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Lower Demand, Bigger Shortfall: even with $33M loss, Unifi says it is poised to ride out recession
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Published: May 1, 2009
Softer consumer demand for its premium yarns led to a larger quarterly loss for Unifi Inc. in its third quarter, the yarn manufacturer reported yesterday.
The company, based in Greensboro, reported a $33 million loss in the quarter, which ended March 29. By comparison, Unifi had net income of $12,000 in the third quarter of 2008.
Unifi said that its sales were down 30 percent to $119.1 million, affected primarily by a decline in demand as customers tried to sell excess inventory in the quarter.
The manufacturer also took a noncash charge of $18.6 million in the quarter to write off goodwill value associated with its purchase of Dillon Yarns in 2007.
Higher raw-material costs also affected expenses.
Unifi reported an earnings loss of 53 cents a share, compared with no earnings a year ago. The average forecast was a loss of 10 cents by analysts surveyed by Zacks Investment Research.
It is the third consecutive quarterly loss for Unifi, which has its largest manufacturing operations in Yadkinville.
It posted profitable quarters in the third and fourth quarters of 2008, primarily based on increased sales of its premium value-added yarns.
Bill Jasper, the president and chief executive of Unifi, said that it continues to benefit from cost-cutting measures, which he said would be pivotal for emerging from the recession in a more competitive position.
For example, total cash and cash equivalents on March 31, including restricted cash, were $39.5 million, compared to $32.4 million on Dec. 31.
"We expect this recession will be long and the recovery will be slow, but we have positioned ourselves well and are in a much better position to weather the storm than we were just a year ago," Jasper said.
"We expect to see gradual improvement in our business through the current quarter and the first half of our 2010 fiscal year," he said.
"We have realized annualized savings of more than $25 million from these initiatives, thereby substantially reducing the volume levels required to operate our business profitably once economic conditions improve," he said.
■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.
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