Woolworths warns liquor earnings will be down in 2019

Endeavour Drinks Group has rebounded from disappointing results in the first half of FY19, reporting sales growth of 5.9% in Q3.

In HY19 EDG’s sales increased by 1.8% and EBIT decreased by 6.4% [to $290 million], with Dan Murphy’s below expectations in a low-growth market, impacted by cooler and wetter weather around key events and the timing of New Year’s Eve.

Woolworths Group CEO, Brad Banducci said: “After slower sales growth in H19, Endeavour Drinks’ sales momentum improved in Q3 with Easter-adjusted comparable growth of 5.9%.

“We still expect Endeavour Drinks’ EBIT for F19 to be below the prior year as we invest in improving our range, service and convenience for our customers.”

Endeavour Drinks’ Easter-adjusted sales increased by 6.4% with comparable sales increasing by 5.9%.

In-store and online VOC metrics improved across both BWS and Dan Murphy’s in the quarter. Woolworths reported both businesses also delivered positive comparable sales growth "with Endeavour outperforming the market in all key categories".

BWS’s comparable sales were also supported by Customer 1st Ranging, the amplification of convenience offerings and the success of its Renewal program.

Woolworths Group noted: “Despite the strong sales growth, category mix remains a challenge, particularly for Dan Murphy’s. The overall Wine category in Australia contracted marginally in the quarter with Beer and Spirits category growth of approximately 2% and 4% respectively.

“Beer sales were boosted by the introduction of the Container Deposit Scheme in Queensland in November.”

Online sales remained strong with growth of 10.5%.

During the quarter, seven BWS stores were opened and one was closed taking the total fleet size to 1338. No new

Dan Murphy’s were opened during the quarter with 227 stores at the end of the period.

Following its performance being below expectations, Steve Donohue assumed the role of interim managing director of Dan Murphy’s to position Dan Murphy’s for the next horizon of growth.

Woolworths said its plan focused on localised ranging, building ‘discovery’ into all aspects of the customer experience and being digitally-led.”

Donohue is focussing on curating the chain’s range to suit traditional customers and Millennials.

Bars deliver strong growth for ALH

Easter-adjusted total sales for ALH increased by 2.7% with Easter-adjusted comparable sales also increasing by 2.7%.

Woolworths said sales growth in Q3’19 was driven by strong growth in Bars and Food and benefitted from the timing of New Year’s Eve.

“Bars delivered strong growth through televised sporting events and successful promotions,” it noted. “Food sales were strong as a result of successful promotional activity focusing on traditionally quieter times of the year and the performance of recently refurbished venues.

Three hotels were acquired in Q3’19 with 327 venues at the end of the quarter.