Unifi Reports First Quarter Fiscal 2026 Results, Announces Cost-Saving Initiatives and Continued Focus on Innovation
Unifi, Inc. (NYSE: UFI), the makers of REPREVE® and one of the world’s leading innovators in recycled and synthetic yarns, today reported results for the first fiscal quarter ended September 28, 2025. The company faced continued challenges from trade uncertainty and demand volatility but remains committed to improving profitability and advancing sustainable textile innovation.
First Quarter Fiscal 2026 Overview
For the first quarter of fiscal 2026, net sales were $135.7 million, down 7.9% from $147.4 million in the first quarter of fiscal 2025. The decrease reflected weaker customer ordering patterns, driven largely by global trade and tariff-related uncertainty across all business segments.
REPREVE® Fiber products, which represent Unifi’s flagship portfolio of recycled fibers, accounted for $39.3 million or 29% of net sales, compared to $44.7 million or 30% in the prior-year period. The company cited persistent softness in demand for apparel and home textiles using REPREVE fibers, though long-term customer interest remains strong.
Gross profit declined to $3.4 million from $9.5 million, while gross margin narrowed to 2.5% from 6.4%. The contraction was primarily due to lower sales volumes, import pricing pressures, and increased production volatility across Unifi’s global operations.
Unifi reported a net loss of $11.4 million, or $0.62 per diluted share, which included $1.1 million in transition costs associated with restructuring initiatives. This compared to a net loss of $7.6 million, or $0.42 per share, in the same quarter of fiscal 2025. On an adjusted basis, Adjusted Net Loss was $10.3 million, excluding transition costs, versus $7.6 million in the prior year.
Adjusted EBITDA was $(2.5) million, compared to $3.3 million in the first quarter of fiscal 2025, reflecting lower profitability and ongoing margin pressure.
Segment Performance
Across Unifi’s geographic segments, results reflected broad-based challenges in customer demand and pricing dynamics:
- Americas Segment: Gross profit decreased by approximately $0.3 million, primarily due to demand volatility and production inefficiencies.
- Brazil Segment: The most significant decline, with gross profit down $5.3 million, resulted from import pricing pressure and reduced sales volume.
- Asia Segment: Gross profit decreased $0.5 million, primarily due to lower sales volumes and continued softness in export markets.
Overall, the company’s operating loss widened to $9.6 million from $3.2 million a year earlier, driven by reduced gross profit and restructuring-related transition costs.
Strategic Initiatives and Innovation
In October 2025, Unifi launched an additional restructuring program to enhance cost efficiency and drive stronger profitability and cash flow throughout fiscal 2026. The initiative includes targeted reductions in variable manufacturing costs across labor, procurement, and support functions, as well as workforce optimization within salaried positions in the U.S.
Alongside these cost-saving measures, Unifi continues to strengthen its innovation pipeline. During the quarter, the company introduced A.M.Y.® Peppermint, a naturally deodorizing yarn designed to provide long-lasting freshness. This new product line underscores Unifi’s continued commitment to sustainable innovation and performance-driven fiber solutions.
Management Commentary
“Our first quarter results came in below expectations as we continue to navigate headwinds from softer customer ordering patterns amid an uncertain trade environment,” said Eddie Ingle, Chief Executive Officer of Unifi, Inc.
“While a full recovery in the retail and trade landscape will take time, our customer engagement remains positive. We believe these relationships will translate into growth once market conditions stabilize,” Ingle added. “In the meantime, we are taking proactive steps to offset current pressures through targeted price increases and additional cost restructuring. These efforts should help improve earnings and cash flow performance through the remainder of fiscal 2026.”
Fiscal 2026 Profit Improvement Plan
To support financial recovery, Unifi has implemented a Profit Improvement Plan designed to reduce operating costs, improve efficiency, and strengthen cash flow generation. Key elements of the plan include:
- Streamlining manufacturing operations to reduce variable costs;
- Lowering overhead through workforce reductions and spending controls;
- Optimizing commercial execution to focus on higher-margin product lines; and
- Intensifying working capital management to unlock liquidity and operational flexibility.
Management expects these actions to produce positive operating cash flow in upcoming quarters, with measurable improvement anticipated in the second quarter of fiscal 2026.
Outlook
Looking ahead, Unifi plans to maintain a disciplined approach to cost management, emphasizing reduced operational and capital expenditures throughout fiscal 2026. The company anticipates improved operating cash flow in the second quarter, driven by working capital reductions and lower production spending.
Despite near-term challenges, Unifi remains focused on advancing its innovation strategy, expanding its circular textile solutions, and positioning the company for long-term growth.
“Looking forward, we are making the necessary changes to strengthen our business and capitalize on the investments we’ve made in sustainable innovation,” said Ingle. “We expect to see the benefits of these actions in the near term, allowing us to better capture opportunities as trade conditions improve and to deliver long-term value for our shareholders.”
Non-GAAP Financial Measures
Adjusted Net Loss and Adjusted EBITDA are non-GAAP financial measures that exclude certain items such as transition costs. Reconciliations of these metrics to the most directly comparable GAAP measures are included in the company’s earnings materials available on its investor website.
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