Endeavour Group’s 1H26 result release revealed ongoing weakness in Retail liquor sales and further gross margin pressure for 2H26e. Gross margin investment that commenced in September 2025 needs to flow through and should start to boost sales late in FY26e as marketing is ramped up. However, EBIT recovery will only begin in FY27e. The Hotel segment is seeing good momentum from site renewals and more will be done over the next year. However, it is grappling with higher cost growth.

Endeavour Group provided a trading update that revealed gross margin pressure on its Retail segment earnings for 1H26. The release also provided the first indications about new CEO Jayne Hrdlicka’s likely strategic direction. Ms Hrdlicka will clearly focus on price leadership and driving more sales through its stores. There is also scope to cut overheads and unwind the arrangements with Woolworths over time. We have lowered our EPS by 5% in FY26e and 1% in FY27e. We retain a Buy rating on Endeavour and expect the shares to re-rate once there is clarity from the refreshed strategy in May or June 2026.

Endeavour Group reported 1Q26 sales down 0.3%.  The sales dynamic remains broadly consistent with declines in Retail liquor volumes, but growth in Hotel sales. Endeavour’s commentary suggests gross margin risks are building as it invests in sharper pricing in order to improve sales trends in its retail stores. We expect EBIT to drop by 5% in Retail in FY26e, despite cost savings. The Hotel business should have a better financial year given sales growth, but costs are elevated.

Endeavour Group reported a weak FY25 result with EBIT down 12%. There were mixed fortunes with Retail earnings down and Hotels up.  Recent sales trends suggest a similar dynamic in FY26e. However, we see more cost savings and less headwinds from its One Endeavour restructuring costs. We make EPS downgrades of 5% in both FY26e and FY27e given lower Retail sales and some gross margin pressure. Endeavour’s balance sheet has high gearing. When combined with its management changeover in January 2026, the risks are growing that an equity raising is used to improve its balance sheet and provide the capital to turnaround the business.

Endeavour Group reported FY24 EBIT up 1.8% on a 52-week basis and EPS dropped 4.3% given higher finance costs. We expect a flat EPS of 28.6 cents for FY25e with subdued 1H25e sales growth and higher finance costs largely offsetting better gross margins and cost savings.  Endeavour’s underlying sales momentum shows market share gains and cost savings are likely to continue to build in FY26e.

Endeavour Group reported 1H24 sales up 2.5% and EBIT up 2.6%.  The company had an increase in gross profit margins and some cost savings to help offset higher operating cost growth. Weak sales trends in liquor are likely to persist throughout 2024 in our view as the industry resets volumes back towards more normal levels post the COVID-19 boom. While higher gross margins can be a red flag, Endeavour is holding market share and the cost savings embedded in 1H24 give us confidence in second half earnings.