Inflation and Costs Cloud Endeavour Group’s Earnings Despite Sales Growth

Strong Hotels Growth Offsets Retail Challenges

Endeavour Group’s first quarter trading update for fiscal 2026 paints a picture of resilience and gradual recovery. While retail sales across Dan Murphy’s and BWS slipped 1.4% compared to the prior corresponding period, the Hotels division delivered a robust 4.4% sales increase. This growth was broad-based, with gains across food, bars, gaming, and accommodation segments, underscoring the strength of Endeavour’s diversified hospitality portfolio.

The Hotels segment benefited from strategic initiatives including new venue openings like the Northern Grounds Hotel in Queensland, multiple venue renewals, and an expanded loyalty program that now boasts over 560,000 active members. These efforts have translated into higher customer satisfaction scores and increased market share, particularly in key states such as Victoria and Queensland.

Retail Sales Momentum Returns

Retail sales started the quarter on a subdued note but showed a clear upward trajectory by September, returning to positive growth. This turnaround was driven by targeted promotions around school holidays and major sporting events, alongside a renewed focus on value pricing and everyday low price guarantees. Despite a challenging consumer spending environment outside these key occasions, Endeavour’s emphasis on competitive pricing and service improvements helped lift customer satisfaction scores at both Dan Murphy’s and BWS.

Online sales were a standout performer, surging 20.9% and now accounting for over 10% of combined Dan Murphy’s and BWS sales. The growth was fueled by enhanced promotional activity, a more competitive delivery fee structure, and strong uptake of pick-up options, which represent 76% of online orders. This shift highlights the increasing importance of digital channels in the retail liquor market.

Outlook and Strategic Focus

Looking ahead, Endeavour Group anticipates a busy second quarter with marquee events such as the Spring Racing Carnival, The Ashes, and the festive season providing multiple social occasions to drive sales. The Group plans to continue investing in its value proposition and customer experience across both retail and hospitality. However, inflationary pressures on wages, security costs, and increased depreciation related to recent capital investments are expected to weigh on earnings growth in the near term.

Capital expenditure remains on track within the guided range of $420 million to $470 million, including significant investments in the One Endeavour program. The Group is also progressing a comprehensive strategy review aimed at enhancing long-term shareholder value and sustainable returns.

Overall, Endeavour Group’s Q1 results reflect a business navigating a complex consumer environment with a balanced approach; leveraging its hospitality strength while steadily regaining retail momentum and embracing digital growth.