Retail pain, hotel gain - Endeavour Group delivers mixed FY25 results

Endeavour Group’s (ASX: EDV) FY25 result tells two sides of a story – a retail arm struggling to find its footing, and a hotel business that's holding the line.

Sales slipped to $12.1 billion, down 0.3% on the prior year, while net profit tumbled 17% to $426 million – missing market expectations and prompting a 1.9% share price slide.

The real pressure point was retail. Both sales and EBIT shrank, with soft consumer demand and supply chain hiccups biting hardest during peak trading periods, like Christmas. In contrast, the hotel division delivered growth in sales and earnings, underscoring the value of Endeavour’s diversified business model.

Where FY24 saw margin expansion and the benefits of tighter cost control, FY25 brought operating deleverage and one-off restructuring costs. The board also pared back shareholder rewards, trimming the final dividend from 7.5c to 6.3c per share.

The financial downturn comes against a backdrop of leadership uncertainty. With Jayne Hrdlicka not formally stepping into the CEO role until January 2026, the Group faces a period where clarity of strategy and execution will be under the microscope.

I spoke to Jim Power from Martin Currie to discuss the latest results.

Endeavour Group (ASX: EDV) FY25 key highlights

Sales: $12.1b (down 0.3% vs FY24, 52 weeks)
Operating EBIT: $1.0b (down 7.3% vs FY24, 52 weeks)
EBIT: $926m (down 11.0% vs FY24, 52 weeks)
NPAT: $426m (down 15.8% vs FY24, 52 weeks)
Operating cash flow: $1.2b (FY24: $1.2b)
Earnings per share: 23.7c (FY24: 28.3c, 52 weeks)
Dividend per share: 18.8c (FY24: 21.8c)
Dividend payout ratio: 79%

What was the key takeaway from this result in one sentence?

Inline result. Trying to find sales momentum while they wait for Jayne Hrdlicka to arrive, but not really there yet.

Were there any surprises in this result that you think investors need to be aware of?

They pre-announced the result, so the numbers were in line with what we expected. The main pleasing thing is they’re taking actions to protect the dividend and the balance sheet - phasing capex, restructuring, and progressing demerger plans. That’s probably the main thing to call out.

Would you buy, hold, or sell EDV off the back of this result?

We’re all waiting for Jayne Hrdlicka, the new CEO, to join early next year to see what her strategic plan for the company will be.

She has a range of things she can do in the short and long term, including big strategic questions around business structure. We’re waiting to see the outcome of her review.
It’s on hold until we see what big moves she makes.

I think she has an open mind and will do a thorough review to determine where to take the business. There’s a lot you can do with this company - it’s very vertically integrated, with retail all the way through and hotels joined with retail. She’ll need to decide what the best structure is to win going forward. We’ll wait and see.

Are there any risks investors need to be aware of?

Yes, the ones I’ve just described. Jane has an open mandate to determine the best way forward, and that may involve some big decisions around retail, hotels, and wine businesses. There’s plenty of risk in that, but also plenty of potential return.

At the heart of it, they need to get the business working. If she has a good plan and it works, the upside is also very large.

From one to five, where 1 is cheap and 5 is expensive, how much value are you seeing on the ASX today overall?

It depends on where the earnings go. If we’re about to start a new leg of the earnings upgrade cycle, then it’s not that expensive. There’s a lot of divergence in the market.

Endeavour, for example - lots of problems, but that makes it cheap if they can fix them. And there are plenty of companies like that. On the other hand, you’ve got names like Wesfarmers or CBA, which already reflect the situation. Paying 37 times for Wesfarmers is extreme. So you’ve got a bunch of cheap companies with issues, and a bunch of expensive ones trading at a premium.