Endeavour Group, the company behind Australia's Dan Murphy's and BWS liquor chains, has reported a sharp fall in annual profit, even as its strategy of cutting prices to lift sales shows results.

The company made a bottom line net profit of $52 million for the year ended June 28, a fall of almost 90 per cent. That result was skewed by a one-off $311 million post-tax expense related to the writedown of certain assets and costs from its strategy review, according to the company. Taking that out, profit came to $363 million, a fall of almost 15 per cent, on sales of $12.2 billion, up 1.3 per cent.

Strategy of Price Cuts

Chief executive Jayne Hrdlicka, who joined a year ago from Virgin Australia, has been steering a "back to basics" play at Dan Murphy's, returning the brand to its low-price roots. As per the 7NEWS, sales at BWS and Dan Murphy's have grown for 10 consecutive months, reaching a record $10 billion last financial year. But the lower shelf prices have contributed to the hit in profits. "There is no doubt that sales are building in retail following our renewed drive on value and price leadership," Hrdlicka said in a market update billed to Monday.

Endeavour's retail gross profit margin declined by 80 basis points because of the price cuts, according to a company statement. The group is also increasing promotional activity across Dan Murphy's and BWS. Retail sales totalled $10 billion in the year, up 0.7 per cent, with Dan Murphy's contributing to most of that with one per cent gain. Looking ahead, retail sales for the first seven weeks of 2026/27 are positive.

But Hrdlicka acknowledged when speaking in this regard, that the division faces strong competition. Dan Murphy's and BWS face strong competition from Liquorland, with promoted discounts for online orders of up to 20 per cent. "We haven't seen 20 per cent off before," Hrdlicka said, acknowledging that deep discounting is affecting the bottom line.

Financial Details and Dividend

The company's underlying profit, stripping out the one-off expense, was $363 million, down almost 15 per cent, on sales of $12.2 billion, up 1.3 per cent. The retail business delivered 10 consecutive months of sales growth, according to the CEO, with lower prices introduced early in the financial year. As part of its strategy, it also increased promotional activity, and that has been credited for the sales growth.

Endeavour has maintained its goal to take out $300 million in costs by 2028/29, including $100 million in the new financial year. The group also declared a final dividend of 1.2 cents, making the total for the year 12 cents.

Hotel Business Performance

The hotel business, including 351 licensed venues such as Breakfast Creek Hotel, generated $2.2 billion in sales, up 4.2 per cent. But sales across hotels and pubs have slowed in recent months, the company said, as consumers watch spending amid high petrol prices and interest rate concerns. There was an uplift in pubs from the recent Football World Cup.

Endeavour renovated and renewed 38 of its venues and installed 2000 new gaming machines, according to the company. It has also put the 'for sale' sign on its six company-owned vineyards as part of moves to offload non-core assets.

The results come amid an uncertain consumer spending outlook, as higher interest rates and cost of living pressures continue. The company said retail sales for the first seven weeks of the new financial year have been positive, but no further specifics\\\ avail.