Endeavour Group outlines turnaround momentum as F26 results reveal building sales trajectory
In its F26 full year results presentation, Endeavour Group detailed a year defined by strategic reset, with management outlining a transition towards disciplined execution across its Retail and Hotels businesses for the period ended 28 June 2026.
The presentation emphasised building momentum, with combined Dan Murphy’s and BWS sales growth accelerating from 0.7% in H1 to 1.4% in H2, and Q4 reaching 2.2%.
The picture was mixed. Group sales rose 1.3% to $12.2b, but Underlying EBIT fell 8.7% and Statutory NPAT declined 87.8% to $52m, weighed down by $311m of Significant Items after tax.
Management reaffirmed a $300m cost-out target by F29, noting that initiatives delivering 70% of the F27 $100m target had already been executed.
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F26 financial scorecard: sales growth against margin pressure
The full-year result reflected a deliberate trade-off. Underlying EBIT declined as lower Retail gross profit margin, driven by investment in price leadership, combined with cost inflation across the cost of doing business.
The company framed this as investment in restoring price competitiveness rather than operational deterioration. Underlying NPAT of $363m was down 14.8%, while the dividend per share (DPS) was cut to 12.0c from 18.8c. Underlying earnings per share (EPS) came in at 20.2c.
Statutory NPAT tells a different story to the underlying result. The $52m figure absorbed $311m of non-recurring Significant Items after tax, including asset impairments, restructuring costs and portfolio rationalisation. Investors assessing ongoing performance are directed to the underlying metrics.
The preliminary F26 results flagged the $372m pre-tax Significant Items charge in early August, noting that the write-downs were predominantly non-cash and spread across wineries, 25 hotels, 75 retail stores and legacy technology systems, giving investors several weeks to assess the portfolio reset before the audited presentation.
| Metric | F26 | F25 | Change |
|---|---|---|---|
| Group Sales | $12.2b | $12.06b | +1.3% |
| Underlying EBIT | $845m | $926m | -8.7% |
| Underlying NPAT | $363m | $426m | -14.8% |
| Statutory NPAT | $52m | $426m | -87.8% |
| DPS | 12.0c | 18.8c | – |
Retail and Hotels: a two-speed performance
The two operating segments moved in different directions during F26, with Hotels growing earnings while Retail absorbed the near-term cost of its price leadership reset.
Retail — price leadership reset takes hold
Retail sales rose 0.7% to $10.0b, with comparable store sales up 0.5%. Underlying EBIT fell 17.6% to $464m, and the segment margin contracted 103bps, reflecting lower shelf prices held for approximately three quarters following the price reset at the end of Q1.
Management reported that Dan Murphy’s price leadership had been re-established. Online sales grew 35% across the segment, supported by record Voice of Customer (VOC) value-for-money scores and nine consecutive months of Dan Murphy’s transaction growth.
The H1 F26 trading update had already signalled this dynamic, with record December sales for Dan Murphy’s and BWS arriving alongside an 85 basis point compression in Retail gross profit margin as management prioritised volume recovery over short-term profitability.
Brand-level highlights from the presentation included:
- Dan Murphy’s record online sales up 45% year-on-year
- BWS record online sales up 10% year-on-year
- BWS App monthly active users averaging approximately 730k, up 15%
Hotels — renewals driving returns
Hotels delivered contrasting momentum, with sales up 4.2% to $2.2b and Underlying EBIT rising 4.1% to $462m. The segment held its Underlying EBIT margin broadly flat at 21.0%.
The company renewed 38 venues during the year and installed approximately 2,000 new EGMs, representing 16% of the total fleet. The pub+ loyalty programme reached more than 750,000 active members, accounting for 32% of Food and Bars transactions.
What “cost-out” and ROFE mean for investors
Two terms feature heavily in the presentation and warrant plain explanation for investors weighing the turnaround.
A cost-out programme refers to a structured effort to remove recurring costs from a business, targeting savings in areas such as support functions, procurement and operational efficiency. When margins are under pressure, as they are in Retail, delivering $300m in structural savings provides a direct lever to rebuild earnings without relying solely on sales growth.
Return on Funds Employed (ROFE) measures how much operating profit a business generates from the capital tied up in it. Group Underlying ROFE dipped to 9.5% from 10.3%. A lower ROFE during a heavy investment phase is not unexpected, as capital deployed into store renewals and technology takes time to translate into earnings. Together, cost savings and renewal returns are the two levers management is relying on to lift returns over time.
The $300m cost-out roadmap and hotel renewal returns
The cost programme targets $100m in savings in F27, split roughly $85m in Retail and $15m in Hotels. Over 90% of these savings sit within cost of doing business (CODB), with the balance in cost of goods sold, and initiatives delivering 70% of the F27 target had already been executed at the time of the presentation.
Hotel renewals continue to demonstrate strong returns. The F24 cohort delivered an aggregate Year 1 ROI of >15% and a Year 2 ROI of >20%, while the F25 cohort achieved a Year 1 ROI of >16%. Management continues to target a Year 2 ROI of >15% as the programme scales.
Renewal activity is accelerating, from 38 venues in F26 to up to 75 targeted in F27. The Group outlined six transformation initiatives to be executed in F27:
- Accelerated Hotel Renewals
- eCommerce
- Digital, Data & Analytics
- Customer Experience
- Simpler for pubs
- Retail Media
Balance sheet and cash: funding the transformation
The cash story reflects the investment phase. Underlying operating cash flow fell to $933m from $1.2b, with the underlying cash realisation ratio easing to 93% from 110%. Underlying free cash flow was negative $182m, reflecting elevated growth capex.
Net debt increased $198m to $1.9b, lifting the underlying leverage ratio (pre-AASB 16) to 1.9x from 1.6x. Management framed this as a deliberate investment phase rather than distress, pointing to $990m in committed undrawn facilities and a weighted average debt maturity of 4.0 years. Total capital expenditure for F26 was $448m.
F27 outlook: early momentum and elevated investment
The presentation disclosed a strong early read on F27. Across the first seven weeks, Retail sales were up 4.6% and Hotels sales up 2.2%.
Management guided to the following expectations for F27:
- Capital expenditure of $550m–$650m, including One Endeavour capex of $75m–$90m
- $100m of cost reduction initiatives
- Finance costs of $330m–$340m
- Up to 75 hotel renewals and approximately 1,900 new EGMs
- Underlying effective tax rate of approximately 33%
Management struck a cautious note on the consumer environment. The outlook for consumer spending was described as uncertain given ongoing cost-of-living pressure, including the impact of the Middle East conflict on fuel prices, the wealth effect of a declining housing market and the potential for higher interest rates.
The company also flagged that disruption from increased renewal activity is expected to adversely impact Hotel earnings in F27.
F26 Results Presentation
“Transitioned from strategy reset to consistent, disciplined execution.”
The investment thesis: momentum vs. the investment cycle
Endeavour Group presented F26 as a deliberate reinvestment phase, trading short-term margin for restored price leadership, accelerated renewals with proven returns above 15%, and $300m of targeted structural cost savings.
On this reading, the F26 earnings dip reflects investment rather than decline. Building sales momentum and a strong start to F27 suggest the strategy may be gaining traction. The key question for investors is whether F27 delivers evidence that the cost-out programme and renewal returns convert into a genuine earnings recovery.
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