The Endeavour Group Ltd (ASX: EDV) share price is down 2% after reporting its FY23 result.
Endeavour is a business that owns a number of liquor stores, with brands like Dan Murphy’s and BWS. It also owns a large number of hotels around the country.
FY23 result
Here are some of the highlights from the result for the 52 weeks to 25 June 2023:
- Group sales increased by 2.5% to $11.9 billion
- EBIT (EBIT explained) rose by 10.7% to $1.02 billion
- Net profit after tax (NPAT) rose 6.9% to $529 million
- Profit / earnings per share (EPS) grew 6.9% to 29.5 cents
- Full year dividend per share increased 7.9% to 21.8 cents
Endeavour said that both the retail and hotels segments demonstrated stability.
Retail sales fell 1.8% to $9.9 billion, while EBIT dropped 1.2% to $658 million. The gross profit margin, cost of doing business margin and EBIT to sales ratio all improved.
Hotels sales soared 31% to $1.98 billion, while EBIT jumped 35.9% to $428 million. The business benefited from being open from restrictions compared to FY22. FY23 saw the return of live music and events, resulting in nearly 172,000 tickets sold. This is helpful for the Endeavour share price if hotel earnings continue to do well.
Management said that disciplined cost management has been a key focus throughout the year, which help it address inflation pressures.
Trading update
The company said that customer trends are showing resilience and stability so far.
In the first six weeks of FY24, retail sales have gone up by 2.5% year on year. Meanwhile, hotel sales have gone up by 4.6% year on year.
Outlook for the Endeavour share price
In FY24, the business wants to pursue disciplined cost management and optimisation that balances short and long term ambitions, and also accelerate its technology transformation to unlock future “optimisation and simplification” opportunities.
The company also said that it’s going to “accelerate growth” through prioritised deployment of capital to deliver a balance of short and long-term returns.
The Endeavour share price has dropped almost 30% over the past year, so it’s now much lower and possibly cheaper than before. However, it’s tricky to say if it’s good value because of the possible disruption caused by cashless gaming and government/AUSTRAC focus.
The ASX share might appeal to dividend income investors, but it’s not the sort of business that I’m looking to buy for my own portfolio.
