This article first appeared on GuruFocus .
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Group Sales:Up 1.3% year-on-year, with second-half growth of 1.7%.
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Underlying Group EBIT:Declined 8.7% year-on-year.
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Underlying Profit Before Tax:Declined 13.1% to $544 million.
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Retail Sales:Increased 0.7% to $10 billion.
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Retail Gross Profit Margin:Declined 86 basis points to 23.6%.
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Retail Underlying EBIT:Declined 17.6% to $464 million.
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Hotels Sales:Increased 4.2% to $2.2 billion.
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Hotels Gross Profit Margin:Expanded 7 basis points to 84.9%.
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Hotels Underlying EBIT:Increased 4.1% to $462 million.
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Underlying Operating Cash Flow:$933 million, with an underlying cash realization ratio of 93%.
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Underlying Free Cash Flow:Negative $182 million.
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Net Debt:Increased by $198 million; underlying leverage ratio at 1.9 times.
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Significant Items:Pre-tax net expense of $372 million.
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Dividend:Fully franked final dividend of $0.012 per share, representing a full-year payout ratio of 59%.
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Retail Sales Growth (Dan Murphy's and BWS):Combined growth of 1%, accelerating from 0.7% in H1 to 1.4% in H2.
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BWS Online Sales:Record online sales growth of over 10% year-on-year.
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Hotel Renewals:Completed 38 renewals during the year, up from 27 in FY25.
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Net New Stores:Added 13 net new stores (six Dan Murphy's and seven BWS).
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FY27 Retail Sales Growth (First 7 Weeks):4.6%.
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FY27 Hotels Sales Growth (First 7 Weeks):2.2%.
Release Date: August 24, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Endeavour Group Ltd ( EDVGF ) delivered 10 consecutive months of retail sales growth, with Q4 retail sales accelerating to 2.2% and strong momentum continuing into FY27 with 4.6% sales growth in the first seven weeks.
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The company is gaining market share in retail, driven by successful price leadership and value investment, evidenced by record customer value-for-money scores at both Dan Murphy's and BWS.
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Hotels business showed resilience with 4.2% sales growth, record trading during key social occasions, and strong performance from renewal activity, with the FY24 cohort delivering over 20% ROI.
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The company reaffirmed its $300 million cost-out target by FY29, including $100 million in FY27, with 70% of FY27 initiatives already executed.
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Online sales in retail grew over 10% year-on-year, with BWS app monthly active users up 15% to over 730,000, and in-store transactions also trending back towards growth.
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The company completed 38 hotel renewals in FY26, up from 27 in FY25, and plans to double this to up to 75 venues in FY27, with a strong track record of returns.
Negative Points
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Underlying group EBIT declined 8.7% and underlying profit before tax fell 13.1%, primarily due to a 17.6% decline in retail EBIT from price investment and elevated promotional activity.
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Retail gross profit margin declined by 86 basis points to 23.6%, reflecting investment in lower shelf prices and increased competitive promotional activity.
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The company incurred significant items of $372 million pre-tax, including asset write-downs and restructuring costs, and impaired 75 retail stores.
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FY27 will be a year of heavy investment with increased CapEx of $550-$650 million and incremental OpEx of $40-$60 million, leading to expected leverage above the target range.
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Hotels sales growth moderated in FY27's first seven weeks to 2.2%, with softer trading across all key drivers and reduced spend-per-visit due to cost-of-living pressures.
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Finance costs are expected to rise to $330-$340 million in FY27 due to increased net debt and interest rates, and the company expects negative free cash flow in the near term.
Q & A Highlights
Q: What is the outlook for retail sales growth in FY27, given the strong 4.6% start, and how should we view the impact of promotional activity like the 20% off promotion? A: Jayne Hrdlicka (CEO) noted that the strong start includes a larger-than-normal 20% off promotion, but underlying momentum is healthy. She cautioned against over-indexing on any single event, stating the consumer environment remains uncertain. The focus is on continuing to build momentum through retail fundamentals, targeted marketing, and competitive pricing, though the company cannot predict month-to-month growth.
Q: Is the $40 million to $60 million incremental OpEx investment in FY27 a permanent step-up in the cost base, or is it one-off? A: Jayne Hrdlicka (CEO) clarified that the investment is specific to FY27 initiatives and is a mix of labor, tools, and technology. While FY27 is the heaviest year of transformation investment, there will be incremental OpEx in FY28 and FY29, but it will not be at the same level. Each initiative has a business case with expected returns flowing through in 2028-2030.
