Unifi Inc. reported revenues in its third quarter ended March 25 rose 3 percent, but the growth was overshadowed by raw material cost-related challenges and demand pressures in domestic markets, significantly impacting gross margin during the period.

For the third quarter, the maker of synthetic and recycled yarns expects:
• Net sales of approximately $166 million;
• Gross margin of approximately 10.0 percent;
• Operating income between $1.5 million and $1.7 million;
• Net (loss) income between ($0.4) million and $0.4 million and
• Diluted (Loss) Earnings per Share between ($0.02) and $0.02.

“While third quarter net sales grew 3 percent and show that our growth investments are taking hold, profitability was considerably lower than we forecasted when we began our third quarter due to a challenging global cost environment and softer domestic demand,” said Kevin Hall, chairman and CEO of Unifi. “As we discussed in our second quarter earnings call, we anticipated that raw material costs and a challenging domestic landscape would pressure third quarter gross margins, but the operating environment proved even more difficult. These headwinds led to a significant decline in profitability as compared to third quarter fiscal 2017.”

For fiscal 2018, the company continues to believe its net sales performance will be consistent with its previously announced guidance, but short-term profitability will remain negatively impacted by difficult market dynamics.

The company will report third-quarter results on April 25.

Through Repreve, one of Unifi’s proprietary technologies and the leader in branded recycled performance fibers, Unifi has transformed more than 10 billion plastic bottles into recycled fiber for new clothing, shoes, home goods and other consumer products.