US firm Unifi's reports marginal gross profit in Q3 FY23

The Americas segment’s gross profit declined by $2.6 million, primarily due to lower sales volumes driving weaker productivity and cost absorption. The Brazil segment’s gross profit decreased by $3.6 million due to selling price pressures from foreign imports against high-cost inventory. While the Asia segment maintained a strong gross margin, it was impacted by weaker sales volumes, resulting in a corresponding gross profit decrease of $3.3 million, Unifi said in a media statement.

The company’s net sales for Q3 FY23 decreased by 21.9 per cent to $156.7 million, from $200.8 million in Q3 FY22, primarily driven by lower sales volumes related to a volatile global 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. This caused the Americas and Asia Segments to experience near-term revenue declines from customers. The comparable prior year quarter included a strong macro-economic environment amid supply chain and resource constraints.

Unifi's operating loss for Q3 FY23 was $2.7 million, a significant decline from operating income of $5.8 million in the same period last year, primarily due to the decrease in gross profit. The net loss was $5.2 million, or $0.29 per share, compared to net income of $2.1 million, or $0.11 per share in Q3 FY22. On an adjusted basis, EPS was minus $0.25 compared to $0.14 in the prior year period. Adjusted EBITDA was $5 million, compared to $12.2 million, consistent with the change in operating income.

The company’s net sales for the first three quarters of fiscal 2023 were $472.5 million compared to $598.2 million in the same period of the previous fiscal, with revenues from Repreve fibre products representing 30 per cent of net sales, or $141.7 million, compared to 38 per cent, or $225.4 million. The gross margin was 1.7 per cent compared to 10.4 per cent in the same period last year, and the operating loss was $27.2 million compared to operating income of $23.6 million in the first three quarters of FY22. The net loss was $31.1 compared to net income of $11.7 million in the first three quarters of FY22.

“Our third quarter fiscal 2023 performance increased sequentially as apparel supply chain destocking trends lessened and global demand began to improve. While volume trends continue to fluctuate due to macro-economic volatility, we are seeing overall positive momentum and expect further recovery as we end fiscal 2023 and begin fiscal 2024,” said Eddie Ingle, chief executive officer of Unifi.

Fibre2Fashion News Desk (DP)