Unifi posts third-quarter loss
Reposted from Winston-Salem Journal | By RICHARD CRAVER
The combination of a debt-reduction initiative and higher raw-material costs contributed to a $4 million loss for Unifi Inc. in its third quarter of fiscal 2011.
Unifi, based in Greensboro, has its largest U.S. yarn-manufacturing presence in Yadkinville.
The company reported Wednesday it had a 15 percent increase in sales during the quarter, which ended March 27, to $178 million.
However, it took $2.2 million in charges as part of an effort to reduce its debt. Higher cotton costs contributed to a $2.5 million loss on its investment in Parkdale America LLC compared with gaining $2 million in income a year ago.
It had an earnings loss of 20 cents a share compared with diluted earnings of 4 cents a share a year ago. The average earnings estimate was 16 cents by analysts surveyed by Zacks Investment Research. Analysts typically don't include one-time or restructuring charges in their forecasts.
Bill Jasper, the chairman and chief executive of Unifi, said raw-material costs for polyester also rose significantly in the quarter. The company chose to absorb a portion of the price increases, resulting "in temporary margin pressure," he said.
"Since the end of the quarter, we have recovered most of the lost margin, and our business fundamentals remain strong," Jasper said.
He said Unifi is benefiting from retail sales nearing pre-recession levels, as well as expanding business in China and new business from Central America.
Michael Lord, an associate professor of management at Wake Forest University, said Unifi's raw-material costs bear watching over the next few quarters.
"There are some solid figures in terms of sales and volume growth in Unifi's core businesses," Lord said. "It'll be interesting to see if this latest quarter is just a temporary situation, or whether there are some longer-term forces at work, such as continuing upward pressure on commodity prices for cotton and polyester."
Unifi's report was released after the stock market closed Wednesday. Its share price dropped 35 cents to close at $17.38.
The company remained on course for a second consecutive profitable year, with net income of $11.6 million through three quarters of fiscal year 2011 compared with $5.2 million in the same time period for 2010.