Dan Murphy, BWS owner’s promotions cut into bottom line
Shares of the company, which owns Dan Murphy’s and BWS, hit a two-month low on news that Endeavor Group was discounting to boost sales at the expense of profit margins.
The two liquor store chains had sales of $5.4 billion in the 27 weeks to Jan. 4, up 0.7 percent from the same period a year earlier, Endeavor said Tuesday.
However, the group’s total profit in the first half is expected to be between $400 million and $411 million, down from $437 million in the first half of 2024/25.
Jayne Hrdlicka, who took office as the group’s new CEO on January 1 after leaving Virgin Australia, said the company had made a conscious decision to invest in lower prices to increase sales and customer loyalty.
Endeavor said it was very pleased with the speed at which customers responded to the low prices and targeted promotional activities.
Dan Murphy’s achieved record sales in December, and Christmas Eve set a new daily sales record.
“The pricing and promotional decisions we made in our retail business have produced positive sales results and achieved our goal of reigniting sales growth by better aligning customer offerings for each of our brands,” Ms. Hrdlicka said.
“In a competitive market environment, we are focused on strengthening customers’ confidence in the value we deliver across all channels, particularly Dan Murphy’s unrivaled pricing and customer experience.”
Endeavor also has more than 350 bars across Australia, where sales rose 4.4 per cent to $1.2 billion, including best sales in December.
“The holiday spirit in our hotel business has been outstanding and enabled strong results,” said Ms. Hrdlicka.
However, RBC Capital Markets analyst Michael Toner said the sales update was negative for Endeavor shares.
“In the face of structural high-end challenges and aggressive price competition in the retail liquor industry, Dan’s has pulled the pricing lever to strengthen its value proposition,” he said.
This led the company to miss consensus earnings margin expectations by nearly half a percentage point.
Endeavor Group shares fell 6.4 percent to $3,565 in early trading.
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