Latest Endeavour Group sales results reinforce value and convenience trends

May 6, 2024
By Cody Profaca

Endeavour Group’s third quarter results, released to the ASX today, are reflective of wider industry trends towards value-oriented liquor purchasing habits

The Q3 F24 results demonstrate stable sales in difficult conditions. Overall, Endeavour Group sales grew 2.2% on Q3 F23, including 2.4% in retail and 1.5% in hotels. Normalised change, accounting for the timing of Easter, reduces these figures to +0.9% in retail and +1.7% in hotels. 

“Endeavour Group delivered a stable third quarter trading performance in a softer market, with both Retail and Hotels growing sales and our brand and customer metrics remaining strong,” said Steve Donohue, Managing Director and CEO at Endeavour Group.

“This reflects the strength of our diverse portfolio and the efforts of our 30,000 team members to deliver outstanding customer service and memorable experiences.”

Retail sales for the quarter were worth $2.4 billion, with online sales marking the biggest change in growth at 8.4%.

“Dan Murphy’s online sales growth is predominantly being driven by the Dan Murphy’s app, which is rapidly becoming the preferred channel for online orders, delivering greater convenience and a more personalised experience,” read Endeavour Group’s ASX announcement.

The MyDan’s membership program also experienced significant growth over the quarter, adding over 175,000 new members and achieving a record peak scan rate of 84%. The increased online engagement with Endeavour Group’s retail stores was also highlighted by Coles Liquor in its recent third quarter results released by Coles Group last week. Coles Liquor sales decreased 1.9% over the period despite its e-commerce sales increasing by 4.1%.

Endeavour Group also recognises the important contribution of Pinnacle Drinks to its performance, including key innovations such as launching the wine spritzer category during the quarter. Pinnacle Drinks own-label products also received significant international accolades over the period, including Cat Amongst the Pigeons’ Fat Cat Tawny being awarded Wine of the Year at the 2024 London Wine Competition.

The While trading conditions started off relatively flat in January, sales at Easter, which was in the final week of the quarter, were ahead of the comparable period last year. 

“Our unparalleled value proposition continues to make Dan Murphy’s Australia’s leading destination for drinks, once again being named Liquor Store of the Year in Roy Morgan’s Annual Customer Satisfaction Awards,” said Donohue.

Revenue for ALH Group Hotels increased by 1.5% to $487 million over the quarter, or 1.7% when accounting for the timing of Easter. This strong growth has been supported by Endeavour Group’s new localised food and bar menu and its focus on value offerings. Revenue related to acommodation sales was supported by major touring events, such as the Taylor Swift tour, during the period. 

Gaming-machine revenue produced modest growth throughout the quarter. This was partly impacted in Victoria by Endeavour Group’s early adoption of the State Government’s planned changes to trading hours. 

“Our Hotels continue to show their resilience in challenging economic conditions, with all drivers in growth during the quarter,” said Donohue. 

“Our localised food and beverage offer continues to resonate strongly with customers looking to enjoy affordable social experiences with family and friends.” 

Endeavour Group has also stated that its Q4 F24 results to date, which have been broadly consistent with Q3 in both Retail and Hotels segments, are indicative of ongoing difficult market conditions that will continue to guide its plans of operations.

“We continue to experience inflationary cost pressures and are responding by tightly managing CODB, including progressing optimisation initiatives under our endeavourGO program,” said Endeavour Group’s ASX announcement.

“Capital expenditure fo F24 remains within our previously communicated target range of between $420 million and $480 million, with the timing of hotel acquisitions the most significant variable. Full year finance costs are expected to remain within the previously guided range of $300 million to $310 million. 

“The Group remains well positioned to perform through the economic cycle, with our strong customer advocacy and value credentials driving resilience.”

The Q3 F24 results only provide data on the sales from 1 January to 31 March this year. Since then, Endeavour Group has revealed a significant change to its partnership with Woolworths Group, who reduced their stake in the drinks company from 9.1% to 4.1%.

This marks a continuation of Woolworths’ ongoing devaluation of the importance of its stake in Endeavour that saw it cop a $200 million hit in January this year after “[derecognising] its equity accounted investment in Endeavour Group and [recognising] an investment in Endeavour Group as a financial asset, measured at fair value.” 

Woolworths Group has been progressively devaluing its stake in Endeavour Group ever since the drinks business parted ways from the supermarket group in 2021.

“While Woolworths Group and Endeavour Group remain important business partners, with a number of long term partnership agreements in place, we no longer believe that a material equity investment in Endeavour Group is required as Endeavour Group approaches its three-year anniversary as an independent listed company,” said Brad Banducci, CEO at Woolworths Group, last week. 

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