Endeavour Group has posted a 4% rise in sales to $12.3 billion in its FY24 financial results, however net profit fell 3% to $512 million.

While profit was slightly below consensus forecasts of around $514 million, it was in line with company guidance.

Endeavour Group Managing Director and CEO Steve Donohue said value-conscious consumers were turning to Dan Murphy’s for bargains as cost-of-living pressures continue to bite.

He noted there had been a large shift in the ready-to-drink (RTD) beverage space, where consumers are seeking convenience and value, moving from four-packs to cheaper six- or 10-pack because “you’re getting more bang for your buck on a per-ml or a per-litre basis”. In beer, he said shoppers were seeking 30-can slabs rather than 24 cans.

“People continue to spend about the same amount of money, they’re just demanding value for money,” he said.

In the group’s hotels, Donohue said customers were switching away from more expensive meals to cheaper items such as fish and chips and burgers. 

“Endeavour Group’s F24 financial results demonstrate the resilience of our brands and businesses in response to challenging trading conditions, with both our Retail and Hotels segments delivering sales and EBIT growth in a softening consumer environment,” he said.

“With household budgets under pressure, value-conscious consumers continue to seek out Dan Murphy’s for its well-known Lowest Liquor Price Guarantee, expert service and market-leading range. Our My Dan’s membership program has enhanced its range of member-exclusive discounts and personalised offers for its 5.4 million active members, delivering a strong 83% scan rate, with members spending 80% more per transaction than non-members.”

“BWS remains Australia’s most convenient drinks retailer with more than 1400 stores and an expanded range of delivery partners. We delivered even more value for customers with the launch of ‘Appy Deals’, our new member pricing digital offer that increased monthly active app users by 155%.

“Pinnacle Drinks continued to leverage customer insights to drive product innovation, with circa 400 new products
launched during the year driving over 50% of Pinnacle’s growth. Using a capital light model, Pinnacle generated $1.8
billion of Retail sales, with over half coming from wine where growth was driven by the premium and luxury segments.

“In Hotels, optimised food and bar menus and upgrades to accommodation delivered sales and gross profit margin improvement. Gaming returned to growth in H2, supported by investment in new games. We made progress on our
pipeline of targeted renewals, with renovated venues delivering an enhanced guest experience and improved
performance.

“We remained focused on tight cost management in an inflationary environment, with our optimisation program endeavourGO achieving $100 million in savings in the year. Our investments in enhancing our capability to drive efficiency across the business, including deploying AI and other technology, continue to contribute to both cost efficiency and GP margin expansion.”

Outlook for FY25

Endeavour Group said underlying sales momentum in both the Retail and Hotels segments improved slightly through the first seven weeks of trading compared with Q4.

The company said its focus on offering the best prices across both the Retail and Hotels segments continued to attract an increasingly value-conscious consumer.

Donohue said: “With our brands and venues being Australia’s go-to destinations for social occasions and events, we look forward to key upcoming first half trading events such Father’s Day, Cyber Week and the festive season, with our unrivalled value proposition, growing loyalty base and compelling consumer offer positioning us to perform well.

“We will continue to focus on tightly managing our costs as we execute our strategy scorecard commitments to deliver value for shareholders.”

Donohue’s comments echo those made by the Commonwealth Bank Group in the monthly CommBank Household Spending Insights (HSI) Index. It was flat in July, which the bank attributed to consumers looking to prioritise discount shopping options. 

Household spending in July saw the biggest falls across Hospitality (-2.4 per cent), Utilities (-1.3 per cent) and Food & Beverage (-1.2 per cent).

“Hospitality spending dropped in July and has been the weakest category over the past year, as consumers cutback on visiting cafes and bars,” CBA Chief Economist Stephen Halmarick said.

“We’re also seeing changes in shopping behaviours within categories, as consumers look for cheaper alternatives.”

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