GALE Pacific Limited (ASX: $GAP) FY24 Earnings Update

GALE Pacific Limited (ASX: $GAP) has announced a revision in its guidance for the 2024 financial year. The company now anticipates revenue of $172 million to $174 million and profit before tax of $(1) to $(2) million, compared to the previous forecast of surpassing FY23 revenue of $187.6 million and achieving a profit before tax greater than the FY23 result of $5.3 million.

Executive Commentary

The factors influencing this performance are lower than forecast sell-through at retail customers across the United States since mid-April due to the macroeconomic effect on consumer sentiment and spending, further on-hand inventory destocking by retailers across the US, and higher than anticipated implementation costs of approximately $4.9 million for the Company's new ERP system, most of which will not re-occur in FY25. Increased distribution and new product launches in the United States in Q3, coupled with increased revenue in the Developing Markets region and expansion in group gross margins, partially offset the negative demand and cost factors in the second half. The Company has initiated cost reduction measures entering FY25 to better align its operating cost structure and capacity to the current, lower demand environment. These initiatives, once complete, will position the Company for improved earnings in FY25 and FY26.

Summary

GALE Pacific Limited (ASX: $GAP) has adjusted its FY24 guidance downwards, citing lower than expected sell-through at retail customers in the United States, on-hand inventory destocking, and higher than anticipated implementation costs for its new ERP system. The company plans to release its FY24 results pre-market open on 19 August 2024 and has outlined cost reduction initiatives to improve earnings in FY25 and FY26. GALE's core strategy focuses on accelerating its growth as a global fabrics technology business through product innovation, category expansion, expanded distribution, and improved operational efficiency and flexibility.