Endeavour Group has warned investors that its retail sales growth in FY25 is facing ongoing challenges as customers continue to gravitate towards value.

Combined Dan Murphy’s and BWS sales were $2,466 million in the first quarter of FY24, down 1.1% versus Q1 FY24.

The company said customers continued to shop more selectively and prioritise value, with promotional activity intensifying
during the quarter.

Endeavour Group Managing Director and CEO Steve Donohue (above) said: “Endeavour Group delivered a stable trading performance in the first quarter as cost of living pressures continued to impact consumer spending in our categories.

“This result demonstrates the value of our diversified portfolio, with the moderation in retail sales during the quarter offset by a stronger performance in hotels. Retail sales were in-line with the first quarter of the prior year and Hotels recorded 2.5% sales growth.

“We are encouraged by our performance in hotels, which has been underpinned by growth across all four key business drivers – food, bar, gaming and accommodation. This result reflects the ongoing efforts of our team to enhance our customers’ experience across all aspects of our Hotels offering. It also demonstrates the resilience of the Hotels segment and the ongoing attraction of meeting at the pub for social occasions, despite the pressure on household budgets.

“After a positive start to the year, retail sales momentum slowed in September. During the quarter, promotional intensity lifted across the sector as customers became increasingly value conscious. In challenging market conditions, our retail business has continued to execute well.

“In the near term, softer sales and a lower margin sales mix, resulting from both a higher percentage of sales on promotion
and consumer downtrading, are expected to impact retail profitability.”

High hopes for Black Friday

Following the Australian Retailers Association (ARA) predicting a $69.7 billion boost in retail sales in the lead up to Christmas, kicking off with Black Friday on 29 November, Donohue said the promotion was expected to be a winner for Endeavour Group.

“Looking ahead, the second quarter remains an important period for the group, featuring the annual Black Friday and
Cyber Monday sales events as well as key social occasions including spring racing, the Christmas festive season,
New Year celebrations and summer entertaining.

“We are well prepared to execute successfully over the peak trading period by delivering the best prices, service and experiences for customers. Our 30,000 team members are committed to ensuring that we are the destination of choice for our customers as they gather with friends and family to socialise and enjoy the holiday season.”

The ARA said it is expecting a 2.7% increase on last year’s pre-Christmas sales figures, with new research from Roy Morgan revealing more Australians than ever will embrace the Black Friday/Cyber Monday sales window (29 November to 2 December) to capitalise on bargain gifts.

Shoppers are set to spend a record $6.7 billion during the four days, an increase of 5.5% compared to the same time last year. 

Bruce Mathieson lashes out

Endeavour Group’s biggest shareholder and most vocal critic Bruce Mathieson told The Australian that the company’s performance had been “a disaster and the share price proves that”.

He said he hoped the board under new chairman Ari Mervis “gets on with the job and cuts the costs out of it and gets it running the way it should be running”.

“I still think it is one of the wonderful businesses in Australia, Everything is there. It is just the people who have to change. There is not one negative other than the people running it,” Mathieson said.

“It has good properties and is in the right locations. We should be thriving. We always have as a family business done well in tough [economic] times, and this should be no different.

“The business is a wonderful business and can be turned around quickly if you put the right people in place.”

Executive leadership changes at Endeavour

Last week Endeavour Group revealed further changes to its executive leadership team following the announcement in September that Donohue would be stepping down.

Paul Carew has been appointed Managing Director of ALH Hotels, commencing in the new year. Carew is an experienced hospitality executive with more than 18 years in leadership roles in gaming and entertainment. He is currently the Chief Operating Officer at Tabcorp.  

Harinder Saluja has been appointed to a newly created role of Chief Transformation Officer, joining from the NSW Government’s Process and Technology Harmonisation Program.

Chief Marketing Officer Jo Rose has chosen to leave the company after three years to spend some time closer to her family in the United Kingdom.

Ilana Stringer will step down as Chief Strategy and Transformation Officer in February after more than three years with Endeavour Group and five years with Woolworths prior to demerger.