Unifi: The fabric of life
Love that new car smell? Or how that sofa cradles your body just so? Or what about that water resistant jacket you practically live in during rainy season?
Such comforts in life are the life’s work of fabric makers such as Unifi Inc. (NYSE:UFI). The Greensboro, N.C.-based small cap prides itself on providing a diversified line of polyester and nylon textured yarns and related raw materials that are both consumer-friendly and environmentally conscious.
With about 16 brands being distributed among eight global industries, Unifi has positioned itself to endure market fluctuations such as recent rises in raw materials and operating costs as well as general economic slumps.
In its latest earnings report on Oct. 30, Unifi said it narrowed its fiscal first-quarter net loss by 93% to $0.68 million, or $0.01 a share, while net sales decreased less than 1% to $169 million.
“During the quarter, volume started out ahead of plan but softened in September as the economy weakened,” Ron Smith, Unifi’s chief financial officer, said in a statement. “We are reacting quickly and decisively to an uncertain market caused by the economic slowdown and significant fluctuations in our raw material prices. This price volatility, combined with softening volumes, will have a negative impact on our conversion margin in the December quarter, but we expect to see improvement as we move into the second half of our fiscal year.”
Recent declines in home and auto sales have impacted Unifi’s volume in those segments and are expected to continue at least through the end of the year. And, while president and CEO Bill Jasper acknowledged the immediate obstacles ahead, he also pointed to the company’s product mix as reason for long-term optimism.
“We will face these challenges with a strong financial base and flexibility that we have not had in the past, including the ability to shift the supply of our raw materials to the most competitive sources and to adjust our mix more efficiently and effectively,” Jasper said in a statement.
The home furnishings and automotive interior segments make up about 21% and 14% of Unifi’s sales volume, respectively. Apparel and hosiery combine to garner about 56% of the company’s business.
Unifi shares plummeted to below $4 in early October then rallied to a one-year high of $5.43 on Oct. 20. The stock began gradually dropping again during the final week of the month and fell about 6% to $4.55 following the Q1 earnings report.
In keeping with its innovative philosophy, Unifi re-emphasized its sustainability efforts in the textile industry. Its family of 100% recycled yarns is the focus of a “Repreve For The Planet” campaign, and the company launched a consumer-focused, interactive website, www.Repreve.com, in support of the campaign, the product and the recycling process.
Repreve products are made with a proprietary conversion process that begins with recycled plastic water bottles and pre-consumer fabric waste.
“Unifi is taking a unique and transparent approach in educating consumers and the industry about the benefits of Repreve recycled yarns while involving them in the process of doing more in supporting environmental efforts,” said Roger Berrier, executive vice president.
Helping save the planet while making it a more comfortable place to live will no doubt keep Unifi’s fabrics spinning.
