Unifi, Inc., the maker of Repreve, said it expects to report a 24 percent to 25 percent drop in sales in its fiscal second quarter ended January 1, worse than forecast.

For the second quarter of fiscal 2023, Unifi expects:

  • Net sales between $135 million and $137 million, a decrease of approximately 24 percent to 25 percent from the first quarter of fiscal 2023 compared to the previous expectation of a 10 percent to 15 percent decrease;
  • Negative gross margin between 5.5 percent and 6.5 percent;
  • Operating loss between $19.0 million and $21.0 million;
  • Loss before income taxes between $20.0 million and $22.0 million; and Adjusted EBITDA between $12.0 million and $14.0 million, compared to the previous expectation of between $0.0 million and $5.0 million.

Under its previous guidance, sales were expected to be down approximately 10 percent to 15 percent lower net sales than in the first quarter of fiscal 2023. Adjusted EBITDA was projected to come in between $5.0 million and $0.0 million.

Eddie Ingle, CEO, Unifi, said, “Our business continued to face a difficult operating environment in the second fiscal quarter, and our results for the period are a reflection of continued demand disruption from inventory destocking and slowed global apparel production, which has been influenced by, among other things, the impact of COVID-19 in China. This weaker-than-expected demand has been prevalent across our apparel customers as they work through a normalization in their supply chains and aim to reduce excess inventories. In response to these temporary challenges, we executed a number of cost controls, and other savings measures are ongoing. In addition, we are benefiting from the additional liquidity afforded by our credit facility that we previously announced was amended, expanded and extended on October 28, 2022.”

Ingle continued, “As we look forward, the mid- and long-term drivers of our business remain intact. We expect to see improvements in volumes and operating performance as we move through calendar 2023 and customer ordering patterns begin to normalize. We should also experience improved performance and efficiencies across the business as a result of various cost-saving measures currently in effect, along with stabilized raw material input costs. Our global business model and the long-term demand for sustainable solutions remain unchanged.”

Unifi plans to report full results on February 2.