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Tariff Uncertainty Troubles Unifi

NTMT New Textile Materials 2025-09-15 14:58:54

Unifi, the American polyester leader headquartered in Greensboro, North Carolina, continues to take measures to increase profits, but net sales for the fiscal year ending June 29, 2025, still declined to $571.3 million, compared to $582.2 million for the fiscal year ending June 29, 2024.

However, the net loss decreased from $47.4 million in 2024 to $20.4 million in 2025.

“Our fourth-quarter results were below our expectations due to weakened order patterns caused by recent tariffs and trade uncertainties among our customer base,” said CEO Eddie Ingle. “This includes major customers delaying ordering patterns as they wish to wait and better assess how tariffs will impact global trade patterns. Therefore, we consider these to be temporary effects on our business, as we continue to see strong suppressed customer demand prior to clarity in trade policies. Despite the challenging operating environment, we continue to make meaningful progress in optimizing the business and streamlining operations.”

In February 2025, Unifi announced the closure and planned transformation of certain domestic manufacturing operations, including its factory in Madison, North Carolina, to improve operational efficiency, reduce fixed costs, enhance profitability, and further strengthen its balance sheet. The related real estate sales were completed in May, and manufacturing transformation and restructuring expenses will continue through the first quarter of fiscal year 2026. Thereafter, Unifi expects to save approximately $20 million annually, primarily through workforce reductions and operational synergies.

"As we look ahead to fiscal year 2026, we recognize that our business performance has not yet reached the level we desire and has been temporarily impacted by a turbulent trade environment," Ingle said. "We have made significant changes to strengthen our business, including reducing costs and establishing a more streamlined production base in the U.S., which will drive higher utilization as we move forward. We also believe that our forward-looking decisions have enhanced our competitive position, improved our cash generation capability, and strengthened our profitability, all of which will contribute to Unifi achieving better performance in the future. Most importantly, our conversations with global brands confirm that the demand for sustainable solutions and the commitment to circular textiles have not diminished. While these strategic decisions help us address these temporary challenges, their ultimate goal is to position Unifi for long-term success."

Due to the increase in tariffs affecting Mexico and Canada but having little impact on China, the Asian segment market is expected to improve in the fourth quarter of fiscal year 2025. Demand remains stable and is expected to grow with the launch of the REPREVE Takeback innovation and Thermaloop products. Both new products are made from 100%* recycled polyester materials, containing at least 50% textile waste, and meet original quality standards. The Textile Takeback process uses patented technology to recycle global post-industrial and post-consumer textile waste into next-generation materials. To further enhance the value of the entire supply chain, UNIFI will also collaborate with global brands to recycle their waste and extend the circulation time of the materials.

Tariffs' Impact on Central America: The impact of tariffs is uncertain, but Central America may see increased demand due to the threat of tariffs.

The current status of the carpet and military market products: The potential growth of the carpet and military market is expected in 2025. The new installed capacity will meet the growing demand. The product outperforms existing products, showing strong investment potential.

Manufacturing Optimization and Cost Savings

Unifi announced the closure of one of its three factories in the United States, with production transitioning to other factories. This will improve the utilization of fixed costs and profitability.

This decision is expected to save the company a significant amount of costs and strengthen its financial position.

Beyond Clothing and Circular Initiatives:

Unifi's efforts in surpassing the apparel sector (carpet market and military applications) and circularity are beginning to pay off with initial sales revenue in these areas.

The company expects these measures to generate additional revenue benefits in the second half of the 2025 fiscal year and in 2026.

Challenges and Opportunities in the Asian Submarket:

Due to China's unfavorable economic conditions and price pressures, the Asian segment has faced headwinds, resulting in a net sales decline of approximately 7% year-on-year.

However, Unifi expects that the Asian segment will improve in the second half of this fiscal year, driven by the launch of new products and market conditions.

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Tariff Uncertainty Troubles Unifi

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