Endeavour Earnings: Improving Household Budgets to Lift Liquor Sales

Wide-moat Endeavour’s fiscal 2024 results were broadly in line with our expectations. Net profit after tax of AUD 512 million beat our estimates by merely 1%. Like many retailers, Australia’s largest liquor retailer and pub operator is emerging from a tough year. Liquor demand is generally defensive relative to other discretionary retailing categories like household goods and fashion. But consumers are shifting to better-value drinks and meals—like larger packs in shops or cheaper dishes in pubs—as mortgage payments and other living expenses cut into household budgets. Big box retailer, Dan Murphy’s is well-placed for the shift to better value. While adjusted liquor retail sales growth of 2% was below the long-term trend, Endeavour gained market share. According to the Australian Bureau of Statistics, liquor retailing increased by 1% in fiscal 2024. In the smaller hotels segment, the top line increased by 2% on the previous corresponding period.