UFI - Unifi's Painful Bottoming Out Drags On But The Worst Appears To Be Over
2024-07-08 13:24:25 ET
Summary
- Unifi has struggled through a painful customer destocking, as well as fierce competition from Asian producers, leading to ongoing weakness in revenue and margins.
- Management has responded with cost-cutting measures and efficiency moves to minimize losses and boost margins as the business recovers, and the exit of a regional rival is boosting volumes.
- Despite challenges, Unifi remains optimistic about a recovery, especially with the ongoing adoption of REPREVE by retailers for sustainability commitments.
- With retailers no longer actively reducing inventories, the worst appears to be over for Unifi and the shares are not expensive, but this is a high-risk recovery idea as consumer spending softens.
There’s been little to celebrate at Unifi ( UFI ) since my last update on this U.S.-based polyester yarn company. Retail spending has remained lackluster and while retailers are done with their large inventory restructurings, they’ve been cautious as a group when it comes to restocking/reordering. Couple that with ongoing volume growth from Asian producers, and it’s a tough set up for Unifi that has led to ongoing weakness in revenue and margins....
Unifi's Painful Bottoming Out Drags On, But The Worst Appears To Be Over