Unifi Inc delivered a mixed Q2 FY2025 (QQ2 2025) result characterized by revenue resilience in the Americas and a strong Brazil performance, but with material earnings pressure stemming from ongoing US manufacturing consolidation and headwinds in Asia. Consolidated net sales reached $138.88 million, up 1.4% year over year, while gross profit barely covered direct costs, producing a gross margin of approximately 0.385%. The quarter's operating and net income were negative, with an EPS of -0.62 and net income of -$11.39 million. Management highlighted strategic actions aimed at improving leverage and profitability in the second half of fiscal 2025 and into 2026, including the closure of the Madison, North Carolina facility, consolidation of US production, and continued emphasis on the REPREVE fiber platform and Beyond-Apparel initiatives (carpet and military applications).
Management signaled early green shoots in demand beginning January, with expectations for stronger H2 performance and improved demand visibility. The company reiterated guidance for Q3 2025 (fiscal 2025) to see sequential improvements in net sales and adjusted EBITDA, while full-year 2025 net sales are expected to be in line with 2024, albeit with higher transition costs as the Madison consolidation progresses. Management also underscored potential tailwinds from tariffs and de minimis policies, and emphasized cost discipline and innovation investments to support margin expansion over time. This combination of near-term earnings pressure from restructuring and mid-to-long-term growth drivers in REPREVE and beyond-apparel suggests a volatile but potentially constructive path to profitability and cash flow restoration. Investors should weigh the near-term weakness against the potential for margin improvement, reduction in fixed costs, and revenue diversification in 2026 and beyond.