Endeavour has pointed to a ‘renaissance’ in people going to pubs to explain its decline in trading, as it posts its worst financial results since listing on the ASX.
The company (ASX:EDV), spun out of Woolworths in 2021, holds a suite of alcohol-related brands, led by 1,728 bottleshops, predominantly under the Dan Murphy’s and BWS banners, and 354 pubs under Australian Leisure & Hospitality (ALH), as well as some wineries and white label liquor brands.
After 30 years at the company former chief executive Steve Donohue stepped down in September, after assisting in the search for a replacement. In February Endeavour announced Ari Mervis would temporarily move from being chairman to executive chairman, as the search continued.
ALH has been working to lift performance in its expansive portfolio, the largest pub collection in the country, which has involved initiatives such as an increased use of AI and applying capital in the pubs.
In May it presented the overhauled Crows Nest Hotel in Sydney’s north shore, in June it unveiled multi-million-dollar renovations at the Cherry Hill Hotel and Pub Mooloolaba, and in July it announced plans to build a 30-storey residential tower over Brisbane’s Morrison Hotel.
Full year results for FY25 were released in the past week, headlined by lacklustre retail liquor sales, for a statutory fall in revenue of two per cent, to $12.06 billion. This amounted to a drop of 15.8 per cent in profit against the same period, to $426 million.
Behind this were a drop in bottleshop sales by 1.2 per cent (to $10bn) and earnings by 17.8 per cent (to $563m).
At the same time, revenue in the pubs grew 4.1 per cent as ALH recorded growth across its key business drivers of dining, bar sales, gaming and accommodation. Total sales reached $2.1 billion, taking earnings up 1.4 per cent, to $444 million.
Endeavour’s reporting suggests shoppers are looking for value, noting an increase in the sale of its products that are at “entry level” price points.
The company also endured $13 million of one-off restructuring costs arising from its separation from Woolworths, and yet it still shares some distribution channels with the supermarket giant, which saw it get caught up in industrial action late 2024 that reportedly resulted in close to $50 million in estimated lost trade.
These latest results sustain the depressed figures posted for the first half of the financial year as Endeavour profit fell by more than anticipated across both the liquor stores and pubs. The release cited revenues as nearly flat, at $6.62 billion, earnings falling 10 per cent (to $595m) and net profit down 15.1 per cent (to $298m).
This result was similarly dominated by the retail sales, with revenue in the company’s pubs reportedly rising 3.3 per cent. The ongoing capex bore fruit in the second half year’s sales, which were up five per cent.
In February Endeavour posted an interim dividend of 12.5c, down from 14.3c in 2024.
Instability in its management and shareholder register is proffered as a partial explanation, or possibly a consequence, of its flagging results. This was highlighted this month with the surprise departure of Ari Mervis as the newly-appointed executive chairman.
It leaves Endeavour under the guidance of an interim CFO, interim CEO and new interim chair, Kate Beattie, as it waits out the five months until former Virgin CEO Jayne Hrdlicka comes on as the new chief executive.
Beattie denies any effect of management fluctuation and suggests a “subtle shift in where people enjoy alcoholic beverages” may be behind the competing results between its hotels and bottleshops and the shift in consumer spending patterns, attributing the trend to a ‘pubs renaissance’.
Full year figures saw Endeavour cut its final dividend to 6.3c per security, payable in October. This is down 16 per cent on last year’s 7.5c.
The news triggered another dive in the Endeavour share price, hitting $3.96. This is a decline of 7.2 per cent on close a week ago, and 53 per cent less than its high of $8.32 in August 2022.
