Endeavour Group profit slips on higher finance costs but first-half sales at Dan Murphy’s, BWS solid

Liquor sales at major retailers Dan Murphy’s and BWS have been largely flat so far this year, parent company Endeavour Group says, as customers feel the squeeze on their hip pocket.

Endeavour noted sales had lifted this month, with sales up 1.5 per cent in the first three weeks.

In the group’s hotel businesses, sales have been steady to date, the company said, with year-on-year sales growth of one per cent. Through its ALH brand, Endeavour operates a string of hotels around the country.

Endeavour’s post-tax profit was down 3.6 per cent for the six months to December 31 to $351 million, the company told the ASX on Monday, which had been previously outlined. It attributes the fall to higher finance costs.

Chief executive Steve Donohue said a continued focus on low prices and delivering value was key. He said customers were “continuing to respond” to the Dan Murphy’s range and lowest price guarantee.

“We also opened four new large format stores in the half, taking our popular offer to even more customers,” he said.

Mr Donohue added the company was making progress on plans to unlock shareholder value via its freehold property assets, valued at more than $1 billion — through sales, development and renewal of venues.

Over the second half, hotel sales increased 2.7 per cent, with Mr Donohue detailing stronger food and beverage offers “tailored to local communities” had delivered a strong result, including a record Christmas.

“Across Australia, people continued to enjoy our hotels, particularly during the festive season where our value offerings resonated strongly with customers in today’s higher cost-of-living environment,” he said.

Sales across the group were up 2.5 per cent in the first half of the financial year to nearly $6.7b. Its higher finance costs, which hit profit, were driven by higher interest rates and higher average net debt levels, the company said, with an effective tax rate of 30.9 per cent.

“Demand for our hotels remains resilient despite cost of living pressures, with customers continuing to embrace their local pub as a value-for-money destination for social occasions,” the company stated.

The number of properties in the hotels portfolio was largely stable at 353, with no new openings but the closure of the Captain Stirling in Perth’s western suburbs.