Endeavour Group sales up 3.6% to $12.3bn, EBIT holds firm as customer-focused pricing and member value-adds, tech improvements and AI optimisation deliver stronger results

Endeavour Group has highlighted resilient trading, disciplined execution and a healthy dose of customer pricing and value for its solid financial results for the full year to 30 June 2024.

Group sales were up 3.6% to $12.3 billion, with group EBIT also up 3.1% to $1.1bn. Like many retailers, Endeavour Group net profits took a bit of a hit in the current economic downturn and dipped 3.2% to $512m.

Across the group, retail sales hit $10.2 billion in F24, up 3.4% versus F23 or 1.7% on a 52-week basis, with operating retail EBIT reaching $717m on a 53-week sales period versus $677m in FY23. Within this, BWS and Dan Murphy's accounted for $9.99bn Ecommerce sales grew 5.9% in the 52-week comparison period to comprise 8.9% of total retail sales.

Operating hotel EBIT was also up 1.8% to $451m year-on-year on sales of $2.1bn, up 4.2% on Fy23.

Endeavour Group Managing Director and CEO, Steve Donohue, said the F24 financial results demonstrated the resilience of the group's brands and businesses in response to challenging trading conditions, with both Retail and Hotels segments delivering sales and EBIT growth in a softening consumer environment.

A major highlight throughout the financial report is customer loyalty and value efforts. The My Dan's membership program, for example, enhanced its range of member-exclusive discounts and personalised offers for its 5.4 million active members, delivering a strong 83% scan rate, with members spending 80% more per transaction than non-members. Endeavour said MyDan's expanded member-exclusive offers, with personalised offers delivered a 29% sales uplift.

"With household budgets under pressure, value-conscious consumers continue to seek out Dan Murphy's for its well-known Lowest Liquor Price Guarantee, expert service and market-leading range," said Donohue.

"BWS remains Australia's most convenient drinks retailer with more than 1,400 stores, and an expanded range of delivery partners. We delivered even more value for customers with the launch of 'Appy Deals', our new member pricing digital offer that increased monthly active app users by 155%.

"Pinnacle Drinks continued to leverage customer insights to drive product innovation, with circa 400 new products launched during the year driving over 50% of Pinnacle's growth. Using a capital light model, Pinnacle generated $1.8 billion of Retail sales, with over half coming from wine where growth was driven by the premium and luxury segments."

In Hotels, optimised food and bar menus and upgrades to accommodation delivered sales and gross profit margin improvement. Gaming also returned to growth in H2, supported by investment in new games. Donohue said progress had been made on the group's pipeline of targeted renewals, with renovated venues delivering an enhanced guest experience and improved performance.

"We remained focused on tight cost management in an inflationary environment, with our optimisation program endeavourGO achieving $100 million in savings in the year," he said. "Our investments in enhancing our capability to drive efficiency across the business, including deploying AI and other technology, continue to contribute to both cost efficiency and GP margin expansion."

A noted project now underway is ramping up the One Endeavour program to separate from Woolworths and establish the group's own technology infrastructure. Endeavour group demerged from Woolworths in late 2021. The group is also looking to AI to further contribute to margin improvement and cost optimisation. In Fy24, gross profit margin improved by 66 bps to 24.4%, driven by enhanced promotional effectiveness supported by AI, data and new product innovation.

Another example of tech in play is the new pub+ app launched to NSW guests in May and rolled out nationally from August. The investment in digital, data and analytics will offer guests personalisation, convenience and value, Endeavour said.

As to FY25 outlook, Endeavour said underlying sales momentum in both the Retail and Hotels segments improved slightly through the first seven weeks of trading compared with Q4. It noted an ongoing focus on offering the best prices across both the Retail and Hotels segments continuing to attract an increasingly value-conscious consumer.

The group also advised the FIFA Women's World Cup and associated social occasions in early F24 limit the comparability between the same periods in F24 and F25, with headline sales growth in the first seven weeks 0.6% in Retail and 2.0% in Hotels.

A number of optimisation initiatives under the endeavourGO program continue, targeting $290 million plus in cumulative savings by F26.

Donohue said the structural resilience of the businesses, combined with high cash generation and strong balance sheet, position Endeavour well to deliver through the cycle. Endeavour's operating cashflow improved from $767m in Fy23 to $1.2bn in the last financial year.

"With our brands and venues being Australia's go-to destinations for social occasions and events, we look forward to key upcoming first half trading events such Father's Day, Cyber Week and the festive season, with our unrivalled value proposition, growing loyalty base and compelling consumer offer positioning us to perform well. We will continue to focus on tightly managing our costs as we execute our strategy scorecard commitments to deliver value for shareholders," he said.