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Record December sales for Dan Murphy’s have helped Endeavour Group (ASX: EDV) lift revenue for the first half of FY25, but it has come at a cost for the hotels and liquor store operator in the form of a lower pre-tax profit.
Dan Murphy’s had its busiest day on record on Christmas Eve last year, setting the pace for its biggest ever trading weeks leading into Christmas and New Year’s Eve.
Along with solid sales from BWS, this led to a 2.2 per cent increase in sales for Endeavour Group’s retail division to a new record for December.
But promotions and discounts have seen gross profit margin for the retail division slip about 85 basis points below the previous corresponding period.
Endeavour Group revealed today that group sales were up 1 per cent to $6.68 billion in the six months to the end of December.
The retail division’s sales edged just 0.3 per cent higher to $5.51 billion – although this was impacted by a 16.2 per cent fall in Endeavour’s specialty businesses outside of Dan Murphy’s and Endeavour which together achieved a 0.7 per cent lift in sales.
But a robust contribution from the hotels division – which Endeavour CEO Jayne Hrdlicka says benefitted from “exceptional holiday spirit” – has failed to drive pre-tax profit higher for the group.
Endeavour Group is forecasting EBIT of between $555 million and $566 million for the first half, down from $595 million in the first half of FY25.
The retail division is forecast to contribute between $323 million and $328 million of this total, down from $370 million a year earlier.
“The pricing and promotional decisions we have made in our retail business have generated positive sales results, delivering on our aim to better align the customer propositions for each of our brands to re-ignite top line growth,” says Hrdlicka.
“In a competitive market landscape, we have focused on reinforcing customer confidence in the value we offer across all channels, particularly in Dan Murphy’s unbeatable price and customer experience.”
The Endeavour CEO describes discounting as a key step to realising the potential of the company’s retail brands by improving sales momentum.
“As the first half progressed, we made a number of decisions to improve customer engagement and generate higher sales velocity, including investment in lower shelf prices,” she says.
“This year, guided by our refreshed strategy, we will begin to put in place a range of initiatives that will help to improve the sophistication of our in-store price execution, further improve our in-store and online customer impact as well as add to our cost reduction agenda.
“It will take time for these initiatives to be implemented and for the full benefits to be realised.”
Meanwhile, sales in Endeavour’s hotels division lifted 4.4 per cent to $1.2 billion for the first half of FY26, with growth in the second quarter driven by an increase in gaming revenue and growth from refurbished venues as well as “positive trends” in food and bar transactions.
The hotels division had a record monthly sales result in December, aided by record sales for food, bar and accommodation on New Year’s Eve.
“The holiday spirit across our hotels business was exceptional, enabling strong results,” says Hrdlicka.
“There is a lot to play for in our hotels portfolio and we are excited by the opportunity to create additional value as we begin to roll out the refreshed strategy. I look forward to updating the market with further detail on our plans later this year.”
Endeavour has forecast EBIT, before significant items, of between $271 million and $275 million for the hotels division in the first half of FY26. This is up from $262 million a year earlier.
The group is targeting a pre-tax net expense of about $45 million related to significant items for the half-year.
Shares in Endeavour Group were 17c lower at $3.64 at 11.55am (AEDT).
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