Unifi lifts gross profit to $12.5 million despite 5.7% sales decline
Key Facts
Unifi ended the first quarter of fiscal 2027 on September 27, 2026, with net sales of $127.9 million, down 5.7% from the year-earlier period, while gross profit rose to $12.5 million from $3.4 million, according to the company’s statement issued on October 29. Gross margin was 9.8%, compared with 2.5% a year earlier, a shift that highlights improved operating profitability despite shrinking revenue. Adjusted EBITDA was $6.1 million, versus a loss of $2.5 million in the first quarter of fiscal 2026. Chief Executive Eddie Ingle said the results reflect "continued benefits from actions implemented to improve operating efficiency, strengthen cash generation and profitability performance." The company nevertheless remained in a net-loss position, though the loss was far smaller than a year earlier.
Net loss was $2.0 million, or $0.11 per share, compared with a loss of $11.4 million, or $0.62 per share, a year earlier. Investing.com reported that the loss per share was $0.06 better than analysts’ estimate of $0.15, while revenue of $127.9 million fell short of the consensus forecast of $138.14 million. This means improved profitability was not accompanied by a beat on sales estimates. Revenue from REPREVE fiber products fell to $36.4 million from $39.3 million, while their share remained at 29% of net sales in both periods. Selling, general and administrative expenses declined 4.1% to $11.5 million, which the company attributed mainly to cost-cutting efforts.
Unifi attributed the sales decline to weaker customer demand patterns in the Americas and Asia segments amid geopolitical, trade and tariff-related uncertainty, partly offset by higher sales in Brazil. At the segment-profit level, gross profit in the Americas rose $6.4 million, driven mainly by multiyear cost-cutting efforts. Brazil gross profit increased $2.5 million, supported by pricing and sales mix. The divergence between demand and profitability reflects differing segment performance, as cost measures and pricing supported earnings despite softer demand in other markets. Consolidated company sales fell 7.0% in fiscal 2026, while sales volumes declined 5.1%, amid geopolitical and trade uncertainty and competition from lower-priced products.
Operating cash flow turned positive, with operations providing $3.7 million in the first quarter of fiscal 2027, after using $8.9 million in the year-earlier period. The company said the improvement reflected higher earnings and continued discipline in working capital management. Net debt was $64.8 million on September 27, down from $67.4 million on June 28, 2026. Debt principal was also $90.9 million at the end of September, before the subsequent real estate transaction. On October 28, the company sold non-strategic real estate assets for gross proceeds of $60 million and used the net proceeds to repay the full $55.5 million term loan balance; the repayment came after the quarter-end net-debt measurement date.
The transaction included about 120 acres and 500,000 square feet of warehouses across two operating sites in Yadkin County, North Carolina. The company said the real estate sale does not affect its production capacity, allowing it to realize asset value while retaining operating capability, according to its disclosure. In the market, UFI shares closed at $5.9 on October 30, 2026. The company held its earnings call that day at 9:00 a.m. Eastern time, after announcing its quarterly results on October 29. In EL7’s report on the fourth quarter of fiscal 2026, coverage noted that growth in Brazil operations helped narrow adjusted losses.
The company expects sales and profitability to improve in fiscal 2027 compared with fiscal 2026, as the full-year impact of portfolio management, cost controls and improved operational execution becomes evident. For the second fiscal quarter, it expects Brazil segment sales and profitability to remain stable, but warned that raw-material inflation will weigh on working capital. It also expects continued pressure on Asia from regional weakness and geopolitical volatility, while profitability remains stable. In the Americas, it said cost savings and stable demand will support the segment. These projections set the announced improvement against continued uneven demand, regional pressures and raw-material costs.