This article first appeared on GuruFocus .
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Underlying EBIT:$563 million, at the upper end of the January trading update range.
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Retail Sales:Increased by 0.2% to $5.5 billion in the first half.
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Dan Murphy's and BWS Sales Growth:Combined sales growth of 0.7%.
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Hotels Sales Growth:Increased by 4.4% to $1.2 billion in the first half.
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Net Expense:$45 million pretax related to significant items.
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Cost Savings:$24 million through the endeavourGO optimization program.
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Interim Dividend:$0.108 per share, 70% payout ratio of underlying NPAT.
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Online Sales Growth:35.1%, representing 11.3% of combined Dan Murphy's and BWS sales.
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Gross Profit Margin (Retail):Declined by 84 basis points to 23.9%.
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Underlying EBIT (Retail):$327 million, a decline of 11.6%.
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Gross Profit Margin (Hotels):Expanded by 12 basis points to 85%.
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Underlying EBIT (Hotels):Grew by 5% to $275 million.
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Net Operating Cash Flows:$997 million, with a cash realization ratio of 165%.
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Net Debt:Decreased by $34 million compared to the first half of F25.
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New Store Openings:5 new Dan Murphy's and 17 new BWS stores.
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Hotel Renewals:Completed 21 renewals with over 800 new EGMs installed.
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CapEx Guidance:Revised upwards to $460 million to $500 million.
Release Date: March 03, 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 ) reported an underlying EBIT of $563 million, reaching the upper end of their forecasted range.
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The retail segment saw a sales increase of 0.2% to $5.5 billion, with Dan Murphy's and BWS achieving combined sales growth of 0.7%.
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The hotels segment experienced a 4.4% sales growth to $1.2 billion, supported by investments in electronic gaming machines and venue renewals.
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The company achieved a record level of purchase intent and value-for-money customer engagement scores, leading to an all-time record sales month in December.
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Endeavour Group Ltd ( EDVGF ) delivered savings of $24 million through their endeavourGO optimization program, contributing to a cumulative benefit of $289 million over 4.5 years.
Negative Points
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The group's underlying earnings were impacted by investments in lower shelf prices and increased promotional activity, leading to a decline in retail EBIT by 11.6%.
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A pretax net expense of $45 million was incurred due to significant items, including a $40 million provision for the planned closure of the Melbourne Liquor distribution center.
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Gross profit margin in retail declined by 84 basis points to 23.9%, reflecting the focus on price leadership amidst elevated promotional activity.
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Sales growth in both retail and hotels moderated in February compared to January, with ongoing consumer softness evident.
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The company faces challenges from a competitive market landscape and uncertain consumer spending due to elevated inflation and rising interest rates.
Q & A Highlights
Q: Can you explain the drivers behind the gross margin compression in the first half and what should we expect for the second half? A: Jayne Hrdlicka, CEO: The first half gross margin compression was influenced by a reset on price and increased promotional activity, offset by a lack of stock to promote in December last year. For the second half, we are seeing positive signs across the portfolio and will continue to compete aggressively, with promotional activity driven by market dynamics.
Q: Given the price investments, has Endeavour Retail been growing volumes, and how does this compare to the overall market? A: Jayne Hrdlicka, CEO: The market is generally soft, but we achieved record results in December, indicating we are taking market share. Kate Beattie, CFO: Our volume momentum is improving, especially since we began the shelf price reset in August last year.
Q: How is Endeavour balancing online growth with store economics, especially given competitive promotional activity? A: Jayne Hrdlicka, CEO: We are pleased with online growth, particularly through Click and Collect, which leverages store fixed costs. The promotional activity is market competitive, and we do not see it as creating structural problems for the business.
Q: Can you provide details on how you are managing costs, particularly through the Endeavour Go program? A: Kate Beattie, CFO: The Endeavour Go optimization program has delivered $290 million in cumulative savings, addressing both supply chain costs and costs in the front line and head office. We also undertook restructuring across the business, contributing to cost savings.
Q: How is the Pinnacle portfolio performing, and what role does it play in your strategy? A: Jayne Hrdlicka, CEO: Pinnacle is a critical part of our strategy, providing strong margin support. It includes private label products across beer, spirits, and wine. We continue to optimize the portfolio, managing underperforming SKUs and introducing new products.
Q: What is the outlook for hotel renewals and electronic gaming machine (EGM) investments? A: Jayne Hrdlicka, CEO: We are accelerating renewals and EGM investments, with a refined formula for renewals that focuses on both major refurbishments and lighter touch improvements. We aim to maintain a steady stream of renewal opportunities.
Q: How is the gaming segment performing, particularly in Queensland? A: Kate Beattie, CFO: We have seen improved performance in Queensland, driven by investments in venue experience and gaming machines. The focus on renewals and new gaming machines is positively impacting the entire portfolio.
Q: Can you comment on the February sales slowdown in both retail and hotels? A: Kate Beattie, CFO: February sales were impacted by the cycling of prior year supply chain disruptions. It's too early to determine the impact of recent interest rate increases or global events, but we expect cost of living pressures to continue affecting our customer base.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
