The Endeavour Group Ltd (ASX: EDV) share price is down around 5% after its FY25 trading update.
Endeavour is the business that owns a number of liquor businesses including Dan Murphy’s, BWS and a number of hotels around Australia.
FY25 update
The liquor and hotel company said its revenue was stable in the first quarter of FY25 amid weak market conditions.
Its retail sales were flat compared to first quarter of FY24, at $2.54 billion. Meanwhile, hotel revenue increased 2.5% to $567 million. This led to group sales increasing 0.5% to $3.1 billion.
Endeavour said cost of living pressures continued to impact consumer spending for its businesses.
The hotels segment saw growth across all four areas of food, bar, gaming and accommodation. Management said this reflected the “resilience of the hotels segment and the ongoing attraction of meeting at the pub for social occasions, despite the pressures on household budgets.”
Despite the difficulties for retail, Endeavour grew its market share and maintained its ‘voice of customer’ scores. However, the company pointed out more of its sales were through promotions and consumer downtrading, which is expected to impact retail profitability. Inflation of costs is also impacting margins.
To tackle rising costs, Endeavour is implementing a range of measures to make it simpler and more efficient.
Outlook for the Endeavour share price
Management believe the company is well-positioned to navigate the current economic environment.
It warned that promotional activity in the retail sector remains “elevated” and customers are focused on value. Achieving sales growth in the second quarter is “expected to be challenging”, though sales growth in its hotels division has continued in October.
Endeavour noted the level of Christmas bookings in its hotels business is “encouraging”, with reservations already at 54% of capacity.
However, cost inflation remains a headwind.
The company is trading at close to its all-time low. While I’m not particularly excited by liquor stores, I do think this could be the right time to invest in the business for interested investors. But, there are other ASX dividend shares I’d prefer even more.
