Billionaire Bruce Mathieson Sr, known for his extensive holdings in the pub and gaming industry, has called for a major overhaul of the board at Endeavour Group, Australia’s largest owner of pubs and poker machines. Mathieson, who holds a significant 15% stake in the company, has criticized the current leadership, specifically targeting Chairman Peter Hearl and CEO Steve Donohue for what he deems as “disgraceful” decisions that have led to the loss of billions of dollars in market capitalization.
Mathieson has thrown his support behind Bill Wavish, a seasoned retail executive, who expressed his interest in serving as an independent director within Endeavour Group. However, it’s uncertain whether Wavish will be nominated for this position. Over the past year, Endeavour’s market capitalization has plummeted by over $4 billion since its demerger from Woolworths in 2021.
In a scathing critique, Mathieson stated, “I don’t think anyone in this country would stand by the performance of this group under the leadership of Peter Hearl and Steve Donohue. It has been an absolute disaster, and their decisions have been disgraceful.” He emphasized the potential of Endeavour’s vast asset portfolio, which includes 350 pubs and large outlets, but lamented that the company’s performance falls far short of its peers in the industry.
One of Mathieson’s key grievances was Endeavour’s premature implementation of gambling reforms in Victoria, which he believes has cost the company millions in revenue. The decision to adjust the hours of gaming machine areas at ALH Hotels in Victoria, closing them between 4 am and 10 am by August 31, has been a costly one, according to Mathieson.
Endeavour Group is expected to release its annual general meeting notice, recommending the reappointment of two existing directors, Bruce Mathieson Jr. and Rod van Onselen, with board support for shareholder voting. The company has also initiated a formal process to appoint two new non-executive directors.
Responding to the situation, a spokesperson for Endeavour acknowledged Bill Wavish’s nomination and mentioned ongoing engagement with him as part of the board recruitment process. Wavish, who has an extensive background as the former CFO of Woolworths and a previous chair of Myer, argued that the current board lacks the necessary retail and pub industry experience to effectively govern the business.
Despite his optimism about his qualifications, Wavish is still in the process of obtaining regulatory approvals, a requirement for director candidates due to Endeavour’s status as Australia’s largest operator of poker machines. This approval process can take several months.
In light of two consecutive years of underperformance, Wavish stressed the urgency of conducting a comprehensive review of capital expenditures to ensure that the company generates a return on investment for shareholders. He also criticized Endeavour’s dilution of its brand propositions and rising costs, including an 11% increase in expenses in 2023 and an extended inventory cover of 72 days.
Endeavour Group reported a full-year dividend of 21.8¢, a 7.9% increase from the previous year, along with a $529 million profit that fell short of analyst expectations. Group sales increased by 2.5% to $11.9 billion, and earnings before interest and tax grew by 10.7% to $1 billion. However, the company’s share price has declined by over 20% in the past year, closing at $5.30 on Tuesday.