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Unifi Q2 Loss Widens on Depressed Sales

Projects Margin and Cost Improvements

Cooling demand hurt the second quarter results of textured polyester and nylon yarn producer Unifi Inc., but the company expects a better second half.

"Net sales were negatively impacted by the reduced demand for the company's products caused by sharp declines in consumer spending and compounded by the related effect of excess inventory across the respective supply chains," said Unifi, which supplies the apparel, home furnishings and automotive markets.

For the fiscal quarter ended December 28 loss from continuing operations before taxes was $8.7 million and net loss was $9.1 million or 15 cents per share. That operating loss was narrower than the $13.6 million recorded one year ago — but the net loss was broader than the year-ago period's $7.7 million or 13 cents per share.

Net Q2 sales of $125.7 million were down 31.5% from $183.4 in the year-ago period.

"Based on current retail sales estimates, we expect it to take an additional four to six months for this built-up inventory to completely work through the supply chain. Accordingly, we anticipate continued pressure on our sales throughout the second half of the fiscal year," said Ron Smith, Unifi cfo.

"We do, however, expect conversion margins and cost to improve during the second half of the fiscal year, and we anticipate continued strength in our sales to the CAFTA region as more apparel production is shifted there from Asia to reduce the overall sourcing cycle."

Unifi did show progress on a year-to-date basis. The net loss for the first half of fiscal 2009 was $9.7 million or 16 cents per share, compared to a net loss of $16.9 million or 28 cents per share one year ago.

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