Increased promotional activity in the first quarter of FY25 did not translate to sales growth, with CEO Steve Donohue saying while the retail business was growing its market share and loyalty base, the challenge for the category “right now, is one of sales, first and foremost”.
1Q25 Snapshot
- Retail sales: $2.53b, in line with 1Q24;
- Hotel sales: $567m, up 2.5% prior corresponding period (pcp);
- combined Dan Murphy’s and BWS sales: $2.46b, in line with 1Q24; and
- Online sales: $235m, up 6.3% pcp.
“There are more promotions and deeper promotions across the market. There’s also increasingly a trade down factor that’s played out. There’s also cost inflation, as you know, and that’s most materially in wages,” Donohue said.
He told investors that when these factors were combined, retail growth in the next quarter would be challenging. Continuing inflation pressure on operating costs was also impacting margins.
“In the near term, softer sales and a lower margin sales mix, resulting from both a higher percentage of sales on promotion and consumer downgrading, are expected to impact Retail profitability,” he added.
Pinnacle Drinks released 120 products in the quarter
Meanwhile, Endeavour’s Hotels division performed well across four business drivers - food, bar, gaming, and accommodation. Sales momentum came from higher food and beverage sales over Father’s Day, school holidays and the football finals. And gaming remained “resilient”, with Queensland showing the strongest growth in key gaming markets.
Supply chain costs in 1H25 will be higher than the prior corresponding period (pcp) due to distribution centre wage costs from wage increases mandated under relevant enterprise agreements and the temporary duplication of supply chain costs in relation to the transition of warehousing in Queensland.
Donohue said the second quarter is an important period for the group, with Black Friday, Cyber Monday, Spring Racing, Christmas, New Year, and summer entertaining.
