Unifi is back in the black

Yarn manufacturer reports $10.7 million profit for 2010

By: Richard Craver | JOURNAL REPORTER
Published: July 30, 2010

Unifi Inc. basked yesterday in its return to profitability for the first time in 10 years.

But Bill Jasper, its president and chief executive, stressed that while satisfying, Unifi must consider the accomplishment more as a milestone than a completed task.

The Greensboro yarn manufacturer, which has its largest U.S. operations in Yadkinville, reported a $10.7 million profit for fiscal 2010, which ended June 27.

"The past few years have been difficult, and Unifi employees have worked hard to return the company to profitability," Jasper said.

"While we're all proud of our results, there is still a lot more to accomplish in order to ensure we build on our recent successes to continue to grow profitability and shareholder value."

Jasper's cautionary note is appropriate given that since Unifi's last profitable year, it has lost a combined $422.6 million. Annual sales have dropped nearly in half at $616.7 million in fiscal 2010 compared with $1.1 billion in fiscal 2001.

The sales drop-off also took its toll on Unifi's work force. The company eliminated at least 2,313 jobs in North Carolina in the past 10 years, according to the N.C. Employment Security Commission, and at least 490 jobs outside the state.

Unifi had 1,310 employees in Yadkinville as recently as August 2005. It has 945 employees there now, according to Ron Smith, its chief financial officer.

Jasper said that Unifi is benefiting from increased consumer spending on apparel, furniture and automobiles -- three key customer bases for its yarns.

"The strength of apparel retail sales during the important back-to-school and holiday season will be a key indicator as to what we might expect for the remainder of the year," he said.

Unifi's full-year and quarterly performances were "impressive by any measurement standard," said Peter Tourtellot, the managing director of Anderson Bauman Tourtellot Vos & Co., a turnaround-management company in Greensboro.

Tourtellot said that Unifi provided more evidence, along with Hanesbrands Inc. and VF Corp., that the retail environment is recovering, though still fragile.

"There are signs that the consumer is again pulling in their spending, so Unifi needs to be diligent in cost containment as they enter into their new fiscal year," Tourtellot said.

Jasper said that as Unifi continues to focus on gaining market share, reducing costs and lean manufacturing, "we expect to maintain these gains and achieve additional improvements during the 2011 fiscal year."

rcraver@wsjournal.com
727-7376

Here are highlights of the fourth quarter, which ended June 27, for Unifi Inc.

• NET INCOME (QUARTER): $5.5 million, up from $771,000 in the third quarter and a loss of $6.3 million a year ago.

• DILUTED EARNINGS: 9 cents compared with a loss of 10 cents a year ago.

• AVERAGE EARNINGS FORECAST: The average forecast was 3 cents a share by analysts surveyed by Zacks Investment Research.

• WORTH NOTING: First profitable fiscal year -- $10.7 million -- for Unifi since 2000.

• SHARE PRICE: Fell 7 cents to close at $3.97 yesterday.