Endeavour Group shares sink on Q1 result, retail outlook
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More news: Shares in Endeavour Group dived in early trading on the ASX after the drinks company cut its full-year retail margin outlook because of ongoing cost-of-living pressures.
Endeavour shares were down 4.3% to $4.53 at 11:10am AEDT.
E&P Capital analyst Phillip Kimber said a similar second-half performance in Endeavour's retail division implies a 5% reduction to consensus earnings-per-share estimates.
Endeavour cuts retail outlook as Q1 sales miss estimates
The news: Endeavour Group sales edged up in the first quarter, but the drinks group cut its retail margin outlook as cost-of-living pressures continue to impact consumer spending.
The numbers: Group sales in the first quarter rose 0.5% year on year to $3.11 billion. Retail sales were flat at $2.54 billion while Endeavour's hotels business grew sales 2.5% to $567 million.
Retail sales, which make up 65% of the group's operating EBIT, fell short of E&P Capital's expectations for growth of 1.1%. Hotel sales, representing 42% of the group's EBIT, were roughly in line with E&P's forecast of 2.7% growth.
Endeavour now expects its retail operating EBIT margin in the first half to be between 7% and 7.5%, compared to 8% in the previous corresponding period.
The group reaffirmed its full-year capital expenditure guidance of $450 million to $500 million.
The context: Endeavour said that after a positive start to FY25, retail sales momentum slowed in September. It flagged that promotional intensity lifted across the sector during the quarter as customers became increasingly value conscious.
The Dan Murphy's and BWS store owner noted that softer sales and a lower margin sales mix in the near term — driven by a higher percentage of sales on promotion and consumer downtrading — are expected to impact retail profitability. Meanwhile, continued inflationary pressure on operating costs is also impacting margins, it said.
What they said: "Endeavour Group delivered a stable trading performance in the first quarter as cost of living pressures continued to impact consumer spending in our categories," said Endeavour's outgoing managing director and CEO Steve Donohue.
The source: ASX announcement
