Endeavour: Weak Sales Momentum Masks Relative Outperformance

Some of wide-moat Endeavour’s customers are struggling, and sales growth is below our long-term trend estimate. An earlier Easter break supported group sales of 2% in the third quarter of fiscal 2024. Normalizing for the Easter boost, group sales of only 1% are tracking with our muted fiscal 2024 forecast. In the June quarter, sales growth is still hovering at around 1%. However, we expect consumer demand for discretionary items to pick up in fiscal 2025, including liquor, out-of-home meals, and entertainment. Key drivers are wage growth, meaningful tax cuts, and potential interest rate cuts. For more details on near-term drivers for the retailing sector, please refer to our Retailing Industry Pulse published on March 26, 2024.