Endeavour Drinks – which owns Dan Murphy’s and BWS – has announced sales increased by 5% in FY19 to $8.7 billion, with comparable sales increasing 2.3%.
However, it suffered an 8.2% decline in earnings before interest and tax to $474 million.
Endeavour’s normalised FY19 EBIT also declined by 9.7%, with Woolworths noting the drop had been “previously foreshadowed” and reflected the “investment required to position the business for future success”.
The company also noted sales improved in the second half of the year, “driven by more settled weather and early progress on our refreshed strategy”.
CEO Brad Banducci revealed in February that Dan Murphy’s was struggling to open new stores and that consumers were drinking slightly less, trading down and demanding more convenience.
“We saw material trading down from champagne to sparkling wine, which flowed through the results,” he said. “It’s not a business that needs to be turned around but needs to be reshaped for the future.”
He flagged at the time that Endeavour Drinks’ EBIT for FY19 was expected to be below the prior year.
The company announced today: “We have begun to reposition Dan Murphy’s in a rapidly evolving drinks market, delivering improvements in service, range, price and convenience, and while early days, the results are very encouraging.
It reported the repositioning is “beginning to resonate with customers” through its discovery-based product and service strategy.
In-store customer experience was being enhanced with the introduction of wine merchants in key stores to improve team product knowledge and customer satisfaction.
The chain has also responded to consumer consumption trends, introducing more half-bottles to its range.
Dan Murphy’s delivered double-digit online sales growth with new customer offerings, including the roll out of on-demand delivery to 91 stores and 30-minute pick up from all stores.
Dan Murphy’s store network grew to 230 with three new store openings in Q4 including the first store to be powered by solar energy.
Memberships in My Dan’s loyalty program increased 15% on the prior year.
Endeavour noted that it had seen “strong growth in on demand across BWS and Dan Murphy’s”.
However, it said there was “more to do to continue to build operating momentum, especially in Dan Murphy’s” and to “strengthen Endeavour Drinks’ management team”.
Strong results for BWS
BWS also maintained its strong trading momentum, with enhancements to localised ranging and tailored Woolworths Rewards offerings.
The BWS store network grew to 1346 stores with 30 net new stores and the new BWS Renewal format successfully extended to key urban standalone stores. BWS’ convenience offering continued to expand, with On Demand delivery now available in 605 stores, supporting double-digit online sales growth.
“BWS continued to perform strongly driven by Customer 1st ranging, as well as leading in convenience options for customers.
“BWS and Dan Murphy’s key VOC metrics ended F19 at record highs, with improvements both in-store and online.
“The market remained subdued throughout the year with declining volumes offset by price and mix improvements. Sales growth in H2 improved on H1 in both Dan Murphy’s and BWS, with Endeavour Drinks’ sales increasing by 4.8% (normalised) with comparable sales increasing 4%, compared to 0.7% growth in H1. benefitted from more stable weather compared to Q2.”
Jimmy Brings expanded its geographical reach to Brisbane, Gold Coast, Canberra and new suburbs in Sydney and Melbourne.
Commenting on the outlook for FY20, Banducci said: “Endeavour Drinks is evolving to meet rapidly changing customer expectations with the biggest changes taking place at Dan Murphy’s.
“Endeavour Drinks will continue to focus on improving the digital experience, deliver more localised ranges to customers and improving service and convenience. The merger of Endeavour Drinks and ALH is progressing well with shareholder approval for the restructure to be sought at the AGM on December 16.”