The Endeavour Group Ltd (ASX: EDV) share price is down 6% after reporting its FY25 first-half result.
Endeavour is a liquor and hotel/pub business. It owns Dan Murphy’s and BWS.
Endeavour FY25 half-year result
The company reported how it performed in the first six months of FY25, here are the highlights from the report:
- Group sales fell 0.7% to $6.6 billion
- EBIT declined 10% to $595 million
- Net profit after tax (NPAT) declined 15.1% to $298 million
- Interim dividend per share decreased by 12.6% to 12.5 cents
What happened?
The company said its sales were stable, underpinned by strong Christmas trading, despite Victorian supply chain disruptions, which cost the company between $40 million to $50 million.
Retail sales declined by 1.5%, reflected subdued consumer spending in the first half. However, Dan Murphy’s achieved a record sales result for the week before Christmas, while BWS had its best-ever week in the week before New Year’s Eve.
Hotel sales grew by 3.3% to $1.1 billion, with sales momentum “increasing throughout the half”. It achieved higher sales across food, bars, gaming and accommodation. The success of this division could become increasingly important for the Endeavour share price.
Pleasingly, the company’s group gross profit margin increased to 34.9%, thanks to a 11 basis point (0.11%) increase in retail and a 16 basis point (0.16%) rise in the hotels business. It said it has remained focused on profitable sales, including a more tailored approach to its promotional program.
Endeavour said operating costs rose by 3%, excluding one-off restructuring costs, as higher wages and rent were offset by $40 million of savings generated by the EndeavourGO program.
The lower profit reflected operating deleverage from lower sales, as well as $13 million of one-off restructuring costs. Those costs relate to the Jimmy Brings partnership with Milkrun, integrating of Shorty’s into Dan Murphy’s and support office restructuring.
Outlook for the Endeavour share price
In the first seven weeks of the second half, retail sales declined 0.8% and hotels sales rose 4.7%. Hotel sales have accelerated in the third quarter.
Retail sales have been impacted by ongoing effects of supply chain disruption. The company continues to prioritise operating efficiency and cost savings.
Endeavour shares are certainly cheaper than they were – it’s down more than 20% in the past year alone. However, I’m not sure if it’s the right time to buy – how will liquor sales performing in the coming years? I’m not sure. But, the progress with hotels is promising.
Either way, there are other ASX dividend shares I’d rather buy.
