Retail Slump and Restructuring Costs Weigh on Endeavour Group’s FY25 Profits
Endeavour Group reported steady overall sales for FY25 despite a retail downturn, driven by strong hotel performance and disciplined cost management. A strategic refresh and leadership change signal a new chapter ahead.
- Group sales stable at $12.1 billion, down 0.3% on 52-week basis
- Hotels sales grew 4.1%, retail liquor sales declined 1.2%
- Operating EBIT fell 7.3% to $1.0 billion; NPAT down 15.8% to $426 million
- Strong cash flow with 110% cash realisation and $187 million net debt reduction
- Strategy refresh underway with new CEO Jayne Hrdlicka starting January 2026
Stable Group Sales Amid Mixed Segment Performance
Endeavour Group closed FY25 with group sales of $12.1 billion, a marginal decline of 0.3% on a 52-week comparable basis. This stability masks contrasting fortunes within its two core segments, Hotels and Retail. The hotel division delivered a robust 4.1% sales increase, fueled by growth across food, bars, gaming, and accommodation. In contrast, retail liquor sales fell 1.2%, impacted by subdued consumer spending and supply chain disruptions during peak trading periods.
Profitability Pressured by Retail Softness and Restructuring
Operating EBIT declined 7.3% to $1.0 billion, reflecting operating deleverage from weaker retail sales and increased costs associated with the One Endeavour program. Net profit after tax dropped 15.8% to $426 million, including $11 million in post-tax restructuring costs incurred in the second half. The closure of the Prowine bottling facility and other restructuring initiatives contributed to these charges.
Strong Cash Flow and Capital Discipline
Despite profit pressures, Endeavour Group demonstrated strong cash generation with a cash realisation ratio of 110%, enabling a $187 million reduction in net debt. Capital expenditure was managed within guidance at $394 million, complemented by $50 million in proceeds from asset sales. The Board declared a fully franked final dividend of 6.3 cents per share, activating a Dividend Reinvestment Plan to support shareholder returns.
Operational Highlights and Strategic Initiatives
The hotel segment’s momentum accelerated in the second half, with sales growth of 5.0% driven by targeted capital investment, including over 1,000 new electronic gaming machines and the expansion of the pub+ loyalty program, now boasting 480,000 active members. Retail faced challenges from cost-of-living pressures and competitive intensity but maintained gross profit margins through AI-driven pricing and promotions. Online sales grew 7.0%, reflecting evolving consumer preferences.
Looking Ahead, Leadership Change and Strategy Refresh
Endeavour Group is embarking on a strategic refresh under incoming Managing Director and CEO Jayne Hrdlicka, who will commence in January 2026. This review aims to optimize portfolio performance across Retail, Hotels, and Pinnacle businesses to enhance customer experience and shareholder value. The Group plans capital expenditure of $420-$470 million in FY26, with continued investment in hotel network enhancements and retail store openings. The unfolding strategy and market conditions will be critical to watch as the company navigates a challenging retail environment.
Bottom Line?
Endeavour’s FY25 results underscore resilience amid retail headwinds, but the upcoming strategy refresh and leadership transition will be pivotal for future growth.
Questions in the middle?
- How will the new CEO’s strategy reshape Endeavour’s retail and hotel operations?
- Can retail liquor sales rebound as inflation eases and consumer spending improves?
- What impact will the accelerated ERP implementation have on costs and efficiency?
