Greensboro, N.C.-based Unifi is implementing a cost-reduction and profitability-improvement strategy that includes workforce cuts and new executive appointments.
The maker of Repreve recycled synthetic yarns said it is streamlining its operations with headcount reductions set to lower expenses by $10 million to $15 million each year. The company did not specify how many jobs would be impacted.
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“In recognition of the current operating environment, we recently implemented an extensive Profitability Improvement Plan to optimize our resources,” Unifi CEO Eddie Ingle said. Unifi has seen more than a year of lackluster sales. “While this Plan came with difficult decisions, these measures will significantly improve profitability, helping to ensure Unifi has a robust foundation to foster growth and innovation, core tenets of the company’s strategy.”
The company in January reported a loss of $19.8 million for its fiscal second quarter. Adjusted for non-recurring and severance costs, the losses amounted to 81 cents per share. Unifi posted revenue of $136.9 million for the quarter. For the fiscal third quarter ending in March, it projected revenue ranging from $149 million to $154 million.
Ingle said sales transformation initiatives aimed at improving efficiency and processes are projected to pad operating margins by $6 million annually. “Additionally, the transformation of our sales processes will serve as a direct catalyst to improve gross margins and operational efficiencies,” he added. “Savings from these initiatives will be reinvested in the business, first in areas that should help us accelerate growth as demand levels reach the expected rebound across our industry in calendar 2024, and then to bolster the our balance sheet and already strong financial profile.”
The group officially rolled out its Profitability Improvement Plan in December, realigning its resources through layoffs and further resetting costs. The moves lowered Unifi’s variable operating expenses across U.S. production operations and administrative activities. According to the company, those actions are expected to lower expenses by $2.5 million each quarter beginning in fiscal 2025. The company recorded severance charges of $2.4 million at the end of the year.
Phase two of the plan involves gross margin expansion efforts and a transformation of Unifi’s sales processes, including inventory management improvements. By the beginning of fiscal 2025, the total cost reduction and projected profitability improvement is expected to reach $20 million per year on an annual run-rate basis, the group said. Unifi will put those savings toward revenue-generating and margin-boosting opportunities “beyond the traditional apparel market it serves today,” it said.
“We have streamlined our organization and realigned our Leadership Team to support a more efficient and responsive go-to-market structure,” Ingle added. “Collectively these actions will better prepare the business to deliver stronger results as our industry pivots to growth in calendar 2024.”
A.J. Eaker was appointed executive vice president and chief financial officer after serving in roles as CFO, treasurer and vice president of Unifi’s primary domestic operating subsidiary since 2017. Eaker joined Unifi in 2014, holding several finance roles. Meredith S. Boyd is the company’s new executive vice president and chief product officer, promoted from her position as senior vice president of sustainability, technology and innovation.
Brian D. Moore will serve as executive vice president and president of Unifi Manufacturing, Inc. Moore joined the company in 1993, holding roles in Unifi’s Asian market as well as leading global brand sales and U.S. sales. Gregory K. Sigmon was promoted to executive vice president, general counsel and corporate secretary, taking on expanded leadership responsibilities regarding sustainability and government affairs.
“Over the last decade we have focused on leadership development within our organization, and we are therefore very proud to announce promotions of talented leaders like A.J., Meredith, Brian, and Greg,” Ingle said. “Each has extensive experience and proven track records at Unifi that have been invaluable to the organization and our customers.”