Australian retail, wine and spirits branded major Endeavour Group has said ongoing inflationary pressure is likely to have an adverse effect on its Q2 sales.
Reporting its Q1, 2025, financial results today (11 November), Endeavour, which manages a portfolio of drinks brands via its Pinnacle Drink and Langtons arms and also runs the Paragon wine estates, outlined a number of other factors leading to it being cautious in its outlook.
Managing director and CEO Steve Donohue said: “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.”
The business, which also has a portfolio of hotels, a product delivery arm and owns the Dan Murphy’s bottle shop chain, said in a statement with the Australian Securities Exchange (ASX) that cost inflation “remains a headwind” for both the retail and hotel sectors.
It now expects that the retail operating EBIT margin in H1 will be between 7.0% and 7.5%, compared to 8% in H1 2024.
Donohue, who Endeavour announced in September is to step down, said: “After a positive start to the year, retail sales momentum slowed in September. During the quarter, promotional intensity lifted across the sector as customers became increasingly value conscious.”
Its retail sales for the 14 weeks to 6 October were flat at A$2.53bn ($1.66bn).
The statement to the ASX said the second quarter remains an important period for the company, featuring the annual Black Friday and Cyber Monday sales events, as well as key social occasions including Spring Racing, the Christmas festive season, New Year celebrations and summer entertaining.
Announcing Donohue’s departure in September, Endeavour said: “Mr Donohue and the board have determined now is the right time for a new leader to take the group into its next phase of growth."
Endeavour declined to confirm whether Donohue has decided to retire or seek opportunities elsewhere.
Donohue assumed the position of CEO at Endeavour in 2018.
