker sales volumes and had a corresponding gross profit decrease of $1.8 million.

In the fourth quarter, the net sales decreased to $151.1 million, from $217.6 million, primarily driven by lower sales volumes related to a weak global textile environment. The demand for apparel production declined in fiscal 2023 as brands and retailers took actions to reduce their inventory levels and normalise supply chains. Such actions caused the Americas and Asia segments to experience revenue declines. The prior year quarter included a strong macro-economic environment amid supply chain and resource constraints, the company said in a press release.

Operating loss was $13.7 million compared to operating income of $5 million, which was primarily due to the decrease in gross profit and an $8.2 million impairment charge for abandonment of specialised machinery constructed in the Americas in fiscal 2017. Adjusted EPS was ($0.39) and adjusted EBITDA was $1.7 million, compared to $0.11 and $12.2 million, respectively, in the prior year quarter.

“Our fourth quarter fiscal 2023 results reflect continued demand instability across apparel and textile supply chains, which were once again impacted by low levels of brand and retailer demand. In spite of the current headwinds, we are cultivating market share opportunities across the Americas and Brazil Segments through diligent price management and portfolio diversification. Additionally, our mix enrichment efforts in Asia continue to strengthen the asset-light margin profile. Our disciplined cost controls and reduced spending levels have bolstered our balance sheet and liquidity. These efforts allow us to remain focused on positioning our segments for demand recovery in fiscal 2024, restoring profitability, and executing our growth strategy, which includes accelerating innovation, expanding REPREVE brand awareness, increasing market share, and penetrating new markets,” Eddie Ingle, chief executive officer of Unifi, said.

Unifi expects first quarter fiscal 2024 net sales and adjusted EBITDA to be generally consistent with fourth quarter fiscal 2023 results. The effective tax rate is expected to demonstrate continued volatility. Capital expenditures are expected to trend downward for the first quarter and be between $14 million and $16 million for fiscal 2024.

"While the demand environment is expected to remain subdued during the balance of calendar 2023, we are encouraged by recent market share developments in both the Americas and Brazil segments, which should provide momentum for a much stronger back half of fiscal 2024. Although there is continued uncertainty across our customer base, we believe the inventory destocking period is nearing its end,” Ingle concluded.

Fibre2Fashion News Desk (RR)