Unifi Inc. reported a challenging QQ1 2026, with consolidated revenue of $135.7 million and a net loss of $11.36 million ($0.62 per share), reflecting tariff- and trade-related demand softness that weighed on all segments. Gross margin was only 2.5%, and EBITDA was negative at $-3.24 million, underscoring the earnings impact of near-term volume weakness and transition costs from the Madison facility closure. Management responded with a comprehensive cost restructuring program, headcount reductions, and a resizing of the cost base to align with the new, lower revenue level. These actions are designed to restore profitability and improve cash flow as demand normalizes, with October results indicating the early benefits of cost actions and capacity right-sizing in the Americas.
Management articulated a multi‑stream plan to restore revenue momentum and margin resilience, including price actions to offset inflation and tariffs, an asset-light and flexibly scalable model in Asia, and repositioning toward higher-margin Beyond Apparel products (carpet, military, packaging) and REPREVE innovations (Takeback and resin). The company also highlighted meaningful longer‑term opportunities in the Americas via Central America production and U.S.-based supply chains that can reclaim some of the 10% reciprocal tariff, potentially improving competitiveness against Asia. Management guidance points to sequential EBITDA improvement into Q2 and stronger top-line trajectory through calendar 2026 as channel inventories normalize and trade clarity improves. Overall, the investment thesis hinges on (1) rapid execution of cost takeout and capacity alignment, (2) accelerating demand as tariffs subside and inventories unwind, and (3) the increasing contribution from REPREVE and Beyond Apparel initiatives as catalysts for margin expansion and cash flow generation.