Endeavour coy on outlook in its maiden result as hotels stay shut in lockdowns

Freshly demerged drinks, pubs and pokies company Endeavour Group has declined to make earnings predictions for the year as COVID lockdowns keep bars shut, but said it sees significant opportunities to create value for shareholders.

Endeavour, which owns and operates the Dan Murphy’s and BWS bottle shop chains and a number of pubs and hotels, reported its maiden full-year result on Thursday after splitting off from parent company Woolworths in June.

Endeavour Drinks boss Steve Donohue said there were opportunities to create value even as the pandemic challenges persist.Credit:Eamon Gallagher

Sales grew 9.3 per cent to $11.6 billion and earnings increased 22.1 per cent to $899 million in the year to June 28, though these figures were all achieved while under Woolworths’ ownership. Shareholders in the new entity will be paid a maiden dividend of 7 cents per share on September 22.

Online sales, a major area of growth for the retail sector, jumped 34.7 per cent to $859 million in the pandemic, comprising 8.4 per cent of sales.

Endeavour’s performance over the past 12 months has been a tale of two halves, with the company’s bottle shops growing strongly through lockdowns while its on-premise segment struggled. Across the year, the company recorded 169 days where one or more of its pubs were shut.

Eyes will now be on how the business performs without the stewardship of Australia’s largest supermarket chain, with analysts and investors keen to assess just how well the newly minted top-50 business on the ASX can stand on its own two feet.

However, the company reported a shaky start to fiscal 2022, with retail sales dropping 1.7 per cent for the first eight weeks, though this was compared against a very high sales period last year. When compared against 2020, sales jumped 21.5 per cent.

Conditions for its hotels remain challenging due to ongoing closures, the company warned, with sales falling 7.3 per cent for the first eight weeks of the new financial year.

Shares in the company fell 2 per cent in early trading as shareholders reacted to the news.

Chief executive Steve Donohue acknowledged the challenges the company continues to face as lockdowns continue, but said there were still opportunities to create value for shareholders by improving its operations.

“The recent COVID-19 trading restrictions, which began in June, make it extremely difficult for us to forecast with any degree of certainty how our businesses will perform over the next 12 months,” he said.

“We are excited that we are entering the new year with a robust balance sheet and a significant number of opportunities to create value, including growing our digital engagement, expanding and enhancing our network and optimising our business through a focus on profitability and capital management.”

He also highlighted international trade and logistics as a headwind for the business in the new financial year, with COVID-related shipping delays currently wreaking havoc on the retail industry.

More to come.

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