Endeavour Group's profits down, but sales up, in half yearly report

Endeavour Group’s F24 Half-Year Profit and Dividend Announcement, published to the ASX this morning, reveal a resilient performance that saw a 2.5% increase in sales compared to its 2023 H1 results.

"Our first half result demonstrated the resilience of Endeavour Group,” said Steve Donohue, Endeavour Group Managing Director and CEO.

“Group sales grew by 2.5% to $6.7 billion, with Dan Murphy's and BWS both driving increased Retail sales, and an improved food and bar offering delivering growth in Hotels sales.

“Group EBIT increased to $661 million, benefiting from our disciplined focus on cost optimisation, including $53 million in savings from our endeavourGo program, and gross margin management.”

Despite the increase in sales, net profits after tax dropped 3.6% to $351 million. Endeavour Group attributes this decrease to higher finance costs and says it was in line with previous guidance.

Regarding the performance of its businesses, Dan Murphy’s continued to develop as Australia’s go-to liquor retailer for celebrations.

"Dan Murphy's strengthened its position as Australia's preferred drinks destination for events through the festive season, with customers continuing to respond to our great range and Lowest Liquor Price Guarantee,” said Donohue. 

“We also opened four new large format stores in the half, taking our popular offer to even more customers. We continue to report market-leading customer metrics and our My Dan's membership program now has 5.4 million active members, with record high customer engagement.”

BWS also continued to confirm its reputation as Australia's most convenient and value-driven liquor retailer. 

“BWS performed strongly through the half, with engagement with the younger adult demographic benefiting from the launch of our new brand campaign and innovation in our stores. 

“With 1,447 stores servicing communities around the country, including 12 net new stores opened in the half, BWS offers Australia's most convenient liquor store network.

Endeavour Group’s hotel sales also grew over the reporting period by 2.7%, driven by making its food and beverage options more tailored to local communities. 

“We continue to optimise our existing portfolio, with no hotel acquisitions in the half,” said Donohue.

Following a reportedly flat start to the year that saw only 0.3% growth compared to last year over the first seven weeks, Endeavour Group has reported growth of 1.5% so far this February. 

The report concludes by saying that Endeavour Group is well positioned to balance its short and longer-term obvjectives, and is targeting 10%+ return to shareholders from F26.

"These results are testament to the hard work and dedication of more than 30,000 team members in stores, hotels, wineries and support offices across the country,” said Donohue. 

Their resilience and commitment to our customers has been outstanding throughout the half, enabling us to build even stronger connections in more than 2,000 communities around Australia."

The half yearly report has come shortly after Woolworths Group adjusted its accounting treatment of Endeavour Group at the end of January due to Woolworths no longer believing it wields significant influence through its equity owned in the group. This change is expected to result in a loss of $209 million for Woolworths Group.