Endeavour Earnings: Weak Short-Term Outlook With Spending on Liquor Below Trend Growth Levels

Wide-moat Endeavour’s first-half fiscal 2024 sales and earnings are tracking marginally below our expectations, and sales momentum is weakening slightly. In the first seven weeks of the second half, retail and hotels segment sales were virtually flat, with consumers reining in spending on liquor and food. In comparison, Woolworths’ Australian food sales are up only 1.5% over the same seven-week period versus the previous corresponding period. We trim our sales growth forecast for Endeavour to 2% in fiscal 2024 versus 3% previously, adjusted for an additional trading week in fiscal 2024. With our forecast sales growth in the low-single digits, we expect EBIT margins to remain soft for the remainder of the year, down some 20 basis points on the PCP. In the first half, EBIT was flat versus the first half of fiscal 2023. We decrease our fiscal 2024 EPS estimate by 3%, but our long-term forecast is virtually unchanged.