Unifi reported that net sales for the company’s fiscal fourth quarter declined 7.0% to $191.7 million compared to net sales of $206.1 million for the prior year. Gross margin was a meager 5.9%, a 270 basis point decline from the 8.6% margins reported last year. SG&A was down to just 5.6% of sales, a 120 basis point improvement from last year. UFI reported a net loss of $11.0 million, or 21 cents per share, for the quarter compared to a net loss of $30.5 million or 57 cents per share for the prior year.

Much of the decline in sales is a result of increased supply and competition coming out of Asia and, as a result, Unifi has made it their top priority to establish production facilities in the region. Last quarter, the company was embarking on a program to launch a wholly-owned facility in the ‘Greenfield’ region, but management has since found a better option.

“We were approached by several other Chinese companies about Unifi’s interest in establishing a joint venture with them for their existing texturing operations,” said Unifi chairman & CEO Brian Parke. “We identified one particular company that appeared to be a good fit for us… We are currently working on the terms of a non-binding letter of intent.”

The funding for the JV is expected to come from the sale of assets related to the closure of Unifi’s facility in Ireland. The closure, which marks Unifi’s exit from all of its European production facilities, will affect approximately 700 workers. UFI expects to see a $20 million to $24 million charge associated with these actions.

In addition to the potential in China, Unifi has announced plans to buy certain Invista assets from Koch in a deal worth roughly $21 million, a deal which will be seller financed. The two companies are also discussing options for Unifi to acquire other polyester filament assets from Invista. The move will make Unifi more vertically integrated, giving them a production plant for certain raw materials used in day-to-day operations. Parke said that in their discussions with Koch, management discovered if an agreement were not finalized for the sale of the Invista facility, it would be closed down.