Shares in Endeavour Group, the owner of Dan Murphy’s and BWS, slid to a two-month low on Tuesday after the company revealed it had ramped up discounting to lift sales, a strategy that is weighing on profit margins in an increasingly competitive liquor market.
Endeavour said its two major liquor chains generated $5.4 billion in sales in the 27 weeks to January 4, a rise of 0.7 per cent compared with the same period a year earlier. While the modest sales growth underscored a pickup in customer activity, it came at the cost of profitability, with the group warning that first-half profit would fall short of last year’s level.
The company expects overall profit for the first half to be between $400 million and $411 million, down from $437 million in the corresponding period of 2024/25. The outlook disappointed investors, who had been hoping that stronger trading over the crucial Christmas period would translate into firmer earnings.
Shares in Endeavour Group fell as much as 6.4 per cent in early trading to $3.565, their lowest level in about two months, as the market digested the impact of lower margins.
Chief executive Jayne Hrdlicka, who took the helm on January 1 after stepping down from Virgin Australia, said the softer profit outlook reflected a deliberate and strategic decision by the company to invest in lower prices and targeted promotions to re-engage customers and defend market share.
“We made a conscious choice to lean into price and value,” Hrdlicka said. “We are pleased with the speed at which customers responded to lower prices and our targeted promotional activity.”
She said the approach was already delivering results, particularly at Dan Murphy’s, which recorded its strongest December sales on record. Christmas Eve marked a new daily sales high for the brand, highlighting the effectiveness of sharper pricing during the peak trading period.
“The pricing and promotional decisions we have made in our retail business have generated positive sales results, delivering on our aim to better align the customer propositions for each of our brands to re-ignite top-line growth,” Hrdlicka said.
“In a competitive market landscape, we have focused on reinforcing customer confidence in the value we offer across all channels, particularly in Dan Murphy’s unbeatable price and customer experience.”
Beyond liquor retailing, Endeavour also owns and operates more than 350 pubs and hotels across Australia. That division delivered a stronger performance, with sales rising 4.4 per cent to $1.2 billion over the half, supported by a surge in patronage during the festive season. December marked a best-ever sales run for the hotels business, reflecting robust demand for food, beverages and entertainment over the holidays.
“The holiday spirit across our hotels business was exceptional, enabling strong results,” Hrdlicka said, adding that the division benefited from both increased customer volumes and higher spend per visit.
Despite the solid trading update on the sales side, analysts were cautious about the implications for earnings. RBC Capital Markets analyst Michael Toner said the update would likely be viewed negatively by investors focused on margins and medium-term profitability.
“In the face of structural top-line challenges and aggressive price competition in the retail liquor space, Dan’s has pulled the price lever to reinforce its value proposition,” Toner said. “This has resulted in Endeavour missing consensus earnings margin expectations by around half a percentage point.”
The update highlights the difficult balance facing liquor retailers as cost-conscious consumers hunt for value while competition intensifies across physical stores and online channels. For Endeavour, management is betting that sharper pricing now will help rebuild momentum and customer loyalty, even if it means accepting lower margins in the short term.
