Shares in grog retailer Endeavour Group (ASX:EDV) lost more than 7% at one stage yesterday, despite reporting record sales of $12.3 billion for the year to 30 June.
The owner of the Dan Murphy’s and BWS chains, as well as a fleet of pubs and pokies, saw a 3.6% rise in annual revenue turn into a dip in earnings for the 12-month period.
The company attributed the weaker earnings to "challenging conditions," citing the current weak economic environment.
Full-year earnings were around guidance, as the retail group noted "challenging trading conditions" and a "softening consumer environment" for the sluggish performance.
Endeavour reported a net profit after tax of $512 million, down 3.2% compared to FY23 but in line with market forecasts of $512.3 million. A miss of $900,000 is considered a rounding error in half a billion dollars and is not particularly significant.
Group EBIT rose 3.1% to $1.1 billion following the 3.6% rise in revenue.
The full-year dividend was set at an unchanged 21.8 cents a share, which is often the best indicator of the board's view on the result.
Looking to the year just started, Endeavour noted a slight pick-up in underlying sales momentum in both its retail and hotel businesses over the first seven weeks compared with the June quarter of 2023-24.
This performance appears to have been weaker than the market had anticipated, contributing to the decline in share value.
The company is continuing its cost-cutting efforts and is still targeting $290 million in cumulative savings by 2026, with a third of that figure forecasted for 2024-25.
Endeavour CEO Steve Donohue said the company’s latest results "demonstrate the resilience of our brands and businesses in response to challenging trading conditions, with both our retail and hotel segments delivering sales and EBIT growth in a softening consumer environment."
"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," he said.
"We remain focused on tight cost management in an inflationary environment, with our optimisation programme endeavourGO achieving $100 million in savings in the year."
But investors believe 2024-25 will be another lacklustre year.