Q: Will the elevated wage growth and incremental investments in FY27 offset the $100 million cost-out target? A: Kate Beattie (CFO) confirmed that wage growth in FY27 is materially elevated, and the $100 million cost-out will largely offset it but will not drive more than an offset to wage inflation. The company is flagging that FY27 includes additional investment, so CODB growth is expected to be elevated.
Q: What are the implications of the Pinnacle Drinks portfolio changes on gross margin and gross profit dollars in FY27? A: Jayne Hrdlicka (CEO) explained that the changes are about improving the performance of the private label business by reducing SKUs that don't justify their real estate. The decisions were made on gross margin, not sales, and the simplification improves the economics of retail and enables greater focus on Pinnacle's core role.
Q: Did the retail business benefit from the FIFA World Cup during the first seven weeks of FY27, and how should we view the sales momentum? A: Jayne Hrdlicka (CEO) acknowledged that the period was festive with lots of sport, but it's hard to ascribe specific sales to the World Cup. The company continues to trade well, and the momentum is broad-based, not solely event-driven.
Q: What is the profit impact of hotel renewal disruption in FY26, and how should we model the step-up in renewals to 75 venues in FY27? A: Kate Beattie (CFO) said it's hard to get a definitive read-through due to the disruption and recovery cycle. The step-up in venue touches in FY27 will replicate and potentially amplify the disruption seen in FY26. Renewed venues perform better, but during renewal, fixed costs are not fractionalized, so interim EBIT margins may be softer.
Q: Is there a meaningful performance differential between online and in-store sales, and between Dan Murphy's and BWS? A: Jayne Hrdlicka (CEO) and Kate Beattie (CFO) noted that online sales grew 30% and are a stronger driver of growth, but in-store transactions are also trending back to growth. Dan Murphy's benefits from price positioning, while BWS leverages its 1,450-store network for ultra-convenience. The omni-channel approach creates a virtuous cycle, with online orders often picked up in-store.
Q: Is the softer hotel sales momentum in July and early August driven by lower visitation or lower spend per visit? A: Jayne Hrdlicka (CEO) confirmed it is primarily spend per visit, correlating with fuel price increases. The company is increasing tactical efforts to drive foot traffic and appeal to broader catchments. Kate Beattie (CFO) added that renewed venues are performing proportionately better than non-renewed ones.
Q: Given the impairment of 75 stores, are there plans for store closures, and how should we think about the store network? A: Kate Beattie (CFO) explained that the impairments reflect forward earnings not supporting the invested asset base, not necessarily planned closures. The company continuously optimizes the fleet, moving licenses from BWS to Dan Murphy's where possible. Net new store openings in FY27 are expected to be around 10, similar to the current trajectory.
Q: How comfortable is the company with the build in underlying debt levels given the negative free cash flow and elevated CapEx? A: Kate Beattie (CFO) acknowledged FY27 is an investment year, and leverage is expected to be above the top end of the target range. The dividend payout ratio was revised to 50%-75% to manage this. The investments are supported by business cases that will generate returns in due course, so the debt build is near-term and followed by return generation.
Q: Should we expect retail gross margin to be flat year-on-year after the step-down in FY26? A: Kate Beattie (CFO) declined to provide guidance, noting the critical swing factor is the competitive environment. While the company will cycle the shelf price reductions, the level of competitive intensity will determine the gross margin trajectory. Jayne Hrdlicka (CEO) added that FY26 only had three quarters of the price investment, so the comparison is not clean.
Q: Will the impairment charges reduce D&A and AASB 16 rent charges going forward? A: Kate Beattie (CFO) said the impact will not be materially visible on the face of the accounts because the step-up in investment is substantially offsetting any D&A benefit from the impairments.
Q: Are consumers trading down in the retail business, similar to the lower spend per visit in hotels? A: Jayne Hrdlicka (CEO) stated that there is no obvious evidence of trading down in retail, though it could be masked by growth in other areas. The company is keeping a close eye on consumer behavior.
Q: Have BWS stores co-located with Woolworths performed differently, given the popularity of Ooshies? AFor the complete transcript of the earnings call, please refer to the full earnings call transcript .
