Endeavour shares dive to record low after profit warning amid slowing liquor sales

Dan Murphy’s owner Endeavour expects to take a profit hit as budget-conscious shoppers prefer cheaper options and it is forced to put more products on sale.

Endeavour in a trading update on Monday said that after a positive start to the financial year, sales had slowed. This sent shares down to a record low of $4.34.

The company, which is also behind BWS and hotels group ALH, revealed retail sales in the 14 weeks to October 6 hit $2.54 billion, the same as what it recorded in the first quarter of fiscal 2024.

Outgoing Endeavour chief executive Steve Donohue said it delivered a stable trading performance in the first quarter as cost of living pressures continued to impact consumer spending.

It expects the second quarter, which includes the all-important Black Friday and Cyber Monday promotional events, to remain challenging for its 1725 stores.

“In the near term, softer sales and a lower margin sales mix, resulting from both a higher percentage of sales on promotion and consumer downtrading, are expected to impact retail profitability,” Mr Donohue said, adding higher operating costs were also impacting margins.

As a result, operating earnings margin for its retail arm is expected to hit between 7 per cent and 7.5 per cent in the first half, compared with 8 per cent the prior year.

Sales at the hotels business grew 2.5 per cent to $567 million in what Mr Donohue said reflected the ongoing attraction of meeting at the pub for social occasions, despite the pressure on household budgets.