Endeavour Group and Coles Liquor faced the ire of shareholders this week as cost-of-living pressures battered profits for the retailers in the first quarter of FY27.

Total group sales for Endeavour Group rose 2.8% in the first quarter to $3.18 billion with sales at Dan Murphy’s and BWS up 3% to $2.57 billion, while sales growth of 1.9% at hotels delivered $603 million.

Endeavour Group Managing Director and CEO Jayne Hrdlicka said: “In a challenging macro-economic environment, our retail business continued to outpace the overall liquor market, delivering 3% sales growth in Q1, reflecting a very strong July and more moderate consumer spending since. Our retail business has now achieved four consecutive quarters of sales growth.”

However, major shareholder Bruce Mathieson Jr expressed his dissatisfaction to The Australian at the result and voted against Endeavour Group’s remuneration report at the retailer’s Annual General Meeting.

“We continue even now to reward existing executives for underperformance … all at the expense of the shareholder and it continues,” he said. “It is a great company, great assets but continued underperformance.”
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Looking ahead, Endeavour Group said it expected customers to continue to manage their spending carefully and prioritise value for money in their purchasing behaviour.

“As we approach the end-of-year holiday season, we have clear plans in place across the Group to ensure our range, value-driven offers and quality of service mean that we are the destination of choice for both retail liquor and hospitality,” the retailer said.

Coles’ shares fell as much as 13% following the announcement of its Q1 results. Coles Liquor sales revenue declined 1.3% to $831 million, which the retailer attributed to customer preferences continuing to shift towards smaller pack sizes and RTD products.

The retailer noted growth in demand for flavour-led innovation in RTDs and spritzes. Sparkling wine also performed well supported by targeted offers.

Coles said it continued to make good progress on its integrated food and drink proposition, with encouraging early results
from its expanded grocery impulse and entertaining ranges and cross-shop activity.

“Our Father’s Day Wine & Steak offer delivered double-digit growth in combined steak and red wine sales,” the retailer said.

Coles Group Managing Director and CEO Leah Weckert said: “We know household budgets are under pressure and customers are shopping more deliberately across retailers and channels.

“There is more to do to ensure we are front of mind for customers in this environment, and we are taking action to sharpen our offer over the coming months.”

Coles said cost-of-living pressures and elevated competitor promotional activity have continued to influence customer behaviour in the first four weeks of the second quarter.

In liquor, the sales revenue decline in the early part of the second quarter was broadly in line with Q1.

“We are investing more in lower prices and value for customers, while continuing to improve the customer experience,” Weckert said.

“I am confident that our teams’ focus on providing, quality, choice and inspiration for customers will deliver improving sales momentum through the festive season.”

However, the looming threat of another interest rate rise before Christmas is expected to impact festive sales.

Wilson Asset Management’s Oscar Oberg told the Australian Financial Review: “Another rate rise next week will be diabolical for the retail sector ahead of Black Friday and Christmas.”