Unifi braves price hikes to cut loss
By Staff -- Home Textiles Today, 10/30/2008 12:50:00 PM
Greensboro, N.C. – Yarn maker Unifi Inc. endured considerable price hikes for raw materials – specifically, 25% for polyester and 15% for nylon, year over year – and passed along at least a slice of those increases to its customers, the company reported during its first-quarter earnings call today.
“In response to these dramatic increases, the company increased prices to its customers during the first fiscal quarter,” said Bill Jasper, president and ceo. “We were able to pass along a portion of the raw material increases as raw material costs peaked in July and began to decline in August.”
Unifi reported a net loss from continuing operations of $572,000 for its fiscal first quarter ended Sept. 28, dramatically less than the $9.2 million loss in the year-ago quarter. The net loss was one cent per share, narrowed from a 15-cent loss last year.
Sales edged down by less than 1% to $169.0 million.
Beyond cost of materials, another challenge during the period came from softness in the polyester and nylon textured yarn producer’s furnishings segment.
Existing home sales for August 2008 were 15% lower than August 2007, and the seasonally adjusted annual rate for existing home sales is down almost 11%.
“This decline caused a projected decrease of 10.7% in retail sales at furniture and home furnishings stores in September on the heels of a decrease of 9.2% in August,” Jasper said.
Year-to-date through June, domestic and imported upholstered furniture shipments were down 12.4% and 7.8%, respectively, “which has a direct impact on demand for our products in this segment.”
Jasper said tightening of the credit market “has worsened the situation,” as more than 70% of all furniture and mattress purchases are financed. “Erosion of this market and subsequent reduction in demand” are to blame for three of Unifi’s packaged dye-yarn competitors having recently shut down operations in the last three months.
“This will lead to consolidation of production to a few dyeing operations, which include our own,” Jasper said.
On a positive marketing note, Unifi recently launched a consumer-focused, interactive, eco-minded website, www.Repreve.com, to help promote its eponymous family of 100% recycled yarns that were first introduced to the United States this past summer. The website was launched in conjunction with Unifi’s newly developed “Repreve for the Planet” campaign.
Updates to Unifi’s initiatives in China were also offered during the call. Jasper said the company still expects to close the deal “exiting the manufacturing joint venture and have the Chinese regulatory approvals finalized for UTSC, our new wholly-owned subsidiary” by the end of this year.
He warned that both of these initiatives “are progressing but are subject to certain conditions and approvals and there can be no assurances that the transaction will be completed in these time frames or at all.”
Unifi’s growth in China, Jasper said, “will come from our ability to remain focused on identifying opportunities for new and existing PVA [value-added] products in the region and in utilizing the flexibility that UTSC provides to develop, source, sell and service them.”
Talkback
Related Content
Related Content
