How Is Gale Pacific Fighting Tariffs with Price Hikes and Manufacturing Moves?

Steady Financial Performance Amid Challenges

Gale Pacific, a global leader in technical fabrics, reported FY25 revenue of AUD 172 million, a modest 1% decline from the previous year. Despite this, the company achieved a 5% increase in normalized EBITDA to AUD 19.5 million, reflecting disciplined cost management and operational improvements. The net loss after tax widened to AUD 5.2 million, influenced by one-off costs and foreign exchange headwinds.

The Australia/New Zealand segment delivered solid results with share gains and strong retail sell-through, while Developing Markets saw revenue growth driven by project wins. However, the Americas segment faced significant tariff-related cost pressures, impacting peak season trading and revenue.

Tariff Impact and Mitigation Strategies

Approximately 85% of Gale Pacific’s Americas revenue is tied to products manufactured in China, exposing the company to increased US tariffs that rose sharply in February 2025. The company anticipates an incremental $3 million tariff cost in FY26, primarily in the second half. To counteract this, Gale Pacific implemented price increases across its US retail and commercial customers, largely offsetting the tariff impact and stabilizing margins.

Despite these measures, the US retail environment remains challenging, with ongoing uncertainty around trade policies. The company’s strategic response includes a comprehensive reset of its Americas operating model, which has already seen a 24% reduction in the US workforce and streamlined management roles, delivering $3.1 million in cash savings for FY26 and recurring annual savings of $3.7 million.

Manufacturing Diversification and Operational Efficiency

Gale Pacific is actively diversifying its manufacturing footprint to reduce reliance on China. Recent trials for roller shade assembly in Southeast Asia and pilot production of roller shade fabric in Thailand mark significant steps in this direction. The company is also reviewing its China manufacturing cost base with an eye toward warehouse consolidation and workforce optimization.

These initiatives aim to enhance operational agility and cost efficiency, supporting the company’s broader strategy to grow market share and improve profitability. The Q1 FY26 trading update showed stable EBITDA and improved net debt, reflecting early benefits from these changes.

Brand Refresh and Digital Expansion

In parallel with operational shifts, Gale Pacific is undertaking a global brand and website refresh to modernize its consumer and commercial identities. The rollout includes enhanced e-commerce capabilities, with a US launch scheduled for Q3 FY26 and an Australian launch planned for early 2026. This digital transformation is designed to strengthen customer engagement, drive sales growth, and differentiate the company in a competitive market.

Outlook and Strategic Priorities

Looking ahead, Gale Pacific is positioned to capitalize on the Australian peak summer trading season, while anticipating continued tariff-related challenges in the Americas. Growth in Middle East project activity is expected to persist, supporting revenue diversification. The company targets H1 FY26 EBITDA of approximately $4 million, with improved performance anticipated in the second half as cost-saving initiatives take full effect.

Overall, Gale Pacific’s refined strategy focuses on channel growth, manufacturing diversification, cost efficiency, and deepening customer connections to drive sustainable profitability and shareholder returns.