Endeavour Group Ltd reported a 13.1% decline in underlying profit before tax to AUD 544 million for the fiscal year ended 2026, as retail profitability weakened and one-off costs weighed on results.
Group sales rose 1.3% year-on-year to AUD 11.2 billion, with retail sales up 0.7% to AUD 10 billion. Hotels sales increased 4.2% to AUD 2.2 billion, though growth moderated in the second half due to cost-of-living pressures. Underlying group EBIT fell 8.7% to AUD 1 billion, driven by a 17.6% drop in retail EBIT to AUD 464 million, while hotels EBIT rose 4.1% to AUD 462 million.
Gross margins declined across segments, with retail margins compressing by 86 basis points to 23.6%, while hotels margins expanded slightly by 7 basis points to 84.9%. Operating cash flow decreased by AUD 217 million to AUD 933 million, reflecting higher capital expenditure and one-off expenses. The company recorded a pre-tax net expense of AUD 372 million related to significant items disclosed in August.
Stock reacted negatively, with shares falling 4.87% to AUD 3.23 in late trading, extending a 2.56% pre-market decline. The group revised its dividend payout policy to 50-75% of underlying net profit after tax and declared a fully franked final dividend of AUD 0.012 per share, representing a 59% payout ratio for the full year.
Management outlined a cost-reduction target of AUD 300 million through FY2029, with AUD 100 million expected in FY2027. Retail initiatives are projected to contribute AUD 85 million, while hotels will account for AUD 15 million. Roughly 70% of the FY2027 cost-saving measures have already been implemented.
Capital expenditure for FY2027 is guided between AUD 550 million and AUD 650 million, up to AUD 60 million higher than previous estimates. Finance costs are projected at AUD 330-340 million, while incremental operating expenses are expected to total AUD 40-60 million. Hotel renewal spending is set to double to AUD 130-160 million, targeting upgrades for up to 75 venues.
CEO Jayne Hrdlicka emphasized improving retail fundamentals and retail share gains following the introduction of lower shelf prices in September 2025. CFO Kate Beattie noted elevated wage inflation in FY2027, with cost-out initiatives expected to largely offset but not exceed wage pressures.
