Endeavour Group has reported a slight fall in group sales for the first half of its financial year, but the company saw online sales, group EBIT and group net profit after tax (NPAT) increase on the prior corresponding period.

While retail sales remained high during the half, Endeavour Group’s Managing Director and CEO, Steve Donohue said that the first quarter hotel lockdowns in Victoria and New South Wales, saw the hotels business hit “particularly hard”.

Group sales in the period were $6.33bn, down from $6.35bn in FY21, a drop of 0.3 per cent, while group EBIT was up 3.2 per cent to $556m and group NPAT was up 15.6 per cent from $269m to $311m. Online sales were particularly strong for the group, up 24.8 per cent to $603m.

Donohue said: “Our first six months trading as an independent business has demonstrated the structural resilience of the Group. We maintained Group Sales in line with last year, and improved our profitability significantly. This is a positive result during a period which was heavily impacted by COVID-19. These financial outcomes have been delivered through the hard work and dedication of our team who have responded diligently and flexibly to many COVID-19 related challenges.

“Our Hotels business was particularly hard hit in H1 F22. There were multiple and extensive COVID-19 impacts in the first quarter, including lockdowns in the key markets of Victoria and New South Wales. We have however, continued to invest in our Hotels, retained core team members, deployed new digital services and created COVID-Safe environments; all of which enabled the business to rebound strongly during periods when COVID-19 impacts abated.

“Unfortunately, high levels of infection in the community since the emergence of the Omicron variant resulted in reduced patronage in hotels in the period immediately prior to Christmas and impacted the first six weeks of H2 F22.

“With on-premise restrictions in place, the retail market remained elevated through the half. We delivered Retail sales consistent with the exceptionally strong H1 F21 period. Our Retail business profitability also improved considerably in the period. Retail EBIT increased by 10.0% when compared to the same period last year, delivered through gross profit margin improvements and disciplined cost management.”

The Retail business delivered sales of $5.7bn in the first half of F22, slightly behind the exceptionally strong sales in H1 F21 and up 18.4 per cent on a two-year basis. EBIT increased 10.0 per cent to $461m and the EBIT to sales ratio improved 79 bps to 8.1 per cent.

The group said that the retail market remained elevated in the first four months of the financial year due to lockdown, however following the easing of COVID-19 restrictions during October, the group said its Retail sales started to normalise as customers returned to on-premise venues.

During the half the group’s retail store network increased by a net 24 stores, with 49 store renewals. The group has also commenced the rollout of the Dan Murphy’s 2.0 format, with five stores now live.

For the hotels business, trading was dominated by pandemic issues and while sales grew by 1.9 per cent to $680m on a one-year basis they were down 26 per cent on a (pre-Covid) two-year basis.

Despite the significant volatility in the operating environment, gross profit margin remained stable at 84.4 per cent compared to 84.8 per cent in the prior comparative period.

The total hotels portfolio consisted of 342 hotels (including five managed clubs) at the end of the period and Hotels EBIT of $121m was in line with FY21’s EBIT of $122m.

Looking ahead the group said: “We are confident that the actions we have taken and the investments we have made in our hotels and stores, in our technology and online offering, as well as in our Pinnacle Drinks business have provided us with strong foundations to navigate this next phase of COVID-19 and to continue to build a strong and resilient business.”

Andy Young

Andy joined Intermedia as Editor of TheShout in 2015, writing news on a daily basis and also writing features for National Liquor News. Now Managing Editor of both TheShout and Bars and Clubs.

Leave a comment

Your email address will not be published.