The owner of the Dan Murphy's and BWS bottle shop chains has cut prices under its new leadership, successfully boosting sales albeit at the expense of its bottom line.
The two businesses reported $5.4 billion in sales in the 27 weeks to January 4, up 0.7 per cent from a similar period a year ago, Endeavour Group said on Tuesday.
But the group's overall profit for 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 began as the group's new CEO on January 1 after leaving Virgin Australia, said that Endeavour made a deliberate decision a few months ago to drop its prices and focus on more promotions.
"We are committed to making this investment as a critical first step in ensuring there is no room for doubt in the minds of the customer that Dan Murphy offers the best value in retail liquor," she told analysts in a conference call.
Endeavour was very pleased with the speed with which customers responded to the lower prices and targeted promotions on offer.
Dan Murphy's had record sales in December, with Christmas Eve setting a new daily sales record.
Endeavour also owns more than 350 pubs across Australia, where sales were up 4.4 per cent to $1.2 billion, including a best-ever sales run in December.
"The holiday spirit across our hotels business was exceptional, enabling strong results," Ms Hrdlicka said.
Endeavour had plans to further reset its strategy, but the CEO declined to give details until the group's first-half earning results drop in March.
"It will take time for these initiatives to be implemented and for the full benefits to be realised, but we're confident that we're now headed in the right direction," Ms Hrdlicka added.
RBC Capital Markets analyst Michael Toner said the sales update was an overall negative for Endeavour.
"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," he said.
This led to the company missing consensus earnings margin expectations by about half a percentage point.
Endeavour Group shares fell more than six per cent in early trading on Tuesday before clawing back most of the loss to around $3.78, down almost one per cent, in the afternoon.
