Navigating Endeavour Group's First Half 2025 Earnings: A Closer Look at EPS

Alright, fellow investors, let's dive into Endeavour Group's first half 2025 earnings and explore what's behind that AU$0.17 EPS figure, compared to AU$0.20 in the same period last year. Grab a cuppa, and let's get stuck in!



First things first, we need to acknowledge the elephant in the room: the challenging economic environment. Steve Donohue, Endeavour's CEO, admitted as much in the earnings call. So, what's been going on?

1. Soft sales and subdued consumer spending: Endeavour reported soft sales, declining 1% in the first half of fiscal 2025, with at-home liquor consumption subdued. Supply chain disruptions and an estimated $40 million to $50 million of lost sales in retail didn't help matters. (Source: "Endeavour reported soft sales, declining 1% in the first half of fiscal 2025 with at-home liquor consumption subdued.")
2. Rising operating costs: Operating costs increased, weighing heavily on profit margins. The 6.6% overall decline in operating EBIT, with growth in hotels offset by a decline in retail due to lower sales and higher costs, is a clear indication of this. (Source: "Operating EBIT fell 6.6% overall, with growth in hotels offset by a decline in retail due to lower sales and higher costs.")
3. Declining net profit after tax: Net profit after tax declined by 15.1% year on year, contributing to the decrease in EPS. (Source: "Net profit after tax declined 15.1% year on year.")

Now, let's look at how Endeavour is tackling these challenges:

1. Improving supply chain and consumer spending: Endeavour has taken steps to improve on-shelf availability and customer satisfaction scores. As supply chain issues ease and consumer confidence improves, retail sales are expected to rebound. (Source: "The company has since improved on-shelf availability, and customer satisfaction scores have remained strong.")
2. Cost optimization and efficiency gains: The Endeavour Go program has delivered significant cost savings, nearing a quarter of a billion dollars. The company aims to achieve additional savings, especially in the current challenging consumer market. (Source: "The Endeavour Go program has delivered significant cost savings, nearing a quarter of a billion dollars.")
3. Growth in hotels and gaming: Sales momentum in hotels has increased across food, bars, gaming, and accommodation. Endeavour plans to roll out 1,000 new gaming machines and improve gaming rooms, which should enhance performance in key markets like Queensland and Victoria. (Source: "Sales momentum increased across food, bars, gaming, and accommodation. The company plans to roll out 1,000 new machines and improve gaming rooms, which should enhance performance in key markets like Queensland and Victoria.")



So, what can we expect from Endeavour Group in the coming quarters? Well, as the company works to mitigate the impact of rising costs and soft sales, while also focusing on growth opportunities in its hotels and gaming segments, we can hope to see an improvement in EPS. Keep an eye on their progress, and remember that even in challenging times, there are always opportunities for savvy investors.

Stay tuned, and happy investing!