Australian alcoholic drinks retailer, hotel operator, and poker machine owner Endeavour Group [ASX:EDV] (2021 spin out of Woolworths Group) has posted an increase of 3.7% in sales to the total of $2.83 billion for Q3.
Retail sales increased by 1.2% to $2.35 billion and hotel sales rose 18.5% to another $2.35 billion, a strong result for the last three months as customers continued to shop in stores at a higher rate compared to last year year, driving in-store sales growth of 2.8% for the quarter.
EDV’s stock price has risen 5.5% in the year so far, but counting the last 52-week cycle, it’s down more than 12%.
The group is also tracking 12% below the wider market’s 12-month rolling average:
Source: TradingView
A solid quarter for Endeavour
Endeavour has posted results for the 13 weeks from January to April as it appraised its performance for the Q3 report.
Retail sales were noted to have returned to growth in December and continued to track ahead of last year.
In-store sales supported the positive change and was also helped by a trend towards pick-up representing 53% of online sales.
Endeavour CEO and Managing Director Steve Donohue was pleased with the numbers, calling it a solid result for both its retail and hotels divisions in Q3.
He said the results point towards strong growth and stable trade, particularly compared to the COVID-19 impacts the year prior.
Donohue applauded Australians for their sociability, which supported the group’s strength in the market even as the macro environment proved challenging for retailers. He said:
‘Customer sentiment remained strong. Notably, our My Dan’s membership program has continued to grow, reaching a significant milestone in the quarter with over 5 million active members.
‘In Hotels, food, bars and accommodation have all continued to be materially above the prior year in which COVID-19 impacted both customer demand and team availability levels. This was supported by over 100 live events held across the quarter, with ticketed events attracting over 38,000 patrons. Gaming has returned to pre-pandemic share of turnover, with low single-digit growth in the quarter.’
Endeavour confident of options and consumer habits
The group added five new hotels, 16 bars, five bistros, seven accommodation rooms, and 112 gaming machines to its portfolio in the quarter, as well as the iconic Cape Mentelle winery in Margaret River.
The group is feeling secure in its solid performance over the past quarter and expects the Australian market outlook to remain on a positive track thanks to high post-COVID social opportunities.
Capital expenditure for F23 is expected to be between $470 million and $520 million, and the group anticipates rising interest rates to result in higher finance costs in H2, to range between $240–$260 million for the full year.
CEO Donohue concluded with:
‘As we look ahead, we continue to closely monitor customer choices in the context of the macroeconomic climate. We remain confident that we offer a great breadth of options and value for all social occasions, and we will continue to tailor our offering as the environment requires.’
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Regards,
Mahlia Stewart
For The Daily Reckoning Australia
