Endeavour Group CEO and Chairman explain profit warning

Earlier this week, Endeavour Group published its first quarter results for Financial Year 2025, revealing a total sales revenue of $2,538 million, in line with Q1 FY24.

Endeavour Group also concurrently issued a profit warning for the upcoming quarter, listing “softer sales,” “a lower margin sales mix” and “continued inflationary pressure on operating costs” as factors impacting profit forecasts. The update also stated that sales had slowed in September after a positive start to the new financial year.

This morning, CEO Steve Donohue and Chairman Ari Mervis addressed these concerns at Endeavour Group’s Annual General Meeting.

“The economic conditions and consumer environment in F24 created challenges for the retail sector, including for Endeavour Group,” said Donohue.

“Consumers remain value-focused in the face of hip-pocket pressure, while elevated supply chain costs and continued inflationary pressure on other operating costs are yet to abate… I think it is, however, important to acknowledge that these challenges accelerated in the first quarter of F25, and while we also continued to outperform the market, we clearly have more to do.”

In his presentation, Donohue also said that Endeavour’s weak trading results reflect an ongoing post-pandemic market correction.

“Whilst the current market is particularly challenging, the underlying dynamics of the retail liquor industry have been consistent over a very long period: stable low-to-mid single digit growth, delivered through both population-driven volume growth and consistent price growth. We are facing a significant cyclical correction after unprecedented growth during COVID.”

Similarly Ari Mervis added that, “while the financial results that we delivered did not meet the expectations of the Board or of Management, it was encouraging to see market share growth, particularly in the retail sector, and improved voice of customer feedback, which was already at all-time high levels.”

Moving forwards, Endeavour Group will continue to focus on delivering value-oriented offerings to its customers.

“We will continue to ensure that we deliver value, range and convenience through our retail network, and in hotels we will deploy capital to increase returns on this part of the portfolio,” said Mervis.

“As a positive shopper experience is at the heart of every interaction, we will continue to relentlessly focus on in-store execution, relevant choices, digital support and great customer service.”

Donohue added, “By focusing on our customers and maintaining price competitiveness and value, we will profitably grow Retail sales above market and maximise returns from our existing assets. And through a combination of operational improvement and disciplined capital deployment we will continue to work towards unlocking the $150 million EBIT opportunity that we believe exists in our Hotels business.

“While we face challenges in the short term, we continue to make progress and remain well positioned to deliver sustainable results through the cycle.”